Over a decade ago, Unibic Foods changed the game in the Indian cookies space by introducing differentiated products—something that competition took notice of and replicated quickly. The company boasts of a largest single cookie plant in India with a capacity of 100 tons per day and given the growth rates witnessed it plans to expand to five production lines in the coming years. Nikhil Sen, managing director, Unibic Foods India Pvt Ltd, in conversation with Ashish K Tiwari, speaks about the cookie brand, its market positioning, competitive scenario, new developments and future plans.

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Could you throw some lights on the overall market scenario?

Between demonetization and post roll-out of goods and services tax (GST), the market is slowly settling down. There were lots of apprehensions, especially among dealers, during GST, more out of the fear of the unknown. But, the July to September quarter has been very good so far. Diwali has been good for us. The on-year growth is between 15-30% and most of the growth has come from traditional retail, which contributes 60% in volume terms; we are present across 200,000 outlets. Modern trade has been performing well and so is the canteen stores department (CSD).

The cookies space has seen a lot of competitive activity in the recent past from brands like ITC, Britannia, Parle, etc.

We were able to identify a gap in that segment right in the beginning when we started the business back in 2005-06. Today, cookies form 30% of the overall biscuit market in India pegged at Rs 7,500 crore. What has also happened is that Unibic is now on the radar of big boys since the last couple of years and what they are trying to do is to replicate our products and introduce offerings that are close to what Unibic brand of cookies/biscuits are offering in the market. At this stage, one must realise that the consumer in India is not to be taken for granted. They want offerings that are valued, different and are in a position to experiment. So give them something where you use your research and development (R&D) to your benefit. By copying me (Unibic) you (competition) are basically shooting yourself in the foot.

How are you dealing with this scenario and protecting your turf?

We have been lucky so far. The bigger boys will get it right at some point in time. By then I hope we’d run away with the race.

Where does the Unibic business stand at present?

Right now, we are growing at about four times compared to what the market’s growing at. In the last five years, we have seen fantastic compounded annual growth rate (CAGR) of up to 50%. A large amount of traction is still coming from within the segment. The market per se has slowed down, but within that slowdown, we are growing much bigger than anyone else. South still remains our bastion bringing 55-60% volumes.

We are receiving a fairly good response from markets like Delhi and the eastern region. We have started penetrating the western region now and hopefully, over a period of time, we will grab a good hold here as well.

Is distribution a challenge for your company, particularly in the western region?

Yes, most definitely. There are two challenges here. One is getting a steady distributor who can see money being made over here and second is putting together a team that is actually willing to get their feet on the street and bring the numbers. That remains a challenge and Mumbai is very expensive in terms of distribution for all companies.

Are the margins not that attractive in this segment?

Margins are standard but there are other challenges like getting your people and products into the market/shops etc. Each store here has its own system of operating.

Have you been approached by the competition for a possible takeover?

Large multinational companies (MNCs) have approached us. At this point, our single largest shareholder People Capital is very clear in mind that they want to support the company’s growth and right now they are not looking at exiting immediately.

Growth-wise what is it that you are looking for in the next 12 to 18 months and in the next 3 to 5 years?

We will always target growth of four times compared to market growth. Last year, market grew at 7%, this year there may be a recovery and it might grow at 10%. So we expect aggressive growth of around 30% to 40%.

This will come as a result of two things. We still feel that the penetration we have in the mature markets is low compared to what the Britannias of this world have and in the markets which are fairly virgin, there is great scope for us to expand.