Britannia Industries is looking to drive volume-led growth as it looks to target regions, consumer-centric products and distribution. The company also wants to make sure that it is price-competitive in each of the regions.
'Only 20 per cent of families in India buy cheese twice once a year.'
Britannia Industries will take higher grammage cuts instead of increasing prices in a bid to tackle rising inflation, the firm said. The biscuit major took a 10 per cent price hike in financial year 2021-22 (FY22) and resorted to reducing pack sizes as an indirect way of increasing prices. In the previous financial year, the ratio of grammage reduction was 65 per cent, which will be higher in FY23.
The mantra for the biscuit maker is simple: Run a tight ship and make prudent investments in manufacturing and distribution.
'Due to rural stress, volumes continue to remain an issue for the industry, and we are yet to see any revival in demand.'
Vinita Bali to lead global ops, new business growth; COO Berry to head India operations.
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The slowdown had been brewing since 2016 but was intensified further by several disruptions in the past two years including demonetisation.
With this joint venture, the company is looking to take complete control of the entire process - from collection of fresh milk to processing and then to introduction of value-added products such as cheese deserts, cheese rolls and lollypops.
Britannia, which is celebrating its centenary year in 2018, will first look at expanding its dairy and bakery businesses, before turning its attention towards new food categories. The attempt is to become a total foods company, as it eyes a well-rounded presence in the market.
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With a revival in demand and consumption, FMCG companies are looking forward to 2022 with positivity and hopes of sustaining a healthy growth trend across both rural and urban markets while gearing up to cater to the ever-increasing digitally active consumers and tackle the challenge of higher commodity prices. Health and wellness and convenience are going to remain key trends and FMCG companies are strengthening their core brands, driving premiumisation across their portfolios with targeted innovations as consumers are gravitating towards trusted brands looking for quality, purity and hygiene, in continuation of the trend that started since the pandemic last year. FMCG makers are accelerating digitalisation and are investing in building capability in e-commerce and Direct-to-Consumer channels, identifying it as a key vector of their growth as the threat of a possible third wave is still not away.
Besides launching 50 products with a refreshed logo, Britannia to issue bonus debentures of Rs 720 crore
Companies from Nestle and ITC to Hindustan Unilever and Patanjali have pledged to reduce use of unhealthy ingredients by five to 50 per cent
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Experts point to the higher contribution of rural from the north for the growth reported by the region, a point endorsed by companies who've been pushing their presence aggressively there.
However, the government's draft policy on e-commerce companies has forced consumer companies to also adapt to the changes. For Dabur India, e-commerce channel continues to be a key driver of growth in urban India. The contribution of online sales to its entire portfolio is at six per cent compared to 1.5 per cent before the pandemic.
While sales momentum from rural areas may last another three to six months, sales growth in urban areas could stage a comeback by next year's June quarter as people learn to live with the coronavirus and economic activity gradually improves in the cities.
FMCG CEOs indicate that the market should stabilise post the general elections and that some growth should make its way back especially in rural areas
Britannia, which last week announced a management rejig putting COO Varun Berry in charge of Indian operations, has always believed in quickly identifying new trends in the food and beverage segment.
While green shoots are beginning to emerge, with June sales rebounding to pre-Covid levels thanks to a rural revival, most FMCG chief executives have voiced concerns about localised lockdowns that began in July and have extended into August in some states.
In the past month, wheat prices have increased 6.3% as production is expected to be 1.5% lower, in terms of crop acreage, than the earlier estimate
While companies have not launched too many products in rural areas of late, easy financing has helped push up demand.
Domestic food companies, too, continue to bet on packaged foods.
The firm, which traces its origin back to 1862 in a humble Kolkata bakery and its subsequent listing on the bourses in 1918, says that it now wants to grow "substantially" and not just rest on its laurels.
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