Big Bazaar, the hypermarket of Pantaloon Retail, has come out with a breakfast cereal range under its private label, Tasty Treat. Big Bazaar already sells noodles, pasta, vermicelli, soups, namkeens,chips, toast, khari, papads,jams, pickles, carbonated drinks, ketchup and fruit beverages under the brand. It has now added breakfast cereals to the range. The breakfast cereals will be available in three variants— plain cornflakes, chocolate-flavored Choco Gols and honey-flavored Honey Circles. There are two reasons for launching the product
1. Private brands gives far higher margins &
2. Cornflakes as a category is under-penetrated and has a lot of scope to grow
The market for breakfast cereals is still small. While the packaged food market is valued at Rs 33,234 crore, the organized breakfast cereal market is just Rs 250 crore —less than one per cent. But the market is growing fast, given the growing health consciousness in the country, especially the urban middleclass.
Kelloggs monopolizes the market for breakfast cereals with its range of flakes. Some other multinational players have also shown keen interest in this market. PepsiCo has already entered with its bestseller brand, Quaker Oates. Heinz India, which has a hugely strong bond with households because of its Complan health drinks, too has joined the bandwagon.
In spite of the presence of a large number of players in the branded packaged food segment, Tasty Treat is growing at about 70 per cent. This perhaps has given Big Bazaar the confidence to try its luck in breakfast cereals as well. In a recent development, Pantaloon Retail, promoted by Kishore Biyani, has boycotted Kelloggs at all its retail formats for turning down its demand for higher margins. Not surprisingly, Big Bazaar is pushing its own brand of cornflakes now. This is not the first time Big Bazaar is doing this. A while back Cadburys and PepsiCo owned snack food brand Frito Lay had to bear the brunt.
As an introductory offer, the cornflakes brand will be priced at Rs 99 along with a free bowl worth Rs 60. The brand will provide 10 to 15per cent value when compared to rivals. The Big bazaar has the option of pricing it lower as they don’t have to pay intermediaries and can pass on that advantage to consumers.
The retail sector trying its best to increase the percentage of organized retailing in India. At the same time FMCG companies also want retail sector to be more organized to maintain most valuable customer info for accurate demand estimation. But this will go against them if all the players like Big bazaar will try to increase their profit margins through private label push.
Finally, it is going to be a fight between two MBA grads only. One from FMCG company, trying to retain the customer like Big bazaar and other one from retail sector, trying to push private label brands!
.JPG)