Bengaluru: Biscuit maker Britannia Industries Ltd is working on developing a new bakery product category and is close to signing up a partner for the same, managing director Varun Berry said. The company is also developing new products in existing categories such as cakes and rusks.
“Recently in Tamil Nadu, we put up a rusk line and we’re looking at putting up a facility which is going to give us value-added rusks. We are also looking at working on new and indulgent and differentiated formats of both cakes and rusks which is going to be in the next year,” Berry said in an analysts’ call on Tuesday.
Britannia has been selling rusks earlier too, but they were manufactured on a contract basis by other firms and only packed and sold by Britannia.
In November, when Britannia opened its research and development (R&D) facility in Karnataka’s Bidadi, Berry said the company will launch “disruptive products” in biscuits, rusks and ‘evolved cakes’ over the next six months.
Britannia, which owns brands like Good Day and Tiger biscuits, reported a 4.6% rise in net profit to Rs220 crore and a 6.11% rise in revenue to Rs2,355.27 crore in the December quarter on Monday.
Berry said the partnership for a planned new category will be signed in a month or so, which will involve technologies, recipes and experience from its partner’s side and consumer knowledge, distribution and marketing from Britannia’s side. The new product category will not be in the dairy business but closer to the bakery business, Berry added. He said it is a category that ought to resonate well with India’s youth.
The company is also looking for joint ventures for its dairy business, it said, even though its earlier joint ventures in this segment have ended badly. “The first joint venture was with a company which only was only doing fresh dairy. The other part of their portfolio was biscuits which they sold off. The second joint venture was with a company which was in commodities with no real brand. That also wasn’t thought through as well as it should have been,” said Berry.
In 2002, Britannia had formed a joint venture with New Zealand’s Fonterra Dairy called Britannia New Zealand Fonterra Ltd (BNZF) to sell milk and milk products under the Milkman Brand. After recording huge losses in the business, Fonterra exited in 2009 and sold its 49% stake to Britannia.
Also in 2009, Britannia ended a 13-year association with French foods and dairy giant Groupe Danone SA. With the termination of that partnership, Danone was to divest its biscuit business and focus on dairy and pro-biotic products in India.
Berry said the company will now evaluate partnerships after incorporating all its learnings from the past. He also indicated that ghee, where the company doesn’t make any profits, is not the right category for a company like Britannia.
It is also looking at setting up operations in Nepal, a manufacturing hub in Maharashtra, and might increase prices for some products in the next two or three months. Britannia is also planning around Rs350-400 crore of capex in the next 18 months or so. It will end up doing about save about Rs150 crore in cost efficiencies this year and is planning to increase that by at least 40% next year.