Britannia to use its strength against local competition, not to go into a price war: MD

Bengaluru, Sep 14 (PTI) With competition from regional players intensifying, Britannia Industries is taking a localised approach of looking "at India not just as one country but as many countries within" to stay ahead of rivals and scale up the strategy going forward, according to Vice Chairman & Managing Director Varun Berry.

Britannia, maker of Good Day, Marie Gold, and Tiger biscuits, would not go for a price war; it would leverage its brand strength, execution, and network of 70 factories and a vast distribution spread across the country, making its product available down to the lowest population strata, he said.

About margins, Berry said it has gone up through cost optimisation initiatives. Britannia has been doing cost optimisation of almost 2 per cent of revenue saving for almost last 13 years.

"And as we go forward, we are looking at seeing if we can continue with that 2 per cent, and we certainly have a line of sight to do that," said Berry.

Moreover, commodity inflation on input materials is also at a "stable state now". It's expected to be "within limits" of 3 to 5 per cent, which "we can manage that very well", Berry added.

About the competition from local players, Berry said that the majority of the new players do not survive in the long run as their businesses become "unviable" due to lower profitability; however, the company is looking at each one of these regional players, competing with its localised approach.

"We obviously are looking at each one of these regional players. Our objective is to make sure that we start to look at India not just as one country but as many countries within. One India has many Indias in it, and that is how we want to see it, and that is what is helping us take the right corrective actions from a standpoint of how to compete with some of these players," Berry told PTI.

Britannia, through its scale and cost optimisation initiatives, has enhanced the profitability of this industry to a large extent, making it attractive for new players.

Earlier in August, in the latest earnings call, Berry had said that with a 'war chest' ready, it is ready to "fight many battles in smaller territories" against the regional players.

"We have got brands which have been established as early in the last century. We have had these brands forever and are deeply entrenched with the consumers. That is a big advantage that we have, along with localised factories and localised teams. So we are leveraging those to make sure that we build our business in each one of these states," he said.

About Britannia's growth in adjacent categories, Berry said it's a mixed bag.

"We certainly are doing well in certain adjacent categories. So to name a few, we are doing very well in Rusk. We are doing extremely well in wafers, croissants, and milk shakes. There are a few where we have to grow a little faster than we are growing," he added.

When asked about the launch of any product, Berry said Britannia is in the phase of consolidation, at least for one year.

"We will not get into new categories. We will nurture the categories that we are already in. And thereafter, we have got a lot of categories in the pipeline. We will start to look at those categories as we sort of stabilise some of the new categories that we have launched," he said.

Over Britannia's milk business, Berry said it has "not done as well as we had imagined." "But still, we have taken the turnover from about Rs 400 crore to Rs 700 crore over the last four, five years," he said, adding, "We have got a very big aspiration on dairy and we will fulfil that." About capex and investments, Berry said this year, it is not going to be as large as it has been in the last four to five years, because it has already made investments in a lot of plants.

"We have got some headspace, and we want to make sure that we run that headspace out completely before we make the next wave of investments," he said. PTI KRH HVA