|Cookie maker Unibic is planning to set up a production base outside of south India as the company looks at breaking into the Hindi heartland apart from going deeper into markets in eastern India. |
The firm has its manufacturing plant located in Bengaluru, where it is has five production lines with a capacity to produce up to 100 tonnes a day.
Nikhil Sen, managing director, Unibic Foods, said the intent was to have a deeper footprint in the northern and eastern India, especially the Hindi-speaking states such as Uttar Pradesh where it had not seen much success with its premium range of cookies. “You run at a disadvantage when you are running from a single location.
Hence, we are looking at expanding beyond Bengaluru,” Sen added.
The company is planning to launch its second manufacturing unit at a new geographical location in central India so that it can maintain control of the facility and distribution and cater to the markets in North India. He however did not divulge the exact location where the company is looking at for setting up this plant.
Currently, the firm derives 60 per cent of its business from Karnataka, Kerala, Andhra Pradesh and Tamil Nadu. It is also seeing good traction in the northeast and the National Capital Region.
The total cookie market is pegged at Rs 75-80 billion of which around Rs. 40 billion forms the premium segment.
In a market dominated by Britannia’s Good Day and Parle’s Hide & Seek, the company is looking to go beyond the 10 per cent share in the premium segment.
With cash at its disposal, Unibic is trying to create more awareness about the brand in markets that are more rural in nature, spending in below-the-line activities, innovative distribution channels, and getting the right packs in place.
“We have to move to markets that are rural in nature. We are putting in Rs 10 and Rs 5 packs as penetration packs in these markets which will lead our distribution to the next level,” said Sen.
The distribution network of rivals like Parle and Britannia are already widely spread in rural areas.
Unibic is also looking to leverage the contract packaging (CP) model, if required. The Peepul Capital-backed firm utilised three CPs -- one in the East and two in Hyderabad -- when it was running short of stock in 2016.
Eyeing the health segment, it recently launched a range of cookies using ingredients like oats, ragi, rice and corn. It has also ventured into the new segment of snack bars. However, with Britannia's Nutrichoice, and ITC's Farmlite, there's already enough competition in the segment.
Going beyond cookies, Unibic Foods will also look at new snacking products which are distinct and affordable in nature. “We have 30 odd variants of cookies today but there is a lot of work to be done here. Once we have exhausted the geographical part of what we are doing today, we will look at products which do not require humongous spending and give us the opportunity to be one of the top three players within a reasonable period of time, added Sen.