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

In an interview with Storyboard18, Varun Berry, managing director, Britannia Industries Limited, sheds light on the food major’s sustainability journey and strategy that’s based on four pillars—growth (economic), resources (environment), people (social), and governance; the challenges to putting it in action, and the communication conundrum when it comes to purpose-driven advertising.

We've got a clear framework that we look at for sustainability. It covers growth, governance, resources, and people. Sustainability has been important for us for a long time, but we haven't put it in a framework. We haven't published a report on sustainability till now. But we've been working hard for many years on these parameters.

Sustainability is a driver of competitive advantage for most companies. It opens up new areas of growth and improves operational efficiency and it strengthens the internal and external relationships of our organisation and our people. However, the problem with sustainability is that you want to get it well set within the organisation, otherwise it becomes a bit of a challenge.

We have to ensure that there is coherence in what we are going to do as far as sustainability is concerned. So there have to be long term metrics that are defined versus your short term KPIs (key performance indices) that you work on, in any case. The balance between the long and the short is certainly one challenge.

The other is that it has to be culturally well ingrained into the organisation so that everyone wants to perform on the sustainability indices. The third challenge is that it's a dynamic area because there are things that are changing including the requirements from the government. So we have to keep on top of the latest on sustainability. What are the technologies? What are the regulations? And make sure that we continue to focus on those and get as far as possible within the organisation.

A key area that got accelerated during the pandemic is the focus that we have on community and nutrition. Child malnutrition is a chronic problem in India. One in every three children is affected due to malnutrition. 52 percent of pregnant women are anaemic. This crisis has created income issues that have exacerbated the problem. We accelerated that agenda during this time and we tried to have as many beneficiaries out of that. Today, we have almost 100,000 beneficiaries across 1,400 villages in the country.

It's not just about working towards the betterment of the world, but in the long term sustainability initiatives will give you benefits on the bottom line as well. Our renewable energy agenda has given us great benefits on the bottom line as well. We've got some cost efficiencies for our businesses. But it takes time. It means investments to be made and thereafter it takes time for them to be stabilised. So that's why the balance between the long term and the short term is important.

We have a challenge on that front. We are in a part of food which is the cheapest form of food. If you look at Maslow's hierarchy of needs, we are at the lowest level. We are at the bhook-pyaas level.

Biscuits are less than Rs 100 a kilo. Glucose biscuits are as low as Rs 80 a kilo. So, we need to balance between cost, taste, and quality because it's not a superficial, just on the edges kind of a category either, right? People consume biscuits throughout the day. People across income levels consume biscuits. So that balance is one part which we have to protect. We cannot take the prices up because then it doesn't meet our objectives of getting consumers to have nutrition at the lowest price possible. But at the same time, we have to make sure that we get the right efficiencies, we get the right sustainability happening for our products without challenging the structural safety of our packaging, and so on. So, that's one challenge for us.

We haven't been front and centre of communicating that we are organic, gluten-free, vegan, and so on. We haven't been able to do that. But it's a matter of time, as things change. We will have a broad base at the base of the pyramid which will be very large. But we'll also build products that are at the top of the pyramid—that is made from whatever the top end of consumers want—and that's when our communication will change.

Now, the fact that we do renewable energy and are taking out plastics, we don't think that we need to communicate this. We’re doing it because it's right for the world and because that's somewhere that we had gone wrong and we are correcting that as we move forward.

But I'm seeing a lot of brands talking about what is necessary, what consumers need to do and what they do for the consumers in terms of sustainability. We are underplaying that at this point.

As far as whatever we do, we don't want to tom-tom it at this point. It's worth doing. It's not worth advertising.

The good news is that millennials and Gen Z consumers are highly focused on sustainability. As Gen Z consumers become a larger part of the population, things will change. Mass awareness about sustainability is increasing. It's not just investors, it's even customers, employees and job seekers who are subjecting companies to a lens of sustainability.

Research indicates that 72 percent of Indian consumers in the age group of 25 to 35 prefer buying sustainably produced products and 77 percent of millennials prefer to work in companies with a sustainability focus. At Britannia, we have this group of young managers we created for innovation. We wanted to look at what these young managers would like as products in the future. So we created this group and we keep getting similar feedback from them. They like what they see in Britannia, and because they are insiders they know exactly what we are doing. That helps them stay with us.

We must keep an eye on these young consumers because they are going to change the world.

I’m cautiously optimistic about the growth prospects in 2022. Economic activity is on a recovery path. The GDP growth of 8.4 percent in July-September, while it's on a low base, is a robust number. Consumption is improving for FMCG, especially food companies. The challenge is inflationary trends.

The inflationary winds have been strong. We've seen inflation in every raw material that we use and more so in oil. We do need to mitigate this as we go forward, otherwise, while the revenue growth will happen, it will certainly impact volume growths.

We've seen decent growth in the last two years as well. We are continuing to focus on improving our penetration down the pop strata and we are looking at expansion plans and new capacities.

I do think that the country has done what was necessary and the vaccination drive has been going well. However, new strains are looming large. Hopefully, that will also be in the past. So let's hope for the best.

The interview also aired on CNBC-TV18. Read and watch Storyboard18 on Moneycontrol, CNBC-TV18, CNBCTV18.com and Forbes India.