Of biscuits, bread and cakes

on the company's future plans.

For the past 90-years, Britannia has been feeding households with a variety of biscuits. What can we expect next?

We are constantly looking at a variety of opportunities in the marketplace. The agenda is move away from the traditional concept of looking at biscuits as a grocery item, because people's habits and needs are changing. We would rather segment the opportunity rather than the market.

Across our product range we are offering a different consumption experience and making the product more interesting, at the same time trying to realise better prices. How we need to engineer new growth opportunities by offering products which morph into various consumption occasions is the challenge we are working on.

Which categories will Britannia focus on ?

We are clear that that we don't want to start off with a product, but assess where the opportunity lies. Products then become a delivery mechanism, they can be a drink or a powder or a solid. We have domain knowledge in the bakery segment and we will convert that into opportunities and products.

For example, our cakes and rusks are growing at 40 per cent and we are trying to see how to cope with this demand. Today's mother has a challenge to make her childrens' lunch-boxes interesting and we're trying to be innovative with the packaging of our existing brands.

What is Britannia doing to counter the competition?

Today, there are two national players and ITC is aspiring to become a third contender. Every player has its own strengths and weaknesss and we need to be cognisant of these. ITC's strengths lie in good distribution and deep pockets, but that doesn't mean that we will have a strategy to counter ITC. We will focus not on competition, but on consumers. If we starts to focus more on the competition, we need to build strategies to counter around 350 regional players.

How are you attempting to stem the erosion in operating margins?

The problem with our industry is that we have not innovated at all for the past three to four years. I actually think the problems have less to do with the price of wheat going up and more to do with irrational competition at this point of time. As a consumer of either atta or rice, we are all paying a lot more today than a year ago.

But you are paying the same price for a packet of biscuits as you were paying three years ago?Despite an increase in cost of input materials, due to scale efficiencies and technology applications, we have managed to take enough cost out of the system.

As an industry, we are faced with a choice. And we aren't going to be irrational competitors. Frankly, no one gains from such practices and it's the industry's profits that get eroded. I do not believe that a consumer will stop buying biscuits if the price goes up by 50 paise or one rupee. We have already taken price increases, which will definitely improve our operating margins. In addition to this, over the past two years, we have taken out over Rs 100 crore out of supply chain using technology to create greater efficiency in the system.

You recently acquired Daily Bread, a premium bread and bakery boutique firm. How does this fit into your strategy of being a mass market player?

Britannia has identified this niche of offering premium products to a varied customer base. As the economy is booming there are people who are willing to pay Rs 50 for a loaf of bread and Daily Bread fits into that category of 'Not all breads are made equal'.

Does that mean we will exit the Rs 15 a loaf bread market? Not at all. We are about every day food for everybody. The middle class Indian is an important market segment for companies like us. The biggest challenge is to explore ideas on how to add more experience and excitement in this market.