i

Hurdles and Barriers in the

Development of Bakery Business

By

Dr. Ashok V. Giri

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About the Author

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Dr. Ashok V. Giri

M.Com, B.Ed, M.Phil. G.D.C.& A. Ph.D.

(Marketing)

Dr. Ashok V. Giri is having an excellent

academic career. He has 27 years of

teaching experience in various subjects in

Commerce at graduate level as well as post

graduate level. Right now he is working as

Associate Professor in MES, Garware College of Commerce,

Karve Road, Pune-411004. He is recognized Research guide for

M.Phil and Ph.D course at Savitribai Phule pune University. He

has attended number of national and international conferences and

Published 66 Research Papers in various reputed research Journals.

He has been invited for presenting his research papers by Central

Queensland university, Sydney, Australia and F H wien University

of applied sciences, Vienna, Austria (Europe). He is the winner of

number of prestigious awards like Best Teacher Award (twice)

from Pune Municipal Corporation, Best ANO Award (6 Times)

from Group Commander Pune NCC Group, DDG Jammu &

Kashmir, Group Commander Ranchi Jharkhand Group, NGOs and

other educational and social related fields.

He is working since 2001 in the capacity of Head of

National Cadet Corps Department, MES, Garware College of

Commerce, Karve Road, Pune-411004. He has attended various

NCC camps including 12 NIC camps at National level and in all

NIC he won winner ship Trophy for Maharashtra.

He has organized several industrial study visits for

students. Such as District industries centre, Mitcon, Garware wall

ropes ltd, Telco, Mapro industries Ltd., Videocon industries Ltd.,

sahyadri industries Ltd, Satara.

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He has organized and conducted several study visits for

Environment science students namely Kaas Pathar Satara,

Ralegansiddhi as ideal Village of famous social activists – “Anna

Hajare” and Aadarsh gram Hivare Bazaar “Shri Popatrao Pawar”

for water conservation and rural development.

He has organized Various Trekking Camps for NCC

students on different forts such as Rajgad, Raigad, Rohideshwar,

Torna, kenjalgad and Purandar as well as various tree plantation

programs conducted by him. He also organized various pleasure

trips for students in Kokan area of Maharashtra.

He has initiated and conducted various social rallies like

Anti Tobacco Rally, Anti Gutaka Rally, Anti Smoking and Liquor

Rally, Anti Drunk and Drive ralley, 125 Km bicycle rally for

spreading the awareness about tree plantation, village surveys,

Traffic control in Pune city, security assistance in Ganpati

immersion procession and Dnyaneshwar and Tukaram maharaj

Palkhi Vari etc.

He has worked as support Executive on the organizing

committee of Pune international Marathon from 2004-2012.

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About the book

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This book has excellent conceptual framework of Hurdles and

Barriers in the Development of Bakery Business, and will be of use

to most readers who are seeking for a structured knowledge or

understanding of the Bakery Business. This book is quite

impressive because it offers a balanced approach and conceptual

information in a highly readable format. The case studies

incorporated in this edition have been made more relevant to the

Bakery Business.

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Contents

Chapter -1 :: Introduction 1-12

Bakery Business in the World

Present Condition of Bakery Industry in India

Bakery Products in India

Bakery Industries in India

Chapter -2 :: Bakery Business – History and

Present Position

13-24

History of Bakery Products

Bakery Business in India

An Overview of the Indian Bakery Industry

Chapter - 3 :: Bakery Business – Relevant Aspects and

activities 25- 62

Basic Bakery Operations

Knowledge of Relevant Aspects and Activities

Chapter- 4 :: Barriers in Bakery Business 63-126

The Basic Barriers in Bakery Business

Requirement of Fixed Capital

Requirement of Working Capital

Education & Technical Knowledge

Lack of Legal Knowledge

Marketing of Bakery Product

Structure of Bakery Business Distribution Channels

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Chapter- 5 :: Important Hurdles in Bakery

Business

127-146

Quality of Raw Material Used

Employees In Bakery Business

Competition in Bakery Business

Credit Facility and Position of Working Capital

Availability of Skilled Employee

Availability of Sufficient Finance

Need of Education for Bakery Owners

Issues and Concern of the Bakery Industry

The Weaknesses of A Bakery Business

Safety Operations in Bakery Business

Chapter- 6 :: Food Processing Industries in India 147-168

Introduction

Market Size

Investments

Government Initiatives

Future Prospects of Bakery Industry in India

Industry Scenario

Trends in the Industry

Biscuits Industry in India

Reasons for the Growth Of the Food Industry

Technological Capability of Food Processing Industry

Employment Generation Capacity

Value Chain in food Processing Industry

Skill Gaps in Food Processing Industry

Opportunities

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Chapter- 7 :: Important Case Studies Related to

Bakery Sector 169-190

Patio Bakery

Sugar dough Bakery Café

Home bakers: The pricing challenge

Case Study-1 181

Case Study-2 184

Case Study 3 189

Chapter- 8 :: Conclusions and Recommendations 191-196

Bibliography 197-202

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Chapter

Introduction

The presence and demand of international bakery outlets in India is

growing at a rapid pace. International bakery products are making for

a big hit in India. Patisserie and chocolate segment is growing at 15-

18% while the bread segment is growing by 4-5%, mainly from multi-

grain bread products. With the growth of the Internet and exposure of

the Indian clientele who are well-travelled, the expectations are

steadily rising. The demand for international desserts is increasing

and this is reflected in the number of cafes and bakeries that sell

popular goodies such as cupcakes, macaroons, marshmallows and

gourmet desserts.

