Pasta in India: New Offerings Indicate a Path for Market Growth

Local manufacturer Bambino Agro Industries Ltd’s December 2010 introduction of a dried instant pasta line in India is testament to the strengthening demand for convenience among the country’s middle-class urban consumers.

With consumer demand for pasta slowing in highly mature markets in Western Europe, Asian markets could provide an opportunity for international manufacturers to diversify geographically and grow their overall revenues.

Bambino targets ‘healthy and busy’ consumers

The new line, Bambino Instant, is marketed as being highly nutritious and rich in dietary fibre and protein. The meal solution targets busy professionals willing to pay a premium for not just health but also convenience. The line also includes a pasta sauce to be added after cooking, which it is claimed takes less than three minutes to prepare.

More significantly, this new product development taps into a growth niche with even greater potential for expansion. Demand for pasta is still very low among Indians and is mostly restricted to upper-income consumers in urban areas.

In addition, research suggests that there have been no significant health and wellness trends or developments to date in the Indian pasta market. Pasta is considered a luxury in the country and is eaten only on an occasional basis. Interestingly, however, wheat-based pasta is gaining some attention from consumers and manufacturers alike, and is a trend that is likely to continue into the medium term.

Bambino Agro dominates sales

Bambino Agro Industries remained the leading player in India’s pasta market in 2010 with a retail value share of 47%. The company has been particularly active in increasing sales of its Bambino pasta and vermicelli brand in India. It has widespread national retail coverage which has helped it to further consolidate its leading position.

Other prominent domestic players in the category include United Agro Industries, Savorit Ltd and Licia Macaroni Pvt Ltd. International brands like Buitoni, Barilla and Agnesi are also trying to increase their presence in India.

Way forward

By and large, pasta continues to be a relatively foreign concept in India. The increasing popularity of Western lifestyles among middle-class consumers, however, could prove an opportunity for significant expansion over the medium to long term.

While pasta is still a niche in India, consumer demand has been growing steadily and the category has managed to build a relatively small – but nevertheless expanding – consumer base. Future economic growth, continued exposure to Western cuisine through television and travel abroad and mounting demand for convenience-minded packaged food solutions among middle-class consumers could together lay the foundations for stronger consumer demand for pasta in the coming years.

Manufacturers anticipating this trend will be best placed to benefit from such growth in demand and should start to adjust their strategies accordingly.

As with other niche food categories, the strategic expansion of pasta manufacturers into emerging markets should be twofold. On the one hand, they could extend their standard priced pasta lines into developing markets, using where possible local inputs to minimise costs and final retail prices. Crucially, an alliance with local food manufacturers through co-branding strategies would allow them to further minimise the cost of their investment.

Similarly, the introduction of premium chilled/filled pasta lines targeting more affluent and well-travelled Indian consumers – and which are sold in specialist stores located in wealthier urban neighbourhoods – could open up a new growth niche for international players able to bank on their brand equity and aspirational nature.

Moreover, co-branding or other forms of strategic partnership between international and local manufacturers in the upper-price segment would likely be less successful than when employed for lower and middle retail price brackets. This is because more premium-minded consumers in developing markets are typically happy – and able – to pay higher prices for imported brands, which often carry an aura of quality that locally-produced offerings lack.