One of the big moats of our business has been our ability to drive cost efficiencies: Varun Berry

Varun Berry, Executive vice chairman and managing director, Britannia Industries Image: Nishant Ratnakar
 
Our performance during the lockdown was not serendipity. It came on the back of a well-crafted strategy that gave us room to navigate the challenges of the pandemic. We stayed true to the core principles of our strategy, and they have rewarded us with enduring, sustained growth.

Britannia grew during the pandemic. Our margins are at their healthiest today, at 16 percent. And we are well on our way to achieving our vision of becoming a global total foods company. The principles of our growth strategy are focussed on distribution and marketing, innovation, growing adjacencies, cost efficiency and embedding sustainability in every aspect of business.

Well before the pandemic, we had charted a course to improve rural distribution. Through the lockdown, we stayed true to that plan and increased our rural distributor base by more than 20 percent—from 19,300 in March 2020 to 23,500 in March 2021. Our direct reach increased from 19.7 lakh to 23.7 lakh outlets in that period. Over the past seven years, our rural distribution has tripled and today, we reach 28,000 distributors and 26.8 lakh retail outlets.

We have also made systematic investments in production capacity to give heft to distribution. We are commissioning two state-of-the-art greenfield biscuit factories in Uttar Pradesh and Tamil Nadu and a brownfield expansion of our facilities in Odisha. We have added new product lines, spruced up our marketing to reflect the voice of the customer and are making investments in digital infrastructure to enhance customer engagement. Our growing distribution strength and various other investments have resulted in our market share increasing steadily. As of March, our rural market share gain is 1.4 times of what we have for all of India.  

The second principle we have been focusing on is innovation. We anticipated and later noted the emergence of two distinct trends in consumer preferences. One is the desire for healthier-yet-tasty snacks at the top of the consumer pyramid.

Also read: Storyboard18 - Must keep an eye on young consumers; they are going to change the world: Britannia MD Varun Berry

The second is the demand for affordable indulgences at the middle and bottom of the pyramid. With these insights, in the last two years, we have introduced several new products, including biscuits like NutriChoice Herbs, NutriChoice Seeds, and Biscafe, a coffee-flavoured cracker. Recently, we launched a millet bread, and Winkin Cow milkshake. Our Treat Croissant brand crossed `100 crore within a year of its national launch last year.

Our aim is to cover the entire bakery segment in our portfolio, and this is where focus on adjacencies becomes important. We are present in baked snacks such as rusks, cakes and croissants, and are exploring some big snacking categories. Eventually, we want to be present in every snacking category possible.

Dairy is another category we are focusing on. Our fully backward-integrated dairy factory became operational in 2022. In November 2022, we established a joint venture with France’s Bel SA to develop, manufacture and market cheese products in India. Today, our total milk collection from dairy farms is 200,000 litres per day, and we are partnering with nearly 3,000 farmers.

One of the big moats of our business has been our ability to drive cost efficiencies. We have been relentless in our efforts to save costs, since we largely operate in a low-margin category. Year-on-year, we have systematically cut our fixed and variable costs, and have saved 2 percent annually on a total revenue basis. We are reducing the distance to market between products and consumers as well as reducing the distance travelled by supplies to factories. The journey on reverse auctions for our procurement is moving quite well, along with our supply chain replenishment and sales productivities.

Our last area of strategic focus is sustainability. As an industry leader with a storied legacy, we are deeply conscious of our responsibility to our consumers. Today, all our products are 100 percent trans-fat free. More than 50 percent of our portfolio is fortified with essential micronutrients. We have aggressive targets for reducing the sugar and sodium content in our products. Our renewable energy usage is up to 36 percent in FY23 compared to 30 percent in the previous year. We became a plastic waste-neutral company in FY23.

I believe that Britannia is operating on a strong wicket. With the resurgence of domestic demand, favourable policy environment and the continuing love of our consumers, Britannia is poised for greater glory.