The baked foods segment is suddenly becoming the battleground for the big foods companies.

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After Pepsi’s Frito-Lay division launched biscuit brand Aliva to take on ITC’s Bingo, Parle Agro best known for its Frooti mango drink, has entered the market with five variants of wheat munchies called Hippo.

According to industry experts, these kind of products give better margins to the company, in addition to the fact that companies want to capitalise on the growing health consciousness of Indian consumers.

Nadia Chauhan, joint managing director and chief marketing officer, Parle Agro, said, “We entered the foods segment in 2007 with confectionery. With Hippo, our aim is to diversify further by adding snacks to our portfolio. This is a significant step for us as we move closer towards being a complete foods and beverages player.” The Indian branded snacks market is valued at over Rs. 6,500 crore and is growing at an annual rate of 25 per cent.

“The margins are higher in the snacks category. The companies are increasingly looking at driving higher margins by addressing the growing awareness among consumers to consume healthy snacks” said Nilanjan Dey, director, Wishlist Capital Advisors.

Marico, the maker of Parachute, recently launched Saffola Zest a baked snack positioned on the health platform in a couple of flavours. Hippo is a baked snack made of wheat and comes in five flavours, as compared with three flavours for Frito-Lay’s Aliva.

Each variant will be initially available in packs of Rs 5 and Rs 10.

“We are planning to launch Hippo in more stock keeping units to increase penetration and serve different consumption needs” Chauhan said.

The new brand is at present being manufactured at Parle Agro’s plant in Vatwa, Gujarat. The company also plans to make investments to increase its manufacturing capacity, distribution network and market infrastructure. Hippo will be distributed through the company’s existing distribution network for confectionery, which was created keeping in mind the entry into the snacks category.

Frito-Lay India’s launch of Aliva is being seen as a move conforming not only to the PepisCo’s portfolio transformation strategy, but also as an attempt to capitalise on the growing Indian salty snacks and biscuits market.

A growing number of young, urban professionals, working women, nuclear families and changing lifestyles have led to a significant rise in the demand for ready-to-eat snacks, say analysts.