 "Varun Berry")
Encouraged by the strong results for the March quarter and the annual financial results for 2014-15, Britannia Industries has an aggressive plan to expand its product offerings and sales network. Varun Berry, managing director, Britannia Industries, talks to Mahesh Kulkarni. Excerpts:
For the second quarter in a row, Britannia has managed revenue in excess of Rs 2,000 crore. How?
The fourth quarter has been pretty good, as our consolidated revenue grew 14.3 per cent (over a year before) to Rs 2,032 crore, mainly due to the continued growth momentum. The operating margin expanded 200 basis points on an equalised basis for the year, despite no pick-up in the market. We have grown in double digits, even as the market remained in single digits.
The agenda we had set for ourselves has resulted in better numbers. This quarter, we could reach out to a million outlets directly as compared to 730,000 previously, and a total of 3.5 million outlets. Overall, our distribution agenda moved in the right direction. Our brands are stronger and we had a lot of action in the quarter. We were visible in the Filmfare awards and cricket tournaments, and had some brand launches. This was supported very ably by our supply chain. The market is still in single digit growth, while we have grown in double digits. All the activities we have run in sales and marketing helped us gain some traction and some share.
Which of your brands performed well in the fourth quarter?
It's the same story. Premium cookies continued to do well. Marie has done well. New launches that have come in, along with Nutrichoice and Good Day Chunkies have all done well in the premium portfolio. The big five continue to do well and our power brands continued to do well. However, the value portfolio was not so good.
Any strategy to improve sales of value brands?
We are not going to do much hand-holding. There is a lot of discount sales and promotion and we are cutting back on the discounts. We are certainly going to look at improving our value portfolio and on how to distribute deeper into rural areas and outlets not available currently. That, hopefully, will give us traction in the long run.
How many more outlets are you targeting??
We are going to look at a 25 per cent rise in direct sales channels in FY16, mainly in rural markets.
Strategy for the first quarter of this financial year?
I can’t disclose plans now. The overall agenda is clear. We want to strengthen our brands and distribution and make these ever-efficient from an operation standpoint. We want to make sure we get cost-savings and have the right people with the right passion for sales. In the long term, our aim is to become a total foods company.
What is the current distribution mix between rural and urban sales outlets?
Currently, 60 per cent of our sales come from urban areas and 40 per cent from rural areas. In terms of outlets, it is the reverse — 60 per cent in rural and 40 per cent in urban areas. The distribution reach in rural areas is short. We want to move forward aggressively in rural areas, while our agenda for urban ones also continues.
Any specific product campaign or strategy for rural areas?
No campaign, as such. In urban areas, the product rationalisation on for about two years is giving us good dividends. We are going to put more SKUs (stock keeping units) in our outlets, so that we get depth in our distribution. In rural areas, we are looking at a hub and spoke model, so that we reach more and more villages and outlets. Expand to smaller villages and outlets and reach more consumers in those areas. Frankly I have not gone to any outlet where people say they don’t want to buy Britannia products. We are trying to enhance our distribution, which gets us into more villages and more outlets.
How was the consumer response for Nutrichoice Heavens and Good Day Chunkies in the quarter?
Very good. These are our super-premium products in the health and indulgence range. The agenda is doing very well. Recently, we launched Pure Magic in the super premium category, the same as Chunkies and Dark Fantasy.
When are you launching new brands?
We are not going to proliferate on brands. Anything we do will be in existing brands. We will have more products under the existing brands -- more formats of biscuits, cakes, different types of rusk. There will be no new brand launch, as such, in the first quarter (of FY16).
You used the e-commerce platform to launch Good Day Chunkies. What will be your strategy, going forward?
This will continue. We still sell Chunkies on Amazon and e-commerce sites. We do see that it is growing. But, it is not going to be a large part of our portfolio because it is very difficult to sell groceries online. We expect less than one per cent of our total sales to come from the -commerce route.
Britannia recently announced setting up of an Innovation Centre. When will it start operations?
It will be ready for operations by December. It will be an innovation centre for all our product categories -- all the bakery products, biscuits, cake, rusk, bread and dairy products. We are also looking at setting up a facility for others like snacks and foods. It is going to have a factory next to it, where we will have pilot production. We are investing Rs 55-60 crore for this project.
Your plans for expanding the bread business?
Breads is perhaps a very small business and not high margin. We don’t have a plan to become a pan-India bread company; it is not our focus area. We sell in Bengaluru. It is not going to be an investment-led strategy.
