Comments
Britannia Industries, the country’s second largest food company, is looking to strengthen its “adjacencies” portfolio. From cakes, rusk and breads, the adjacencies category has now been extended to include croissants, cream wafers and ‘salty’ snacks. More extensions will be looked at in the coming days.
The cream wafers were launched October 2018 onwards in South India markets and are now being launched nationally while the salty snacks portfolio is still restricted in the southern region. Plans are afoot to take it national soon.
On the other hand, croissant — one of the categories that the company has been focussing on — have had their national roll-out last month onwards. While they were extended to modern trade initially, offerings are now being taken to kirana shops and general trade.
Britannia’s core business continues to be its biscuits portfolio with approximately 70 per cent of its turnover coming from this vertical. This apart, it has a diary vertical that contributes around 5 per cent.
New categories
According to Jayant Kapre, Vice-President & Head Adjacency Businesses, Britannia Industries Ltd, the segment (adjacencies business) is expected to contribute 20 per cent of the company’s turnover in FY20.
Of these, new launches will see a revenue contribution of 3-5 per cent in the first full year of operations (April 2019 — March 2020).
“We are looking to expand the adjacencies portfolio and have added three new categories that include croissants, salty snacks and cream wafers. There are other products that are lined up and we can add another new category sometime soon,” he told BusinessLine .
Ramping up
For Britannia, increasing focus on the non-biscuit, non-diary business means an increase in R&D and additional capex.
The company’s Bengaluru R&D centre, Kapre says, is well geared to work on “accelerating into neighbouring categories”. Moreover, a new team of R&D personnel has been brought in to focus on development of the adjacencies segment.
Britannia has so far put in a ₹20-crore capex to set-up a plant for the salty snacks portfolio at Bengaluru. Capacities can be ramped-up “as required”, Kapre said.
The cream wafers are currently being made through contract manufacturing and the company “may look at expanding capacities” depending on the “response it gets”.
JV for croissants
Incidentally, croissants will be Britannia’s big bet.
The company has entered into a 60:40 JV with Chipita of Greece. Around ₹100 crore has been invested to set up a new line at the Ranjangaon unit near Pune in Maharashtra.
Market sources say the business could be a ₹200-250 crore segment for Britannia in 2-3 years. But, a category market needs to be created first. Incidentally, there are no major national players in the segment.
“Croissant is a new market that we are building on, rather creating. However, we have, in the past, created markets for rusks and cakes,” he pointed out.
In fact, the company has opted for two flavours to flag-off the category while the greater focus will be to build the market.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.