Profile of the Association

Bread industry in India

Bread
Bread is a hygienically manufactured and packed snack food product available at comparatively cheap prices. Major
consumers of bread are people from the lower middle class and economically weaker segments consuming more
than 90 per cent of the bread industry's total production. Bread is low margin-high volume based processed food
and bread making is a labor intensive process.
Bread is the cheapest and basic instant food available for consumption. Though bread is not a staple food in the
country, its consumption has increased over the years. In India it is still a secondary staple food when compared to
chapatti, puri or rice.
Bread is generally a highly perishable item, which has a shelf life of maximum of 72 hrs in a tropical country like
India. The government has made it mandatory to stamp the date and time of manufacture and the date and time of
expiry on the packet. Therefore, once the bread is baked and packed, any baker will make it a point that it reaches
the market at the earliest.
Per capita consumption
The per capita consumption of bread in India is only around 1.5 kg to 1.75 kg in various zones.
The consumption pattern in four zones is
Northern States: 27%
Southern States: 32%
Western States: 23%
Eastern States: 18 %
Size of the Indian bread Industry
Bread industry is 4.00 million tones industry growing at the rate of 6 percent and is expected to grow at the same
rate in the medium term. However the organized sector is growing at the rate of 8 percent. In 2006-07, the total
production of the organised sector has been estimated at 18lakh tonnes.
The bread industry, consist of organised and unorganised sectors, contributing around 45 per cent and 55 per cent
of the total bread production respectively. The organised sector consists of around 1800 small scale bread
manufactures around the country, besides 25 medium scale manufacturers and 2 large scale industries which were
permitted to continue on the basis of their installed capacity in 1976 when the Government of India reserved bread
industry for the small sector
The unorganised sector of bread units/neighbourhood bakeries etc. consist of an estimated 75,000 bread bakers
mostly located in residential areas of cities and towns. 35 percent of the total production comes from the small scale
sector with about 1500-1800 units in operation. As bread industry is a low margin business, cost control is crucial in
sustaining profitability in the long run.
Major Brands
The two major players i.e. BIL & MFIL are having a market share of 10-12 percent and 7-8 percent respectively.
Apart from these two, there are few large regional players such as Spencers in South India, Vibbs in Maharashtra,
Kitty and Bonn in Punjab, 365days in Delhi NCR, Haryana, etc and Harvest Gold and Perfect in Delhi & NCR
Marketing: The marketing system in the bread industry is based on a strong retail-wholesale distribution network and
being a highly price sensitive low margin food product with very short shelf life (about four days on an average) and
resultant return of more than 10 per cent of dispatches, the industry is witnessing a very competitive environment
with the result that inter alia the consumer's choice and preferences plays an important role in the sales pattern of
different brands of bread in the market.
Handling/ Logistics
Logistics plays a key role in the bread industry, as the proper logistic support enables the producer to transport his
products in the market at the right time. A producer has to see that all the packs are stacked in solid containers steel or plastic crates - in order to avoid compression of bread (reduction of volume) during transportation. In case of
bulk transport, producers can make use of trucks and tempos, and in case of smaller deliveries to the retail shops,
the producer can use smaller tempos and bicycles. A producer also has to make sure that all vehicles are thermal
proof, so that the bread is maintained at a lower temperature. All the products should be transported preferably in
the night in order to avoid the heat and humidity and also the traffic delays.

