As per the research by theindiawatch.com, the peanut butter market has reached USD 97.2 million in India in FY 22. It has grown at a CAGR of 8.02% over the past 5 years. Domestic demand is still limited and is sized at USD 9.81 million. India’s overall butter, cheese, and other spread consumption are sized at USD 146.8 million with peanut butter having a moderate share of 6.7%.
However, the silver lining is a sharp jump in domestic consumption in the past 5 years. Between FY 17 to FY 22, domestic consumption grew at a CAGR of 33.7%. A rise in health awareness and growth in income will continue to push the market in a positive direction. Peanut butter is a low-calorie and high protein food, which is making it popular in the country.
The Northern region in India constitutes the maximum consumption, closely followed by the southern region.
Growth Drivers of the peanut butter market
In recent years, the consumption of peanut butter has grown notably. Mentioned below are some of the factors that are driving demand
- Growing general health awareness in India is boosting peanut butter consumption, which is a good source of proteins and healthy fats. Peanut butter is a healthy and tastier alternative to butter and cheese. It also helps in appetite suppression.
- India’s rising gym and fitness culture is also a critical growth driver, as peanut butter is an integral part of fitness diets. They are high in proteins but less in carbs, making them perfect for gym enthusiasts.
- The growing organized retail marked by expansion in hypermarket and supermarket penetration In India is also making peanut butter readily available. Likewise, the emergence of new e-commerce horizontals (Amazon, Flipkart) alongside a host of digital grocery players such as Blinkit, Bigbasket, Milk Basket, Zepto, Swiggy Instamart, etc. is steering the market in a positive direction.
- Peanut butter production is a relatively simple process and machinery can be easily procured. The legal requirements to set up peanut manufacturing are also simple and easy.
- Though dairy continues to be a major part of the Indian diet, some households are now shifting towards non-dairy products such as peanut butter, soybean, etc.
- Besides spread, peanut butter is now used in a wide range of food items such as smoothies, shakes, confectionery, salad, ice creams, etc.
- India’s strong structural parameters such as changing consumer behavior, the surge in middle-income households, growth in demand for a healthy lifestyle will continue to foster growth in the segment.
- The global peanut butter consumption market is large and has crossed USD 4 billion. India being the largest producer of peanuts has a natural advantage to become a big player in the global trade. In FY 22, total peanut production in India amounted to 9.86 million tonnes, growing at a CAGR of 5.73% in the past 5 years.
Global Market Trends
The global peanut butter market is sized at USD 4.3 billion in FY 22. Similar to India, the demand in the global market is also rooted in factors such as a rise in population, growth in disposable income, evolving lifestyle, and a surge in demand for convenient and easy-to-eat food products. Major exporting nations include China, Netherlands, USA, Argentina, and India. Major consumption markets are the USA, Canada, and Western Europe. In contrast to the Asian region, the demand for peanut butter is high in the western world.
In the USA, around ~ 90% of households consume peanut butter. Close to a third of peanut produced in the country is processed to make butter.
Although competition is intensifying globally, Indian producers are well-positioned to expand their footprint internationally. Indian peanut butter is relatively inexpensive and is a popular choice for private label brands.
Moreover, poor groundnut production in some of the global markets will further enable Indian exporters to aggressively push their products.
The Future of Peanut Butter Production in India
- Backed by growth in lifestyle, disposable income, and a general shift in consumerism, the Indian peanut butter market is slated to grow in the foreseeable future.
- In addition to retail channels, e-commerce will be one of the major distribution mediums for products such as peanut butter.
- Local manufacturers should try introducing a wide range of packs, formats, etc. In addition to regular peanut butter, the demand for variants such as chocolate peanut butter, low-sugar peanut butter, etc can rise.
- The abundance of raw materials gives Indian manufacturers a natural advantage to win a larger slice of the global export market.
- Manufacturing business will be mostly concentrated around key ground nut-producing regions such as Gujarat, Rajasthan, Karnataka, etc.
How India Watch Can Help?
India is one of the fastest-growing retail markets in the world with a population of more than 1.3 billion. In the next 8 years, the overall retail consumption in India will reach USD 6 trillion, making it attractive for international and local manufacturers/ retailers/ digital consumer start-ups, etc.
However, India is also a multifaceted and complex market. To grow in India requires access to actionable data, inputs, research, etc. The India Watch is an India-based market research and business intelligence advisory and can help Businesses to grow in India with the help of tailormade research solutions.
- Market opportunity assessment for local and international investors/ manufacturers/ suppliers planning to enter India
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