Top snacks maker PepsiCo Foods has started slipping with a slew of smaller and regional brands eating into the market share of its flagship brands Kurkure snacks and Lays potato chips.Kurkure and Lays, which dominate the Rs 9,400-crore Indian snacks market, have begun losing share to regional players such as Gujarat-based Balaji, Indore's Yellow Diamond and DFM Foods' Crax in addition to some variants of ITC's Bingo snacks, which are matching the multinational on pricing, variants and regionalisation.
Industry official quoting Nielsen data said both Kurkure and Lays' market shares slipped 2-3% in the April-September period, while some others like ITC's Bingo, Balaji, Parle and even Yellow Diamond have gained. Nielsen data also shows that PepsiCo Foods' (FritoLay India) share in overall western snacks has slipped to 40% last fiscal from 48% in 2009-10.
A PepsiCo spokesperson said the company doesn't comment on market shares, which "fluctuate from quarter to quarter".
"This year we have further strengthened our market position in all potato chips, Kurkure, baked snacks and traditional namkeen that we operate in, with more than 25 new launches including new category introductions like Kurkure Monster Paws and Kurkure Puffcorn," the person said.
Officials said the firm is banking on volumes, multiple packs and increased marketing spends to get back its market share.
DFM FoodsBSE -4.08 %, maker of Crax snacks, for example, stepped up its distribution in North India and launched Crax in the western markets last summer. "This has helped in our brand share going up," Mohit Satyanand, independent director at DFM Foods, said.
The salted snacks market in the country has been growing 25% a year, and smaller players have been fuelling category growth as much as bigger ones like PepsiCo, ITCBSE -0.88 % and Haldiram's.
And they are attracting the attention of private equity players. Mid last year, Sequoia Capital invested close to $30 million in Indore-based snack food maker Prakash Snacks, owner of Yellow Diamond chips. The eight-year-old Indore-based firm sells a range of chips and savoury puffs.
PepsiCo has been selling products at prices ranging from Rs 2 to Rs 55 across categories. Last year, it consolidated its mass-priced snacks under a new entity, Lehar Foods, to take on regional brands such as Balaji, Bikanervala and A-Top Foods.
It operates on a low-cost model and PepsiCo is hopeful that Lehar Foods will contribute 50% to the firm's foods division FritoLay by 2015. A couple of years back, PepsiCo attempted to buy out strong regional players such as Gujarat-based Balaji Wafers and A-Top Foods, but the talks did not materialise.
Meanwhile, the competition is increasing. Biscuits and snacks maker Parle Products extended its portfolio to the traditional salted snacks category with the revamp of its 'Parle namkeens' earlier this month.
"Whenever new products enter any category, the dominant player naturally gets impacted," B Krishna Rao, group product manager at Parle Products, said. He said the company was enthused by the product's initial response and hoped to capture 20% share by the end of this fiscal.