Why did a biscuit giant decide to extend its equity to packaged wheatflour? A chat with Parle's Mayank Shah on Parle G chakki atta

The packaged atta segment comprises established brands like Aashirvaad, Fortune, Pillsbury at present.

After spending years turning kids into geniuses, Parle G has decided to go a step further. Parle Products, Indian biscuits, snacks and confectionery manufacturer, announced that it was expanding its portfolio with the launch of Parle-G Chakki Atta in India.

Parle-G Chakki Atta's distribution has already started in the northern and western parts of the country under three SKUs – 2 kg, 5 kg and 10 kg, with competitive pricing.

By tapping into the flour category, the company aims to capture urban and rural markets with 100 per cent wheat atta. In India, the brands that make up the packaged wheat flour market in India are national players. This includes the likes of Aashirvaad, Pillsbury, Nature Fresh, Annapurna, Shakti Bhog, Patanjali, Fortune etc. There are more than 500 regional brands and private label brands which form the organised market in India.

Mayank Shah, senior category head, Parle Products, informs us that the product has been a part of the company’s portfolio for over 25 years. It was sold in countries like UK, USA and in Middle Eastern countries. He adds that in India, during the last one-and-a-half years, ever since the COVID-induced lockdown started, people prefer to buy packaged atta from a brand they trust.

“People are very concerned about hygiene right now, and they aren’t comfortable stepping out of their homes to get (milled) atta. This is why we chose this point in time to introduce the product in Indian markets.”

Shah adds that the overseas markets are very different from the Indian ones. The demand for the product overseas isn’t as high as it is in India. “Abroad, it’s mostly Indian households that buy refined wheat flour. The other use case is when someone wants to bake something. Whereas in India, it’s a bigger and much more competitive market.”

According to Shah, 75-80 per cent of the people who buy atta either get it milled, or purchase unbranded loose atta.

Only 15-20 per cent of the total market is the packaged atta market. It is packaged, but it may not necessarily be branded. There could be local players selling these products.

“This 15-20 per cent is valued at around Rs 20,000 crore. Branded packaged atta players, which include the likes of Aashirvaad, Pillsbury, Fortune, etc., account for around Rs 10,000 crore.”

Shah adds that the biggest challenge that the brand has is to cater to the Indian customers and make them realise the value of packaged atta, as compared to unbranded atta.

“Even if the customers take their own wheat to the chakki, there’s no guarantee that the quality of the end product will be the same. People may even question that if getting wheat milled at the chakki costs me around Rs 50, how can the company sell it to me for Rs 30?”

He touts hygiene and convenience as the top two reasons to buy branded atta. Shah also points out that as families become more nuclear and the storage space becomes an issue in the kitchens – buying a packet of branded atta is just more convenient.

To design marketing messages, Shah says, the company will focus on the convenience and hygiene aspect, and will talk about how the atta is made and packaged. The company uses stone milling equipment, which ensures that the nutritional content of the wheat flour is not reduced.

Atta, a staple in most households, is consumed all year round. But it tends to be consumed more in the northern and western parts, than the southern and eastern parts, which happen to be rice eating regions. The plan is to distribute the product through general trade, modern trade and e-commerce sections.

Talking about and reviewing the new product, KS Narayanan, a leading food and beverages industry expert (formerly with McCain Foods and Unilever), points out that in India, a lot of different food items from the ‘household staples’ category used to be unbranded. But a lot of these products are now branded and sold as packaged commodities by companies.

He explains that from March 2020 onwards, there’s an accelerated shift towards purchasing branded items for household supplies. “Food safety, nutrition, immunity, etc., have all become buzzwords, as a result of which, there is a higher propensity to buy branded products for daily household use. In terms of conversion, it should’ve happened 2-3 years down the line, but because of COVID, we’re seeing those changes now.”

Narayanan elaborates that as far as the atta market in India is concerned, it’s a sourcing game. There is a need to identify the location to produce the products and build a supply chain that reaches the rest of the country.

He names Aashirvaad, Pillsbury, and Fortune as two famous pan-India atta brands, and theorises that other consumers may visit their local chakkis.

“As far as Parle-G is concerned, the biscuit is one of the most widely distributed products across the retail landscape. The key ingredient in the biscuit is atta, and Parle already buys large quantities of it. It may be looking at going one step further to create a branded commodity, leveraging that network along with its grocery distribution network. If it can leverage it right, it gives Parle commodity strength in terms of purchase. This product, however, could’ve come from the house of Parle Products, with a different brand name.”

Narayanan says that the main challenge in this category is that the scope for value addition in a product like atta or maida is pretty limited. There will always be a price range that has to be adhered to and there’s a limited premium you can charge on the product.

“For example, a packet of Aashirvaad atta may cost Rs 50, but if you go to the chakki, it can cost Rs 30. Shipping the products from state to state may also add another Rs 5-6. Atta’s shelf life is also around three months, which can pose a challenge. The product’s freshness can be a challenge when you’re selling a packaged version of a localised commodity,” he signs off.