Britannia eyes boost in rural contribution to overall revenue to 30-35% in three years
Britannia is focussing on expanding distribution, product innovation, and increasing sales from the so-called Hindi belt
Bengaluru: Biscuit maker Britannia Industries Ltd is deploying strategies for rural markets that straddle all its key focus areas for the future, in a bid to boost revenue contribution from those regions to at least 30-35% over the next 2-3 years, a top executive said.
Expanding its direct distribution reach, product innovation, and increasing sales from the so-called Hindi belt are the other priorities for Britannia.
Rural India currently accounts for more than 20% of the company’s total revenue. And in line with its first priority of expanding its direct reach, Britannia has already set up 13,000 stock points—distribution points from where it supplies to shops in surrounding areas—across rural markets.
“Rural is where the headroom is and there are many programmes that the government is driving on that front. I think there is going to be far more momentum that will come from there. Disposable incomes will go up and consumers’ appetite for better products will also go up,” Gunjan Shah, Britannia’s vice-president of sales said in an interview.
On 11 November, Britannia reported an 11.52% jump in net profit for the July-September quarter and the company’s managing director Varun Berry attributed volume growth during the period, partly, to the focus on rural markets. Revenue from the rural side continues to grow in double-digits, the company said in a presentation to analysts on 15 November.
To ramp up sales in rural areas, especially of its more premium biscuit brands like Good Day and Marie Gold, the company has experimented with innovative packaging options. It sells smaller packs of these brands that cost Rs5-10. It has also piloted a few marketing campaigns in the rural markets and now plans to run those on a much larger scale going ahead.
“One thing we are looking at doing is ensure that we develop awareness and activation at the local level in those villages. We can activate weekly markets where we can set up stalls and make them aware of our products like cream biscuits and brands like Tiger,” Shah said. This is the first time Britannia will be running branding campaigns in rural markets.
Expanding sales in rural India also aligns with the company’s second priority of increasing its penetration and market share in the Hindi belt, which it views as large swathes of Rajasthan and Gujarat, to Uttar Pradesh and Madhya Pradesh among others.
Britannia has traditionally been weaker in these parts, which are dominated more by larger national names like Parle Products Pvt. Ltd and several region-specific brands.
The rural market should be viewed as two sets of consumers in India—the rural middle and upper class, and the rural mass, according to Sreedhar Prasad, partner and head of consumer markets at KPMG in India. Marketing campaigns need to be tailored to both segments in order to be more effective, he added.
“For the rural middle and upper class, the growth story can be achieved through newer channels like assisted commerce as well as alliance partners, wherein the availability is enhanced through new age distribution channels. For the rural mass, the retailer is the biggest influencer and retailer schemes and promotions would still be the sales initiative that could help grab the market,” Prasad said.
Editor's Picks »
- India’s renewable energy sector hits a milestone but loses speed
- All eyes now on share swap ratio in this mega bank merger
- Jet Privilege can actually get higher valuation than Jet Airways
- Profitability of cement firms to take a hit due to weak prices, high costs
- Pidilite’s shares hold their ground despite weak rupee and rising crude