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Vinita Bali on the future of Britannia
Raghuvir Badrinath in Bangalore | August 12, 2008
No competition should be taken with a pinch of salt. But when the competition comes from a salt producer, what do you do? This, though, does not appear to weigh too heavily on the steely resolve of Vinita Bali, managing director, Britannia Industries, as she discusses the storied biscuit firm's future.
Bali's strategy for the 90-year-old company in the years ahead is spelt out over tea and (what else) a spread of salt and pepper Britannia biscuits on a rainy afternoon at Britannia's sprawling head office in Bangalore.
"If consumers feel that a particular salt is the best food brand in the country, you accept that verdict. This is a consumer democracy," Bali shrugs, reacting to the news that Britannia has been ranked second, after Tata Salt, according to the results of a recent national market research carried out on leading Indian brands across categories.
Shrugging away the competition from other quarters, though, isn't going to be as easy. Britannia is lagging hugely in the glucose biscuits segment, with a 19 per cent market share, in comparison with Parle's 62 per cent stranglehold. Bringing up the rear is ITC Foods, which over just the past six-seven years has already cornered 9 per cent market share.
"ITC is doing what any new player in the market does. Imitating and emulating the leader and cash from the cigarette business certainly helps," she says.
Though it lags in the glucose biscuit segment, and ITC Foods is catching on fast, Britannia remains the market leader with a 35 per cent of India's Rs 8,000-crore biscuit market. "Market share is the result of what we have done, but it is not the objective. It's a measure of the impact of our activities, which are directed to secure profitable growth. Moreover, the way we measure market share today is rather conventional, especially when markets are morphing," she says while digging into the biscuits before us with gusto.
Bali, an FMCG veteran, had an eventful stint as worldwide marketing director and division president at Coca-Cola's global headquarters in Atlanta; she has also worked with Cadbury's in England, South Africa, Nigeria and India at various senior marketing positions. She joined Britannia Industries about three years ago after the ouster of CEO Sunil Alagh.
In her first year, Bali clinically went about ensuring that systems and processes were put in place, besides chalking out strategic moves for the company - including the first-ever overseas acquisition in the Middle East. Britannia, owned 25 per cent each by the Wadias and French multinational Danone, has grown at a compound annual growth rate of over 20 per cent in the past three years.
However, Bali's stint has not been without controversies. Danone has made no secret of its plans to establish a direct presence in India's growing consumer space, much to the chagrin of the Wadias. Not to mention the alleged brand infringement brouhaha over Danone selling Britannia's Tiger brand of biscuits in a few overseas markets without seeking prior permission.
"The shareholder issue has no impact on how we run or execute strategy. And, about the Intellectual Property Rights (IPR) controversy, the less said the better. It is a minor issue in the life of a company. We are fighting at least 25 infringements on our Tiger brand across India. This is a case not unique to us but one which every consumer product firm faces. From our point of view, it is our responsibility to protect our IPR, be it in a village in Uttar Pradesh or globally," Bali says.
Bali's not too concerned about charges that biscuit firms such as hers are contributing to the junk food habit instead of focussing on addressing issues of basic nutrition. "Well, the World Bank certainly has (appreciated Britannia's efforts)", she retorts, and and quickly passes me one more plate of her company's latest product - vitamin and iron-enriched, zero trans-fat biscuits. In its study of the nutrition needs of the world, the World Bank has a mention of the product development work Britannia's doing.
"It's better than eating a samosa for a snack," she stresses. "It's a healthy alternative, consistent with our credo of Swasth Khao (eat healthy). We have taken important nutritional steps and are the only biscuit maker in the country without trans-fat. Hopefully, Indian food regulators will bring in a law to this effect soon," she says.
Bali says that to be truly competitive, market leaders and their peers should take more bold steps - upgrading products, offering greater choices and effecting price hikes, especially in the context of input costs escalating at the rate of 25-30 per cent. This will move the industry to the next level, she tells me, as I take another biscuit.
"Increasing the price of a glucose biscuit packet from Rs 3 to Rs 4 is one heck of a big job - a whopping 33 per cent increase. But we did it without our competitors following suit. With the kind of inflation we are seeing in commodity prices, the entire profit pool of the industry was in danger. For any business to run on a sustainable basis and continue to offer the right quality, hard decisions need to be taken when necessitated," she says.
Given what inflation is doing to the economy, and, to corporate bottomlines, the conversation turns to it, though Bali thinks she's got it licked.
"It is challenging and difficult. But one or two challenging years are not a big deal. This too will come to an end. We are not running the business on a month-to-month or quarter-to-quarter basis. Yes, it is hard to actually generate consistently high margins, but this is what leadership is all about. To manage and deliver when things aren't going too smoothly."
Britannia increased its net margins by 700 basis points last year, keeping its tail well above the roaring flames of inflation. But the road ahead will by no means be smooth. To "manage and deliver" will be a compelling mantra for Bali, as she brings more than three decades of management chutzpah to the (tea) table.
This is one smart cookie, that crumbles easily not.
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