PESTLE Analysis of Biscuit Industry in India - 2023

PESTLE Analysis of Biscuit Industry in India

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The biscuit industry in India has grown to become one of the largest and most competitive industries in the country. The industry has a long history dating back to the early 20th century, with the first biscuit factory established in Kolkata in 1929. Today, India is the second-largest producer of biscuits in the world, after the United States.

The biscuit market in India has experienced tremendous growth over the years, driven by changing consumer preferences and a shift towards more convenient and packaged food products. This has led to the emergence of several prominent players in the market, including both multinational corporations and domestic manufacturers. The Indian biscuit industry is expected to continue to grow in the coming years, driven by rising disposable incomes, urbanization, and the increasing adoption of western lifestyles.

Political Factors

The biscuit industry in India is influenced by various political factors:

Government policies and regulations: The biscuit industry in India is governed by various policies and regulations set by the government. These policies include tax policies, food safety regulations, and import-export policies, among others. Changes in these policies can impact the biscuit industry’s operations and profitability.

Subsidies and incentives: The government of India provides various subsidies and incentives to the biscuit industry, such as tax exemptions and subsidies on raw material costs. These subsidies and incentives can significantly impact the industry’s profitability and growth.

Political stability: Political instability can impact the biscuit industry’s operations and growth. Political unrest and uncertainty can create an unfavorable business environment, leading to a decline in demand and sales.

Trade policies: Changes in trade policies, such as import and export restrictions and tariffs, can impact the biscuit industry’s growth and profitability. International trade agreements can also impact the industry’s operations.

Labor laws and regulations: Labor laws and regulations set by the government can impact the biscuit industry’s operations and profitability. Changes in labor laws, such as minimum wage requirements, can increase the industry’s operating costs.

Biscuit industry in India is influenced by various political factors that can impact its operations, growth, and profitability.

Economic Factors

The biscuit industry in India is a significant contributor to the country’s economy, with many economic factors influencing its growth and performance. Here are some of the key economic factors that impact the biscuit industry in India:

Population: India has a large population of over 1.3 billion people, which makes it one of the largest consumer markets for biscuits in the world.

Disposable income: The disposable income of the Indian middle class has been increasing steadily over the years, leading to a rise in demand for biscuits and other convenience foods.

Raw materials: The cost and availability of raw materials such as wheat, sugar, and oil can impact the profitability of the biscuit industry in India.

Government policies: The government policies, including taxes, import duties, and regulations, can affect the cost of production and distribution of biscuits.

Competition: The biscuit industry in India is highly competitive, with several local and international players vying for market share. This competition can impact pricing and profit margins.

Distribution network: The biscuit industry in India relies heavily on an efficient distribution network to reach consumers in different parts of the country. The cost and effectiveness of this network can affect the overall performance of the industry.

Consumer preferences: The changing consumer preferences and demand for healthier and more nutritious options can impact the types of biscuits produced and the marketing strategies used by manufacturers.

Biscuit industry in India is expected to continue growing, driven by a combination of factors such as population growth, rising disposable incomes, and changing consumer preferences. However, the industry also faces challenges related to raw material costs, competition, and regulatory policies.

Social Factors

The biscuit industry in India is influenced by various social factors that play a crucial role in shaping consumer preferences and market trends. Some of the important social factors that impact the biscuit industry in India are:

Changing lifestyles: With the increasing pace of urbanization and modernization, there has been a shift in lifestyles and food habits in India. Busy work schedules and a growing number of working women have led to an increase in demand for convenience foods like biscuits that can be consumed on-the-go.

Demographic diversity: India is a diverse country with people belonging to different religions, cultures, and age groups. This diversity has led to a wide variety of biscuit flavors and types catering to different tastes and preferences.

Health consciousness: There has been a growing awareness among consumers about the importance of a healthy lifestyle and the impact of food choices on health. As a result, there is a demand for healthier biscuits made with whole grains, high fiber, and low sugar.

Traditional eating habits: Indian consumers have a strong emotional attachment to traditional foods, including biscuits. Therefore, biscuit manufacturers in India have incorporated local flavors and ingredients to cater to the tastes of the Indian market.

Social media influence: The rise of social media has impacted the food industry in India, including the biscuit industry. Social media platforms like Instagram, Twitter, and Facebook are used to promote new biscuit products, flavors, and packaging to reach a wider audience.