Even after the product reaches the retail outlets, the producer has to educate the retailer to keep the bread away
from direct sunlight. On keeping it in direct contact with the bright sunlight, bread starts sweating which may result in
fungus formation, reduction in weight due to loss of moisture, change in texture of bread, etc.
Global status
Europe dominates the global bakery products market, with an estimated market share of 43.85 per cent in 2007.
The world bakery market has become increasingly industrial in recent decades, with developed countries seeing a
steady swing away from artisanal bakers and towards more wrapped and speciality bread, which are now an
important fixture in modern retail outlets.
In Western Europe and the US, major retail chains in the past have used bakery products as loss leaders to
increase the volume of their overall sales.
This has prompted manufacturers to adopt price discounting in key baked goods categories such as bread. As a
result, profit margins per unit declined. To counter this, manufacturers developed new varieties of value-added
products that attracted premium prices for e.g breads enriched with vitamins. Such products were offered in single
serve and portable packaging to provide convenience for customers .In North America, demand for bakery products
that contain soluble dietary fibre, such as wholegrain bread and oatmeal cookies, increased sales in the sector
Global figures: The report, which analyses the worldwide markets for bakery products by segment and geographic
region, predicts that by 2010 the world bakery products market will be worth about US$407 bn. A compound annual
growth rate (CAGR) of 3.93 per cent is projected over the period 2001- - 2010.The Asia-Pacific region is expected to
demonstrate the fastest growth, with a CAGR of about 6.93 per cent.
Segments: According to Global Industry Analysts, the bread and rolls segment formed the largest product category
in the global bakery products market, with an estimated 48.15 per cent share in 2007.Baked goods such as bread,
rolls, pastry and doughnuts have seen a growth of about 3- 4 per cent per year.
Product appearance of bread is seen as significantly influencing impulse purchases.
Spending trends According to the report, over the past five years, customers are spending more on deli and in-store
bakery items and less on meat and packaged bakery products.
Company trends The bakery industry has seen marked changes in recent years. Large bakeries have acquired
many unproductive bakeries and have heavily invested in automation, cost control and brand development.
Productive bakeries have developed niche markets, so exploiting the consolidation of bigger companies.
Companies are working hard to satisfy evolving tastes and preferences and there is constant innovation.
4.3 LEGISLATIONS IMPACTING FOOD INDUSTRY
Prevention of Food Adulteration Rules The Prevention of Food Adulteration Act, 1954 (37 of 1954). The Ministry of
Health & Family Welfare, Govt. of India has made recent amendment in the rules vide its Notification no. GSR
491(E) by making printing of detailed information relating to nutritional energy value etc of the food constituents
compulsory.
Standards of Weight and Measures (PC) Rules 1977 Recent amendment has been made in the rules through
notification no. GSR 425(E) making the printing of name, address, telephone number e-mails of the manufactures
on the packaging material compulsory.
Packaged Commodities Rules Standards of W & M Act The Dept of Consumer Affairs (Director of Metrology),
Govt. of India, proposed mandatory printing weights at the time of packaging for food products like bread etc.
The Vegetable Oil Products (Control) Order, 1947.
The Milk and Milk Products Order, 1992.
Any other order issued under the Essential Commodities Act, 1955 ( 10 of 1955) relating to food
Integration of various Food Laws
The Food Processing Industry had been experiencing the adverse affect of multiplicity of various Acts/ Rules and
Regulations for food standards under the Prevention of Food Adulteration Act, Standards of Weights & Measures
Act, Food Products Order, the Meat Products Order, the Bureau of Indian Standards & MMPO, etc. So need was
there to converge all the acts. Hence came up the Food Safety and Standards Act, 2006
FOOD SAFETY AND STANDARDS ACT 2006
The food sector in India has been governed by many laws under different ministries. This multiplicity in law in food
sector resulted in many problems in the area of food standards maintenance. Need for a single regulatory body and
an integrated food law was recognized as a remedy for this multiplicity of laws. The objective of The Food Safety
and Standards Bill, introduced in 2005, was to unify the food safety laws in India. Food safety and standards Act
2006 was passed by the parliament on 23rd August 2006
Objective
The main objective of the Act is to consolidate the laws relating to food and to establish the Food Safety and
Standards Authority of India for laying down scientific standards for articles of food. The Food Safety and Standards
Authority will regulate manufacture, storage, distribution, sale and import, to ensure availability of safe and
wholesome food

