Britannia: Turns to the rural market for a bigger bite

Britannia Industries is looking at increasing the share of its rural sales to turnover to up to 50 per cent in next five years.

Currently, rural sales is a “weaker segment” when compared to urban. It accounts for 30 per cent of its total turnover. The focus on rural is a recent initiative by the company, sources say.

Historically, value segment (which dominate rural sales) have been a lower contributor towards the company’s top-line.

Value segment accounts for 45 per cent (or Rs 11250 crore) of the Rs 25,000 crore biscuit market in India. Britannia has a 9 per cent market share here.

According to Varun Berry, Managing Director, Britannia, the company is looking to ramp up its distributor network; primarily, in Hindi-belt. The company has currently been able to ramp up its distributor network to 8500 (as on June 30).

This retail distribution model comes in stark contrast to some of its competitors who prefer the wholesale route in rural markets.

As of now the company has been able to make a mark in villages which have a population of over 10,000; and a little presence in villages with a population of over 5000.

“There is so much of potential. We have not got into the smallest of villages. We would like to get to all the villages... Ideally rural to urban sales should be 50:50 in the next 5 years,” he said during an interview to BusinessLine.

Britannia has a strong presence in South and East markets; and is “gaining muscle” in some places like Maharashtra in the West.

Rural Offerings

The company’s strategy has mostly been to enter the rural markets through its value products under the “Tiger” brand. Once the distribution is established, Britannia looks to push its “non value products” – mid–tier and premium – offerings through the same channels.

Similarly, another strategy has been to opt for “low sized” or pocket sized offerings of smaller value. The strategy has worked well with Rs 5 packs of ‘Good Day’ – a predominantly urban brand – witnessing good traction.

“About 3.5 years back we decided to get back (in the rural markets) with a Rs 5 value packs. And we followed it with the best execution. We now have smaller value packs for ‘50:50’; Marie; and the value segment,” he said adding that “there will be horses for courses”.

Exploring Rs 10 packs can also be explored in some cases where Rs 5 offerings are unlikely to work.

Premiumisation and Wellness Offerings

For Berry, the urban focus will come through the “wellness” segments. Cream-based offerings (which it called Delight) too is another area for the company.

Today the mid-tier to premium offerings (which include the wellness segment) account for 85 per cent off Britannia’s portfolio.

A “sugar free” Marie or offerings through “Nutrichoice Essentials” are some examples.

The company is also exploring the traditional snacking category – with an offering (biscuit) that tastes like “mathri” (a flaky biscuit popular in North West India). The offerings have been launched under the '50:50' brand.

Patanjali

On Baba Ramdev’s “Patanjali”, Berry said threat comes not primarily in biscuits, but mostly in traditional and ayurveda-based offerings. But, Britannia isnt letting its guard down.

“I think Patanajli is a threat to any company whichever category they come into. Their profit ambitions are low. However, their right to succeed exist in traditional categories like honey, ayurveda..... Biscuit is less of a threat. We haven’t seen them become so big. But we are keeping a watch,” he said.

Britannia, sources say, has being going to the market to have a look at what Patanjali’s offerings are.

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