Rising disposable income: The rising disposable income of consumers in India has led to an increase in demand for premium and high-end biscuits. Biscuit manufacturers have responded to this trend by introducing premium biscuit brands with premium packaging and unique flavors.

These social factors have a significant impact on the biscuit industry in India and influence the product development, marketing strategies, and consumer behavior in this sector.

Technology Factors

There are several technology factors that have had an impact on the biscuit industry in India.

Some of these factors include:

Automation: In recent years, many biscuit manufacturers in India have invested in automated machinery and processes. This has helped to increase production efficiency and reduce costs.

Quality control systems: With the increasing demand for high-quality biscuits, many manufacturers have implemented quality control systems that use technology to monitor and maintain consistent product quality.

Packaging technology: The biscuit industry in India has also benefited from advancements in packaging technology, which have helped to extend the shelf life of biscuits and improve their presentation.

Energy efficiency: Many manufacturers have implemented energy-efficient technologies to reduce their energy consumption and lower their carbon footprint.

Internet of Things (IoT): The use of IoT technologies has enabled manufacturers to monitor and control various aspects of the production process in real-time, resulting in improved quality and efficiency.

Digital marketing: With the increasing use of digital channels, biscuit manufacturers in India are leveraging technology to reach their target audience, promote their products and improve customer engagement.

Technology has played a significant role in the growth and development of the biscuit industry in India, enabling manufacturers to improve their processes, reduce costs, and deliver high-quality products to consumers.

There are several legal factors that impact the biscuit industry in India. Some of the key factors are:

Food Safety and Standards Act, 2006: The biscuit industry is subject to the regulations and standards established by the Food Safety and Standards Authority of India (FSSAI) under this act. The act aims to ensure the safety and quality of food products, including biscuits, and requires manufacturers to comply with specified standards and labeling requirements.

Goods and Services Tax (GST): The introduction of GST in 2017 impacted the biscuit industry as it changed the tax structure. Biscuits are now taxed at 18% under the GST regime, which has affected the pricing and profitability of biscuit manufacturers.

Consumer Protection Act, 2019: The Consumer Protection Act, 2019 provides for the protection of consumer rights, including the right to information, safety, and protection against unfair trade practices. Biscuit manufacturers must comply with the provisions of this act, including labeling and advertising requirements.

Intellectual Property Laws: Biscuit manufacturers need to protect their intellectual property rights, including trademarks, copyrights, and patents. They must also ensure that their products do not infringe on the intellectual property rights of others.

Labor Laws: Biscuit manufacturers are subject to various labor laws, including minimum wage laws, working hours, and workplace safety regulations. They must also comply with laws related to child labor and forced labor.

Environmental Laws: The biscuit industry must comply with environmental laws and regulations related to the use of natural resources, waste disposal, and pollution control.

Overall, biscuit manufacturers in India need to be aware of and comply with various legal factors that impact their business. Failure to comply with these laws can result in legal and financial consequences.

Environmental Factors

The biscuit industry in India is affected by a number of environmental factors, some of which are:

Climate: The climate of India has a significant impact on the biscuit industry, as it affects the production and storage of raw materials, as well as the shelf life of finished products. High temperatures and humidity can cause spoilage, while extreme weather conditions such as floods and droughts can disrupt the supply chain.

Water Availability: Water is an essential resource for the biscuit industry, as it is required for the production process and cleaning. Water scarcity is a major environmental issue in India, and it can affect the production and growth of the biscuit industry.

Energy Use: The biscuit industry requires significant amounts of energy for manufacturing and packaging processes. The use of non-renewable energy sources such as coal and oil can contribute to air pollution and greenhouse gas emissions, which can have a negative impact on the environment.

Waste Management: The biscuit industry generates a significant amount of waste, including packaging materials, food waste, and other byproducts. Proper waste management practices such as recycling and composting can help to reduce the environmental impact of the industry.

Raw Material Sourcing: The biscuit industry relies on a range of raw materials such as wheat, sugar, and oil, which are often sourced from different regions of the country. The transportation of these materials can contribute to air pollution and carbon emissions, and the use of unsustainable farming practices can also have a negative impact on the environment.

Regulations and Policies: The biscuit industry in India is subject to various environmental regulations and policies, which aim to protect the environment and promote sustainable practices. Compliance with these regulations is essential for the long-term sustainability of the industry.

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