Highlights of the Act

Food Safety and Standards Authority (FSSA) to regulate the food sector.
Food Safety and Standards Authority, aided by several scientific panels and a central advisory committee will lay
down standards for food safety.
These standards will include specifications for ingredients, contaminants, pesticide residue, biological hazards and
labels.
State Commissioners of Food Safety and other local level officials will enforce the law.
Every entity in the food sector is required to get a licence or a registration under the Act
Food safety and standards authority of India
The Authority consists of a Chairperson and the twenty-two members in which one-third will be women members.
Seven members representing ministries:
1. Agriculture,
2. Commerce,
3. Consumer Affairs,
4. Food Processing,
5. Health,
6. Legislative Affairs,
7. Small Scale Industries
Two representatives from food industry, of which one from small scale industries;
Two representatives from consumer organizations;
Three eminent food technologists or scientists;
Five members representing States and the Union territories (on rotation basis every three years,
Two persons representing farmers organisations;
One person representing retailers organisation.
Central Advisory committee
The Chief Executive Officer of the food safety standards authority will be Chairperson of the Central Advisory
Committee Members. Two members each representing following area
1. Food industry,
2. Agriculture,
3. Consumers,
4. Relevant research bodies and food laboratories,
5. Commissioners of Food Safety,
6. And the Chairperson of the Scientific Committee
The Central Advisory Committee advise the Food Authority on following areas
a. Drawing up of a proposal for the Food Authority's work programme,
b. On the prioritisation of work,
c. Identifying potential risks,
d. Pooling of knowledge
e. Other functions specified by regulations.
Scientific Panel
Following scientific panels established under the Act.
food additives, flavourings, processing aids and materials in contact with food;
pesticides and antibiotics residues;
genetically modified organisms and foods;
functional foods, nutraceuticals, dietetic products and other similar products;
biological hazards;
contaminants in the food chain;
labelling ; and
method of sampling and analysis.
Duties and functions of Food Authority.
Food Authority has to regulate and monitor the manufacture, processing, distribution, sale and import of food so as
to ensure safe and wholesome food
Prepare the standards and guidelines in relation to articles of food
Set the limits for use of food additives, crop contaminants, pesticide residues, residues of veterinary drugs, heavy
metals, processing aids, myco-toxins, antibiotics and pharmacological active substances and irradiation of food.
The mechanisms and guidelines for accreditation of certification bodies engaged in certification of food safety
management system for food businesses.
Set procedure and the enforcement of quality control
Procedure and guidelines for accreditation of laboratories and notification of the accredited laboratories;
Prescribe method of sampling, analysis and exchange of information among enforcement authorities
Conduct survey of enforcement and administration of this Act in the country;
Prescribe food-labelling standards including claims on health, nutrition, special dietary uses and food category

systems for foods.

Procedure subject to which risk analysis, risk
Under take Risk assessment, risk communication and risk management.
Provide scientific advice and technical support to the Central Government and the State Governments in matters of
framing the policy and rules in areas of food safety
Following Legislations will be replaced with the new Act on implementation
The Prevention of Food Adulteration Act, 1954 (37 of 1954).
The Fruit Products Order, 1955.
The Meat Food Products Order, 1973.
The Vegetable Oil Products (Control) Order, 1947.
The Edible Oils Packaging (Regulation) Order, 1998.
The Solvent Extracted Oil, De oiled Meal, and Edible Flour (Control) Order, 1967.
The Milk and Milk Products Order, 1992.
Any other order issued under the Essential Commodities Act, 1955 ( 10 of 1955)relating to food
4.4 TAXATION ISSUES
Central Excise duty
Excise duty on bread is zero. However, the Revenue Department proposes to levy excise duty on the `dough' used
for the manufacture of breads.
VAT on bread is NIL in most of the States.
4.5 QUALITY STANDARDS/CERTIFICATIONS
Quality Standards
The Ministry of Health and Family Welfare and the Ministry of Food Processing Industries have formed different
Sectoral Groups in order to facilitate formulation of a proper and efficient Food Safety Programme towards
implementation of GMP, GHP and HACCP in the food industry, either under law or voluntary.
GMP Good manufacturing practice (GMP) is that part of quality assurance which ensures that products are
consistently produced and controlled to the quality standards appropriate to their intended use and as required by
the marketing authorization
GMP is aimed primarily at diminishing the risks inherent in any pharmaceutical production, which may broadly be
categorized in two groups: cross contamination/mix-ups and false labeling. Above all, manufacturers must not place
patients at risk due to inadequate safety, quality or efficacy; for this reason, risk assessment has come to play an
important role in WHO quality assurance guidelines.
ISO-9000 The ISO 9000 family of standards represents an international consensus on good management practices
with the aim of ensuring that the organization can time and time again deliver the product or services that meet the
clients quality requirements. These good practices have been distilled into a set of standardized requirements for a
quality management system, regardless of what the organization does, its size, or whether it is in the private, or
public sector. The family of ISO 9000 standards have been developed by ISO and it is made up of four core
standards:
ISO 9000:2000 Fundamentals and Vocabulary
ISO 9001:2000 Quality Management Systems Requirements
ISO 9004:2000 Quality Management Systems Guidelines for performance improvements
ISO 19011: 2002 Guidelines for quality and/or environmental management systems auditing
ISO 14000 ISO 14000 is the general term used for ISO 14000 family of standards. ISO 14001:1996 `Environmental
Management Systems Specifications with Guidance for use is a standard published by International Organization
for Standardization (ISO) and adopted by BIS as IS/ISO 14001:1996. IS/ISO 14001:1996 is the exact replica of ISO
14001:1996. This standard provides for the framework for the Management System for an organization to meet its
Environmental obligations reliably and consistently. IS/ISO 14001:1996 is the only certification standard in the
IS/ISO 14000 family.
IS/ISO 14001 is a requirements standard. It contains a set of requirements to define the operation of the
Environmental Management System. Since the requirements are expressed in a general form, it has the flexibility to
be applied to any organization.
ISO has published ISO 14000 family of standards including ISO 14001:1996 standard. The Technical Committee of
ISO i.e. ISO/TC 207 Environmental Management Systems is responsible for formulation of these standards. BIS
represents India as participating member on this Committee. Experts from India including BIS officers are nominated
on this Committee to put forth Indias viewpoints on EMS.
HACCP
Hazard Analysis and Critical Control Point (HACCP) is a process control system designed to identify and prevent
microbial and other hazards in food production. It includes steps designed to prevent problems before they occur
and to correct deviations as soon as they are detected. Such preventive control system with documentation and

