• PAGE ONE
• INDEX
• HOME

Wheat glut may ease pressure off biscuit makers

Aarati Krishnan

THE Maximum Retail Price (MRP) of major brands of biscuits have seen a price hike of between 5 and 11 per cent since July 1999.

The sharp increase in excise duties on biscuits from 8-16 per cent in the March, 2000, Budget, apart from a hike in issue prices of wheat over the past one year, has had a cascading impact on retail selling prices of biscuits.

The relaxation of import restrictions on consumer products and the obvious potential in this market has encouraged a host of MNCs and regional players to foray into this business over the past year. Intensifying competition would thus have normally const rained marketers of biscuits from hiking prices at retail levels.

However, the sharpness of the duty hike and the fact that margins in this business are quite literally wafer thin, appears to have counterweighed the impact of competition.

Therefore, marketers of key brands have probably been forced into passing on part of the rising input costs to consumers.

Price hikes, however, have not been uniform across categories. Most manufacturers have refrained from hiking prices too sharply on those categories where competition is most intense. The Marie category is, for instance, one where three major players -- B ritannia, Kwality and Parle have held on to the earlier price levels.

Similarly, the price hikes on brands such as 50-50 and Krackjack have been nil or limited to 5 per cent. However, niche products and the premium ranges such as McVities Digestives, Britannia's Little Hearts and Bourbons, have seen sharper increases in t heir MRPs than the more generic biscuit categories.

However, on the inputs side, there could be some relief in sight for manufacturers over the next few months.

A comfortable buffer stock situation at the government's godowns, a comfortable supply situation and declining offtake of wheat in the Public Distribution System in the months of July and August 2000 could lead to flatter trends in wheat prices at the wh olesale levels over the next few months. This could take some pressure off manufacturers of biscuits for the time being.

This data has been sourced from FoodWorld, a retail chain. The data pertains to Chennai alone.