Market Structure and Competition

Market Structure and Competition:

Market Structure:

The Bread industry is low - tech and low margin industry. In 1977, the Government of India had reserved bread industry for small scale industries (SSI). The then existing two large units viz., Britannia Industries Limited and Modern Food Industries Ltd. were however allowed to continue on the basis of their respective existing installed capacity.

35 percent of the total production comes from the small scale sector with about 1500-1800 units in operation. The organized sector accounts for 20 percent of the total production. The balance production comes from the un-organized traditional bakery units operating under cottage/tiny sector numbering approximately 65000 units in the country.

Major players:

 The two major players i.e. BIL & MFIL are having a market share of 10-12 percent and 7-8 percent respectively. Apart from these two, there are few large regional players such as Spencers in South India, Vibbs in Maharashtra, Harvest Gold and Perfect in Delhi, etc.

Bread being consumed by wide cross - section of the society, the marketing of bread is based on a strong retail distribution network which services the customers. As bread industry is a low margin business, cost control is crucial in sustaining profitability in the long run.

The total market size of bread industry is approximately 15 billion standard loaves (SL) or 1.5 million tonnes. The current growth is around 5 - 6 percent p.a. and is expected to remain in the same level in the medium term. Citing the financial distress faced by the bread industry, All India Bread Manufacturers Association sought assistance from government and sought inclusion of bread in Centre-sponsored schemes