India’s largest biscuit maker Britannia Industries Ltd opened a modern research and development facility in Bidadi, on the outskirts of Bengaluru, on Tuesday.
The new facility is a far cry from the market leader’s first (and modest) R&D (research and development) centre in Mumbai, launched almost half a century back.
Sample this: the Bidadi facility has analytical, sensory and microbiology labs along with the typical pilot plants for its core products such as biscuits, cakes, rusk, breads and dairy. It has a team of seasoned food technologists, scientists, chefs and nutritionists. The 55,000-sq.ft facility and the firm’s first owned factory in Karnataka have been set up at an investment of Rs200 crore.
The move is part of Britannia’s larger attempt to shake off its reputation of being a laggard in innovation, become more cost-efficient and move more manufacturing in-house.
It comes at a time when the company faces tough competition from the likes of Parle, ITC Ltd and Mondelez International Inc.
Under managing director Varun Berry, 54, who joined Britannia less than four years ago and eventually rose to the top, the company has rejigged its management team, cut costs and thrown its might behind five key brands that matter: Good Day, NutriChoice, Tiger, 50:50 and Marie Gold.
The new factory, built adjacent to the R&D facility, has high-speed processing machinery and will make it easier for the company to bring its newer products to markets across India. It currently has 800 employees and is expected to have as many as 1,350 people once it reaches full capacity.
Berry expects the new R&D facility to “act as a springboard” to boost product innovation in newer categories and help Britannia’s growth “into adjacent bakery segments within macro-snacking”.
Berry told Mint in November 2015 that the next big thing on his agenda was to take Britannia, which has an annual revenue of Rs8,500 crore, beyond biscuits and dairy, introduce more “disruptive products”, enter the snack, chocolate and breakfast segments, and ultimately make it “a total foods company” and in general, do it all at a faster-than-usual pace. (bit.ly/1Xc2BBE)
“Our market leadership in bakery today is firm and growing. As a market leader, innovation is the bedrock of our identity. We aim to be a total foods company in five years from now, serving over a billion Indians four times a day,” Berry said on Tuesday.
The consumer goods veteran, who recently revamped Britannia’s innovation team, has in the past stressed on the need for newer state-of-the-art R&D facilities as its older ones did not have the infrastructure “for us to move to the next level”.
Britannia products are currently available across India in over 4 million retail outlets and reach over half of Indian homes, according to the company’s own estimates.
In addition to aiding innovation and faster commercialization, the new R&D facility will help in extending the shelf life of existing products through improved packaging.
The Bidadi plant will eventually have five lines dedicated to biscuit manufacturing and produce as much as 100,000 tons per annum, Berry said.
Before 2005, all of Britannia’s manufacturing was done through contractors.
“The advantage that we get with our (own) plants is that they are technologically superior, they give better efficiencies (and) better economies of scale (as its own facilities tend to be bigger),” Berry said.
Ruling out the possibility of Britannia moving all of its manufacturing in-house, he told Mint he expects the in-house to contract manufacturing ratio to get to a “maximum” of 70:30 in maybe 2 to 3 years.
Motilal Oswal analysts, who visited the Bidadi R&D facility and plant well before official launch, lauded “Berry’s intention to move from the side to the center of the plate” and said in a note that they were “heartened by the progress and potential on the automation and R&D front, which in our view was a relatively weak area earlier.”