Heads up, bakers & pastry chefs! India is fast becoming a

place where careers in baking are becoming more viable and

rewarding.

The Indian market has seen a proliferation of bakery café

chains like Barista, Café Coffee Day & Monginis. It has also

witnessed a myriad of companies like Britannia and Unibic expand

their line of biscuits and other baked products. The national baking

industry produces Rs.7000Cr. worth of processed food. If you’re

considering a career in baking, these facts about the industry make for

a very sweet proposition! The urban Indian’s changing palette,

globalization, better living standards all are party to the exponential

rates at which the baking industry is growing.

The fitness & health industry has also significantly impacted

baking products and trends today. There are biscuits in the market

manufactured that use ragi, oats and whole wheat. Health problems

like intolerance and allergies toward certain foods has allowed the

foray of gluten-free and sugar-free baked products into the Indian

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Hurdles and Barriers in the Development of Bakery Business

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growth rate in the agriculture production for the period of 1950-51 to

1991-92 exceed by 3.99 per annum. During the same period food

production had more than doubled from 6.39 crores tones, while the

population growth less that double from 45 crores in 1961 to 78.69

crores in 1991. This sufficient process that the government of India

had made available of food grains to every Indians. It is the cultural

and traditional method of Indian people to eat to cooked food. In

urban as well as rural houses cosine buys females has been the

practice and convention from ages. The new food grains processed for

cooking purposes. Thus, the culinary culture has been the specialty of

the Indians. Due to the rapid growth and industrialization have phased

in and are growing in India to sustain the demand of various products

by the consumers at large for at least twelve thousand years man has

making various types of bread, but in India it is of recent origin. As

would be observed that the number of bread making units big and

small have come into existence almost in every city and towns of

India. Along with the establishments of bakery products.

Introduction manufacturing units, a complete and

comprehensive channel of distribution on has emerged. However, it

would be seen that so far no detailed study has been made in respect

of the problems of this industry. In view of this fact of systematic

attempt is made to explore the world. Small kids, teenagers, youths,

senior citizens, workers, and patients all love the bakery products.

The ever increasing popularity of bakery products have made it

possible for the businessmen to start bakeries producing different

varieties of alternative bakery products.

In India also, bakery products are very much popular. The

individuals, hotels, hospitals, canteens all are found using these

instant food products increasingly. These products have crossed the

barriers of class, caste, age and sex. People are so accustomed with

these products that, it is just impossible for them, to live without it.

After independence, the industrialization has offered a

dynamic pace to the life in India area. Today, in India lot many

women from the city are working due to this or that reason. It was

Dr. Ashok V. Giri

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noted that the popularity of bakery products is constantly increasing

in India area. Bakery products, being the instant food products, assist

them to great extent. The delicious varieties of cakes and biscuits

attract the children and teenagers, patients and old persons find

bakery products easily digestible. For all persons, bakery products

have become an integral part of their lives.

Bakery products, being the necessary consumer products for

day to day life, it was possible to visit the bakeries frequently. It was

always felt interesting to know about bakery products and bakery

business. What are bare necessities for starting a bakery business

unit? How many persons are required to run a bakery business unit?

How the finance is raised? What are the problems in manufacturing of

raw material? What are the problems in purchasing of raw material?

What are the problems of storing of raw materials? What are the

problems in marketing of bakery of products? What are the problems

about the workers?

With this background, the present subjects was selected for

the purpose of dissertation is to detailed survey in to the matters

related to the bakery businessman about the daily problems in their

business in the selected bakeries in and around India.

Bakery Business in the World

Global bakery industry grew at an annual rate of ~6.5 % y-o-y during

2007-13 and leading research associations project the global industry

to grow at a CAGR of ~7% in the next few years. The global Bakery

Products market is forecasted to reach US$447 billion by the year

2017, driven by new consumer preferences for conveniently portioned

and easy-to-consume bakery goods.

Bakery products are popular worldwide. Breads and biscuits

are the most consumed products, but demand for other bakery items

such as cakes, pastries, and cookies is also increasing. The demand

for traditional bakery product has deteriorated in the matured markets

of Americas, and bakery manufacturers are expanding and

experimenting with innovations in products such as whole wheat

Hurdles and Barriers in the Development of Bakery Business

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breads, gluten-free products, and high fiber biscuits. Europe

encompasses the largest regional market worldwide, followed by the

Americas and APAC. The market has witnessed a rapid growth in

developing countries, such as China, Japan, and India.

