Haldiram is one of the leading brand names in the Indian FMCG industry. The company is managing a wide range of products in the categories of sweets, snacks and frozen foods etc. The following PESTLE analysis of Haldiram elaborates the market environment in which the company is operating and examines the impact of the industry dynamics on company.
About Haldiram
| Company Name | Haldiram’s |
|---|---|
| Founded | 1937 |
| Headquarters | Nagpur, India |
| Industry | Food and Beverage |
| Products | Snacks, Sweets, Ready-to-Eat Meals, Beverages |
| Number of Stores | Over 400 (including franchise stores) |
| Number of Employees | Over 8,000 |
| Revenue | INR 6,030 crore (FY 2019-20) |
| Website | www.haldirams.com |
Political Factors
The lack of political stability creates numerous issues for businesses as they find it difficult to handle the operations smoothly under such circumstances. India has been exposed to political instability caused by riots, ethnic and religious conflicts. Such political climate increases the risk of harm caused to the businesses as violence can be targeted at damaging company’s offices.
Corruption issues in India indicate that the companies faces threat of its employees participating in fraudulent activities. In one such case, a manager at the company was found to be participating in online sales of the stock that was supposed to be deposited back the company. Through this sales activity, the manager has sold committed fraud of around 40 lakh (The Times of India, 2020).
Taxation is also an important political factor that affects the organizations in the FMCG sector in India. Haldiram has to follow tax related regulations implemented by the government and components such as VAT constitute a part of its financial processes. Furthermore, export of its products is dependent on the trading relations of India with other regions such as US.
Economic Factors
The GDP of India has been suggesting positive economic growth over the years, however the recent pandemic has shifted the growth patterns. Due to the widespread impact of pandemic on different organizations, disruption of the economic activities in India was inevitable and the GDP growth rate has been compromised.
One of the implications of COVID on economy was high unemployment and poverty. These factors have affected the ability of the people to spend on snacks and other items that don’t constitute as basic commodities. Moreover, lower production in the factories due to labor shortages has also contributed to the slower growth of the company during COVID.
Inflation has caused a decline in the purchasing power of the people in India, while the management at Haldiram faces the issue of increasing prices of raw material (Malviya, 2020). Considering the lower buying power, the price increase of the product becomes more challenging as it would cause a lower demand in the market.
Due to these economic issues, the profit margin of Haldiram has not shown the increasing trend as expected. However, favorable economic growth is likely to benefit the company as the sales would increase. Economic prosperity would also lower the poverty level and improve the buying power of the market.
Social Factors
The population growth is a key contributing factor in the consumption of products related to FMCG industry. Haldiram can view the growing population in India as a favorable social factor as a higher number of people suggests a greater sales possibility for the company. The company can also gain a higher sales with the growth of the population in regions where it exports.
Changing social trends create social dynamics in which a company operates and they guide the business decisions. For example, the onset of COVID has seen nationwide focus on social distancing. Haldiram has emphasized on the safety of the consumers by investing in a #HaldiramsCare campaign.
Consumers of the company have shown a preference of local snacks and were more interested in purchasing locally produced savory snacks than the western brands available in the market. This inclination towards local products have worked in favor of the company as it has enabled the sales to increase up to $ 1 billion (Financial Express, 2020).
The increasing demand for healthy snacks is another way social trends tend to effect FMCG companies such as Haldiram. The management has recognized the need of the health conscious consumers and explored the options in the domain of related snacks. As a result of this analysis, the company has launched granola bars to keep relevant to this segment of the market (Shashidhar, 2021).
Technological Factors
The technology in production of food items is important in delivery quality products to the consumers. Haldiram is using advanced technology to manage the processes of spice blend making. In addition the manufacturing of different seasonings is also handled by the automated technology which has enabled the company to retain consistence and good quality of flavors.
Furthermore, the packaging processes are also made more efficient through the use of technology in the factories. The company has also benefited from the use of social media platforms to increase the brand awareness and reach its target market. The growth of internet users has allowed the management to expand its operations in the online domain as well.
Legal Factors
The company has to follow employment laws, aligning its labor management practices with the legal framework that defines the company’s policies and practices. Failure to follow the employment laws and mistreatment of the labor can lead to litigation and legal complications for the company.
Quality of the products needs to be maintained to avoid any legal issues. In addition, the copyright violations by other companies needs to be managed to maintain a strong brand image in the market. For instance, counterfeit product by Aahar Foods pushed Haldiram to file a case against the company (Gandhi, 2021).
Environmental Factors
The environmental concerns have pushed many companies in the FMCG sector to adopt eco-friendly practices. Haldiram has also been a part of this move towards sustainable business through its focus on CSR. The company has obtained LEED Platinum Certificate which implies the setting up of green buildings by an organization.
The management has also put efforts in improving the climate through initiatives such as “Seed To Sapling Program” which promotes planting greenery. In addition, Haldiram has indicated eco-friendly behavior through focusing on increased recycling activities along with lowering the amount of water usage in its factories (Haldiram’s India Pvt Ltd, 2023).
Conclusion
Haldiram is operating in a favorable business environment as the company has a significant market demand in India. The political and economic issues have caused temporary disruption in company operations, however, the present increase in sales indicates a positive outlook for the organization.
References
- Financial Express (2020). Haldiram’s IPO soon? With $1 billion sales, India’s homegrown food company has this plan. Retrieved from: https://www.financialexpress.com/industry/haldirams-ipo-soon-with-1-billion-sales-indias-homegrown-food-company-has-this-plan/1862410/
- Gandhi, F. (2021). Aahar Food sued for importing, distributing counterfeit Haldiram products in the US. The Hindu Business Line. Retrieved from: https://www.thehindubusinessline.com/news/national/aahar-food-sued-for-importing-distributingcounterfeit-haldiram-products-in-the-us/article34295976.ece
- Haldiram’s India Pvt Ltd (2023). CSR Activities. Retrieved from: https://www.haldirams.com/csr
- Malviya, S. (2020). Haldiram sales cross $1 billion. The Economic Times. Retrieved from: https://economictimes.indiatimes.com/industry/cons-products/food/haldiram-sales-cross-1-billion/articleshow/73978454.cms
- Shashidhar, A. (2021). Murmura to granola! Haldiram’s sets eyes on India’s health food market. Business Today. Retrieved from: https://www.businesstoday.in/latest/corporate/story/murmura-to-granola-haldiram-sets-eyes-on-india-health-food-market-290829-2021-03-15
- The Times of India (2020). Haldiram grp alleges Rs 40 lakh fraud by manager, online retailer staffer. Retrieved from: https://timesofindia.indiatimes.com/city/nagpur/haldiram-grp-alleges-rs-40-lakh-fraud-by-manager-online-retailer-staffer/articleshow/78436917.cms