The Hindu Business Line : Can Britannia bite back?

"Our reservation with regards to Britannia stems from its inability to take on competition from aggressive players like ITC and Surya Foods." Quarter 1, 2005-06: SSKI Securities.

These are not exactly motivational statements which a leading organisation would like to hear but there is no escaping the fact that biscuit maker Britannia Industries Ltd has to run faster than ever, even to retain its market share.

Britannia currently has a market share of 32 per cent (volume) in the nearly Rs 5,000 crore organised market and in value terms, the share is around 39 per cent. Parle's share in value terms is just 6 per cent less at 33 per cent, Surya Agro (Priya Gold brand) is at 6 per cent and ITC, according to market information, is around 5 per cent.

What is it that Britannia is doing to retain its share and eventually increase it over a period of time? It went back to the basics, just as a cricketer would do when he loses his form. As other players got aggressive, they had caught the giant napping — Britannia witnessed a slide in market share. But today, the scenario is changing, with Britannia slowly but surely clawing back to a position where it has started asserting itself.

"In the last one year, we have had more launches than any other players," says Britannia Managing Director Vinita Bali. It has not just been new launches but a new way of thinking that has put the biscuit major back on track. "We put consumers at the heart of everything we do," says Britannia's General Manager for marketing & innovation, Richa Arora.

Arora explains that Britannia spent considerable time trying to understand consumers better, not merely as consumers of biscuits but as people themselves. "Biscuits are a small part of people's lives.

We needed to understand what drives them. At the end of the day it was really about the share of stomach and not about one biscuit brand against the other," says Arora.

Hence a major exercise went into trying to understand the consumers from a non-biscuit point of view. The role of each of the six power brands was redefined. Brtiannia's portfolio consists of six power brands which contribute about 80 per cent of total sales — Marie, Tiger, Milk Bikis, Good Day, 50-50 and Treat. While Tiger, Good Day and Marie are worth Rs 300 crore, Milk Bikis and 50:50 are worth Rs 200 crore and Treat is worth Rs 100 crore.

Britannia started looking beyond "the physical entity of a biscuit" to explore ways to deliver "the goodness of a biscuit in a more interesting and fun way." It felt it was time the biscuit shed its boring image while retaining its core of "energy and health." "As consumerism rises, people want new things, brands and experiences. Similarly, in biscuits too, people want multiple taste experiences. Consumers are a lot more demanding these days," explains Arora.

For instance, Marie is concentrated in Tamil Nadu, Maharashtra and West Bengal. To tap the non-traditional Marie markets, Britannia came out with Marie Doubles — as light as Marie but with a slight chocolate-orange flavour. "You cannot turn Marie into a cream biscuit. Yet the flavours gave Marie some taste, as opposed to the bland, traditional Marie. And the orange-chocolate dippers were not restricted to tea-time, making it more attractive," adds Arora.

Other innovations were introduced — Tiger Pops (smaller version of the Tiger glucose biscuit) and Pepper Chakkar (the 50-50 biscuit sprinkled with pepper to give it a snack-like flavour). "Pepper Chakkar was a snack but with the touch of do-good of a biscuit."

Vinita Bali, Managing Director, Britannia

Britannia came out with smaller pack formats and different SKUs to target the travelling segment. The company also began looking for newer occasions and opportunities to enlarge its brand image.

Good Day, for instance. "Richness is only one functional facet of Good Day. But there is also a large emotional facet — that of spreading happiness," says Arora. This became the plank on which Good Day began to be advertised. Also with traditional notions of health changing, rich foods are not necessarily looked at as being unhealthy. "Good Day is full of nuts and is rich but it is also good for health. So, we created the Swasth kao, tan man jagao (Eat healthy, energise body and mind) campaign."

It then came out with the `Greetings' gift pack during Diwali last year to make the emotional connect both with individuals and institutions. The response was so good, the company claims, it ran out of products three days before the festival. Britannia hopes to treble the Greetings volumes this year.

Britannia's market share did dip 3-4 years ago. Last year, it stabilised at 32 per cent and today, it is the leader in all biscuit categories except glucose, where Parle has an edge. "All our brands have begun growing in double digits. Our glucose biscuit, Tiger, has also gained a 3 per cent market share since its re-launch last year," says Arora.

According to a report by Nikhil Vora of SSKI Securities, Britannia Industries witnessed a loss in sales momentum for the third consecutive quarter (2005-06) as the company has been feeling the heat of growing competition. But over a period of time it has managed to improve its operating margins on the back of marginal price hikes and from the fiscal benefits from the newly-commissioned Uttaranchal unit.

The report points out that Britannia is, in the coming period, likely to become more defensive in protecting its market share. While intense competition will restrict topline growth, fiscal gains from the Uttaranchal unit will help sustain margins. "Though valuations for Britannia are fairly reasonable, we believe upside is restricted in the face of increased competitive pressures and lack of clarity with regards to the long-term business plan," it says.

But Bali says Britannia will be able to ride the trough much easier now. "We are creating newer capacities as well as creating newer opportunities to grow our business," she explains. According to Arora, Britannia today is the leader in all biscuit categories except glucose, where Parle has an edge. "All our brands have begun growing in double digits," she says.

But some worries remain. For example, shortage of production of wheat has led to to its import resulting in raw material costs going up. "Coupled with huge import duty on fats, the government needs to do a rethink on the tax structure," says Bali. With VAT being higher for biscuits at 12.5 per cent as compared to 4 per cent for a fruit drink, the cumulative taxes on biscuits are as high as 25 per cent. "If you reduce taxes, consumption will surely increase," she insists.

So, what does Britannia think of competition and market shares? "Food is a fickle segment. And biscuits is a highly penetrated category. There is competition from bakeries, regional and national, apart from imported stuff. For example, there are about 107 Marie products in Bengal alone. So, the challenge is not about increasing market share but about growing the brands faster.

The task for Britannia as a leader is to grow by tapping consumer trends, which is a continuous process," elaborates Arora. Its task to get a bigger share of the biscuits pie is cut out.

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