Present Condition of Bakery Industry in India

Baking in India is a traditional activity and has gained ground in the

last few decades. Baking breads and cakes wasn’t really a part of the

Indian culture and the notion became popular only with the changing

perceptions and evolving lifestyles of Indian population. Today

bakery products hold a major place in the Indian food processing

industry. Indian bakery industry is dominated by unorganized sector

with ~ 60 % of the market share.

Bakery Products in India

Bakery products, due to high nutrient value and affordability, are an item

of huge consumption. Due to the rapid population rise, the rising foreign

influence, the emergence of a female working population and the

fluctuating eating habits of people, they have gained popularity among

people, contributing significantly to the growth trajectory of the bakery

industry. Bakery holds an important place in food processing industry

and is a traditional activity. With regard to bakery products, consumers

are demanding newer options, and the industry has been experiencing

fortification of bakery products in order to satiate the burgeoning appetite

of the health-conscious Indian. A number of healthy products have been

launched in the bakery segment, and are gaining popularity at a high rate.

The mounting presence of bakery chains has further triggered the growth

in the sector.

India is the world’s second largest producer of food next to

China, and has the potential of being the biggest with its food and

agricultural sector. The Indian bakery industry is one of the biggest

sections in the country’s processed food industry. Bakery products,

which include bread and biscuits, form the major baked foods accounting

for over 82 per cent of the total bakery products produced in the country.

Dr. Ashok V. Giri

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It enjoys a comparative advantage in manufacturing, with an abundant

supply of primary ingredients required by the industry, and is the third-

largest biscuit manufacturing country (after the United States and China).

The bakery segment in India can be classified into the three broad

segments of bread, biscuits and cakes. India’s organised bakery sector

produces about 1.3 millions tonne of bakery products (out of three

million tonnes) while the balance is produced by unorganised, small-

scale local manufacturers. Despite the fact that there are many automatic

and semi-automatic bread and biscuit manufacturing units in India, many

people still prefer fresh bread and other products from the local bakery.

Since the advent of multinational companies (MNC) selling pizzas and

burgers in the country, people are changing their tastes also. Today, they

are not restricted to bread, cakes and biscuits, but to other bakery

products also. With new launches by a few companies like Britannia,

Biskfarm and Morish, competition has increased. Also, the Indian market

is observing the establishment of bakery café chains in the form of

Barista, Café Coffee Day and Monginis. The popular biscuit variants in

India are glucose biscuits, Marie, cream biscuits, crackers, digestive

biscuits, cookies and milk biscuits. As far as the Indian biscuit market is

concerned, the shares of the branded and organised sector and the

unbranded and unorganised sectors are 60 per cent and 40 per cent

respectively. Indian bakery products, especially biscuits, are in great

demand in developing countries.

Major players in this sector, like Parle, Britannia and ITC Foods,

have captured the markets to a great extent, with Britannia holding the

leadership position. In terms of value, Britannia and Parle account for

around 38 per cent share each of the total volume of branded biscuits

marketed in India. Britannia Industries, with an expected retail value

share of nine per cent of the baked goods category, proved to be the most

successful player in 2013.

Baked goods are expected to grow by constant value at a

compound annual growth rate (CAGR) of two per cent over the forecast

period. The urban regions of India witnessed rapid growth and expansion

of modern retail outlets in 2013. However, modern retail outlets, such as

hypermarkets and supermarkets, continued to remain low, compared to

the overall retail scenario in India. Some of these modern retail outlets

Hurdles and Barriers in the Development of Bakery Business

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also had dedicated sections to bakery products. Organised and

unorganised bread players contribute around 45 per cent and 55 per cent

of the total bread production, respectively. The organised sector

comprises around 1,800 small-scale bread manufactures around India, 25

medium-scale manufacturers and two large-scale industries. The branded

packaged segment in this sector was estimated to be worth Rs 17,000

crore in 2012, and is expected to grow at 13-15 per cent in the next three

to four years. Three or four large-sized players (namely, Britannia, Parle,

ITC and Cadbury’s) constitute 75 per cent of the market. The bread and

cake market is much more fragmented, with multiple regional and local

players. The major players in the bread segment are Britannia and

Modern Industries Ltd, who hold about 90 per cent of the market share

includes Britannia and Modern Industries Ltd. Apart from these two,

there are a few large regional players, such as Spencer’s in South India,

Kitty and Bonn in Punjab and Harvest Gold and Perfect in Delhi and the

National Capital Region (NCR).

The bakery industry in India has witnessed an annual growth rate

of more than 15 per cent during the past years. There is an immense

growth potential in the global and domestic markets. The unorganised

bread sector comprises an estimated 75,000 bread bakers, mostly located

in the residential areas of cities and towns. Thirty-five per cent of the

total production comes from the small scale sector, with about 1,500-

1,800 units in operation. As the bread industry is a low-margin business,

cost control is crucial in sustaining profitability in the long run.

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