verification are widely recognized by scientific authorities and international organizations as the most effective
approach available for producing safe food.
HACCP involves a system approach to identification of hazard, assessment of chances of occurrence of hazards
during each phase, raw material procurement, manufacturing, distribution, usage of food products, and in defining
the measures for hazard control. In doing so, the many drawbacks prevalent in the inspection approach are provided
and HACCP overcomes shortcomings of reliance only on microbial testing.
HACCP enables the producers, processors, distributors, exporters, etc, of food products to utilize technical
resources efficiently and in a cost effective manner in assuring food safety. Food inspection too would be more
systematic and therefore hassle-free. It would no doubt involve deployment of some additional finances initially but
this would be more than compensated in the long run through consistently better quality and hence better prices and
returns.
HACCP CERTIFICATION
BIS offers two Certification schemes to the food industry.
i) HACCP Stand-alone Certification against IS 15000:1998
ii) HACCP based Quality System Certification provide for two Certification through one audit Certification of Quality
System against IS/ISO 9000 and Certification of HACCP against IS 15000:199
4.6 ISSUES AND CONCERNS OF THE INDUSTRY
The declining trend in growth is now a major concern for the bread industry in India. The annual growth in the
bread industry has been 10 per cent during 1980-90. The production declined to 7.25 per cent during 1991-96 and
again to 6.5 per cent in 1997-2005. The annual production and consequently sales pattern has been witnessing
gradual decline over the two decades.
Being a perishable product, the bread industry faces numerous challenges. Like lack of a modern well-developed
retail network requisite for distribution of a perishable product. It is this factor that gives a distinct advantage to the
local units that produce on a small-scale, evidently accounting for a predominant share of the total industry,
especially in the rural markets.
FOOD REGULATORY MEASURES: the bread industry is facing challenges due to stringent food regulatory
measures like Mandatory Printing of Manufacturing Date under the PFA Act/along with best before date,
Quantitative Ingredient Declaration (QUID) and Nutritional Labeling.
MAXIMUM PERMISSIBLE ERRORS (TOLERANCE LIMIT) UNDERTHE WEIGHTS & MEASURES (PC RULES:
The Department of Consumer Affairs (Directorate of Weights & Measures), proposes to reduce by 50%, the existing
Maximum Permissible Error in weight/volume for various Packaged Commodities, including breads and biscuits.
This has also pose a problem before the industry as there can be variations due to various factors in the processing,
manufacturing, packaging, marketing etc., involving error/loss of weight of bread, as also on account of the inherent
features of wheat flour and other inputs, atmospheric/climatic conditions resulting in error in the weight of Bread.

EXCISE ON DOUGH: The Revenue Department proposes to levy excise duty on the `dough' used for the
manufacture of breads.
Although breads, as a finished product, are excise-duty exempt, the Excise Department wants bread manufacturers
to cough up excise duty on the `dough' which is a perishable intermediate product in the bread making process in
the country.