In September 2012, the former chief executive officer of PepsiCo Foods India, Varun Berry flew down from Delhi to Mumbai to meet Nusli Wadia. Berry was running a high-grade fever of 104 degrees at the time. He contemplated calling off the meeting, but decided against it. It’s not every day that the chairman of the Wadia Group, which has majority control of fast moving consumer goods (FMCG) company Britannia Industries, invites you to Mumbai.
In two years, the company has also expanded the reach of its direct distribution network from 7 lakh to over 10 lakh retailers. In rural India, it has extended the footprint of its sub-stockists by 40 percent. It has doubled its frontline sales force in cities and semi-urban areas, which has resulted in an incremental sales growth of six percent by the end of FY15. Through best practices, it has shaved off Rs 100 crore from its distribution costs and reduced its power costs by 10-12 percent.
In his 30-year career, Berry says he hasn’t seen a company in the FMCG sector grow its revenue, profit and market share simultaneously for two consecutive financial years.
He is, however, reluctant to talk about market share numbers, and instead draws attention to a May 2015 news report in The Times of India, which suggested that Britannia, with a 28 percent market share, had overtaken Parle with a 0.5 percentage point lead (in value terms) in April. But the same report mentioned that on a yearly basis, Parle continued to be the market leader, in terms of volume and value. The gap that Britannia is now trying to bridge between itself and Parle for market dominance is about three percentage points, a figure Wadia mentioned in the company’s annual general meeting last year.
Industry watchers and analysts have been taking note of Britannia’s revival. In a recent report, HSBC Securities and Capital Market noted that Britannia “was in the second phase of value creation, which should accompany volume growth acceleration, market share gains led by new product launches and increasing depth and breadth of distribution”. The report notes that the changes wrought have helped the biscuit maker double its margins and have resulted in a “substantial jump in return on capital”.
While some analysts argue that Britannia could have done all this and more years ago, others like Bijoor say that it has timed its revival well. “The context today demands aggression. I don’t believe it has come too late.It has come on time,” says Bijoor.
One of the members of the team is Ali Harris Shere, who joined Britannia as a management trainee in 1998, and served the company for 16 years in various roles in sales and marketing. In April 2014, he quit (he was senior marketing manager at the time) to join Vodafone India. But three months later, he was back at Britannia as marketing head at Berry’s behest. “One does not expect somebody to trust you and give you a job with full responsibility, ownership, accountability and freedom,” says 39-year-old Shere, who is excited about re-energising Britannia’s brand, and wants to strengthen its association with cricket and Bollywood.
Britannia was the title sponsor for a leading film awards function in 2015 and, through its biscuit brands Good Day and 50 50, it has associated itself with the Indian Premier League. In February and March this year, the company ran a promotional offer on 50 50, giving away an iPhone 6 every day. “In the past, we did many activities, but on a smaller scale. Now, we are doing fewer activities, but we are doing them big. Because of this, the average ticket size of our campaigns has doubled,” says Shere.
Shere is an old hand familiar with the nuts and bolts of Britannia, unlike Hemant Rupani, vice president-sales, who joined last year. The sales department, according to Berry, needed “a very aggressive person” because it had become too “transactional” in the way it functioned. “When I started to meet distributors in the market, I felt that we were just pushing sales to them not worrying about their RoI [Return on Investment]; not worrying about what they did with the product or how they sold it and whether their execution was good,” says Berry. That had to change. He took his time, and finally, in May 2014, handpicked Rupani, who was previously national distribution head at Vodafone India.
The first thing Rupani did was to take stock of the company’s policies towards incentive earnings and its rewards and recognition programmes, two critical elements in motivating a sales force. Rupani installed an incentive platform. “If any manager wanted to be evaluated as a good performer, a bare minimum 70 percent of his team should be earning 70 percent incentives, at the very least. Otherwise, they have no right to claim that they have performed,” he says. It is an aggressive policy, but he wears it as a badge of honour, and tells Forbes India that team morale has risen.
Even as the sales force was getting its mojo back, Berry started strengthening the R&D arm. Britannia didn’t have much to show for in the last decade, in terms of ‘big-bang’ innovation. According to Shere, in the last 10 years, it has had only two successful new product launches: Tiger Krunch Choco Chip (cookies) and NutriChoice Essentials (oat and ragi cookies).
About six months ago, the Britannia board approved a Rs 55-crore investment into a new R&D centre in Bengaluru, which is expected to be up and running by March 2016.
Berry wants to see new product innovations account for 6-7 percent of the company’s revenue, every year. In August 2014, Berry hired Sudhir Nema, who at the time was heading operational excellence and capability building in R&D for PepsiCo in Bangkok, to take up this task. “If you don’t have delightful products, then you don’t have any right to go to consumers and say please spend Rs 5 and pick me up. That ‘pick me up’ comes from R&D,” says 44-year-old Nema, vice president - R&D & Quality.
He’s not waiting for the new centre to open. Britannia has launched three innovative products at the premium end of the market over the last nine months: Good Day Choco Chunkies, NutriChoice Heavens and Pure Magic Chocolush. The R&D team is already thinking about innovations in adjacent food categories. The ready-to-eat segment is another avenue for Britannia.
But Berry is not ready to reveal his hand so early in the game. “We are working on a strategy for the next billion,” is all he’s willing to say. What’s clear is his determination to stay on top. Britannia cannot lose its lead. Not under Berry’s watch.
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(This story appears in the 24 July, 2015 issue of Forbes India. To visit our Archives, click here.)
FMCGs - Edible business always makes great strides. And Britty is known for quality products and has the brand name too.on Mar 29, 2016
It is great achievement by the team Britannia under Mr Varun Berry's leading. i am sure Britannia provides more healthy And Tasty biscuits.on Jul 24, 2015
Great sir, keep it up always in your leadership.......cheers..........on Jul 24, 2015
Outstanding stuff. A clear example of -unrelenting focus on the basics, - building a competent team, -empowerment and passion to Win the the market place. It\'s no rocket science , yet most miss it. Kudos to Team Britannia.on Jul 22, 2015
am agreeing with Tanmaya comments. Britannia turn over is comparatively high with other competitors. This can be achieved only with right focus and approach. kudos to Varun Berry and the team!!on Jul 26, 2015