Whisking for baked goodies and more

At the supermarket to buy biscuits, and the shelves are packed with a variety of offerings in different designs, sizes, colours, formats and packs. Beating at the very heart of this Indian biscuit industry boom is Britannia, a brand beyond a household name for quick treats, which now envisions emerging as a total food company.

The Wadia Group-owned Rs 9,228-crore Britannia Industries plans to aggressively expand its product offerings by foraying into the breakfast products segment and expand its dairy business, among others. It aims to  launch around 50 new products under its existing, as well as new categories, by the end of the next fiscal.

The dairy products market is currently witnessing a heated competition with the entry of Patanjali, Coca-Cola and ITC, among others, in the past one year. Nestle, Amul, Mother Dairy and Danone are already significant players in India's dairy industry mix.

Recently, Britannia Industries Managing Director Varun Berry revealed, "Almost 50 new products would be there by the end of the next financial year," adding that the aim is to diversify in the bakery and non-bakery segments, while also focusing on snacks.

As part of this growth strategy, the company will launch dairy products by October-November, and croissants by March 2020, through its JV with Greek cakes and confectionery giant Chipita. Britannia would put up a manufacturing line with Chipita for the croissants, which is expected to be up by the third quarter of the coming fiscal.

The company aims to strengthen its presence in several key categories within bakery including biscuits, cakes, rusks and bread to achieve accelerated growth.
Britannia, which has held a proud place in almost every Indian kitchen cabinet for decades now, broke some innovative ground recently.

More bite in every biscuit

Ali Harris Shere, Vice President for Marketing at Britannia, tells DH that the company's journey has been eventful and action-packed over the last two years, as it has worked towards transformation.

"We are busy since the last two to three years. Lots of things have been happening. Of course, we're focusing on innovation, and we have lots of new products coming. We did our homework, and created 'lighthouses' for each of our brands – defining the consumer, the insight, the purpose of our brand, and the brand idea – so that's a large piece of our work," he says.

The company, which introduced the Indian masses to an array of legendary products such as Good Day, Bourbon, Marie Gold, Little Hearts and Pure Magic, has been looking at novel ways to not only refresh and renovate its existing biscuit offerings, but also unveil highly ingenious products that would unlock untapped segments.

As part of its strategy, Britannia reviewed its brands, looked for gaps, new target groups to connect with, and spaces that had to be catered to.

"Biscuits see low level of differentiation as a category. More or less, biscuits look similar. So it was to be seen how we could redo, refresh, and renovate our products and keep building their superiority. Product; branding in terms of thought, advertising and consumer; and innovations are three themes that we have taken forward in the last couple of years that have given us dividends," Shere says.

In terms of innovations in the biscuit category, the last disruption happened over seven years ago in the industry, by and large as extensions of existing product ranges.

Studying market trends showed Britannia that there were certain dormant, yet potentially promising customer bases that if tapped, would race its growth further.

And one of those bases was youth. Biscuits have not been an exciting product category among youngsters, having largely appealed to children, housewives,and grown-up adults.

"We thought that we needed a product that would address this particular untapped segment. And, Deuce was born," he says.

"Deuce is one of our disruptive innovations. Here, German technology infuses a biscuit with slab of chocolate, culminating in a distinctive bite which is crunchy, yet melt in the mouth. The biscuits come stamped with motifs of cars, musical instruments, and social media as appealing to youth passions. While this is meant to drive innovations for us, it will help us plug a gap as chocolates are popular among youngsters," he informs, adding that the company has also embarked on a digital journey to woo young audiences.

As Britannia wants to become a total food company, it has identified few adjacencies with other categories, like chocolate in this case. There is an interface with chocolate, helping the company get a toehold in the latter space – in terms of R&D, processes, logistics and so on, leading to more bridge products.

What the market desires

Nielsen values the Indian organised biscuit market at Rs 30,000 crore. This unique market, however, is largely value-driven, and yet there is scope to premiumise. Britannia has managed to accomplish that by bridging two distinct product areas. The average price for biscuits per kg in the country is Rs 100-110. Britannia has launched Deuce at Rs 500 a kg, while average price for chocolate is Rs 800 a kg. Therefore, from a chocolate standpoint, the company is offering consumers value, while a biscuit consumer is significantly being upgraded to a more premium product.

Shere says, "Biscuit is a value-consumption product in India, for which pricing is important. Look-and-feel and packaging come at a cost, which needs to be balanced with visual differentiation. Indians are value-seeking consumers, who want differentiation, but only when it really justifies the price being charged."
Accordingly, the company has been upgrading consumers to more premium brands and experiences. India's second largest selling biscuit brand Good Day, for instance, never had a value pack. Today, it is sold even in packs priced as low as Rs 5, however, with lesser quantity. This offering enjoys a large following among the value-conscious.

Shift in consumption

It must be noted that the competitor's Parle-G, with its familiar yellow-striped pack showing the 'Parle Girl', and available as very reasonably priced offerings, holds 20% share of the biscuit market in value terms, and thus, has been leading for decades.

While 60% of the biscuit industry was value-driven earlier, it has dropped to 45% today. For Britannia, 75% of its business comes from core-to-premium segments, with only 25% from value, mainly driven by the Tiger brand. While the company is stronger in urban areas, its rate of growth has been higher in rural areas in the last five years, through greater emphasis on distribution. With a new R&D centre in Bengaluru, Britannia also boasts of 14 own factories, besides contract manufacturing arrangements. It has an annual capacity of over 10 lakh tonnes, with presence in other spaces – cakes, rusks, bread, cheeses, and so on, while biscuits contribute 75% of its overall business.

Britannia Industries reported 19.60% increase in its consolidated net profit at
Rs 263.65 crore for the third quarter ended December 2017, against Rs 220.44 crore in the same period, a year ago.

The biscuit company's stock price has grown 53.76% in the last one year to touch Rs 4,961.90 recently, and consolidated revenue from operations grew 4.4% to Rs 9,228 crore in FY17, and profits are up 9.7% year-on-year at Rs 884.47 crore as on March 2017. Analysts are bullish about the company.

Aggressive investment

The company has laid an investment road map of Rs 1,500 crore over the next three years, with plans to open new facilities at Ranjangaon (Maharashtra), Mundra (Gujarat) and Guwahati (Assam).

The global research firm Credit Suisse believes that the company could gain market share gradually from the current 32% to high-thirties. It also believes that the company as a brand has a 'right to win' in many food categories outside of biscuits.

Meanwhile, Britannia is pretty clear that it would seriously tap the dairy sector. It's all about serving cookies and milk!

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