Britannia’s first task is to strengthen distribution in the Hindi belt: Varun Berry3 min read . Updated: 09 Aug 2016, 02:23 AM IST
Britannia MD Varun Berry says demand in rural, urban markets is now set to pick up, and the firm wants to make the most of it by ramping up distribution in weaker markets
Kolkata: Britannia Industries Ltd is consolidating its product offerings into five key brands as the biscuit maker looks to ramp up marketing in the so-called Hindi belt, where it has traditionally been weak.
Varun Berry, the firm’s managing director, says demand in both rural and urban markets is now set to pick up, and Britannia wants to make the most of the improving business scenario by ramping up distribution channels in weaker markets.
At present, Britannia earns 45% of its revenue from economy products, and the remaining from premium segments. Its market share in the value (or economy) segment is low at 9%, according to Berry. “The non-value segment is growing faster than the value segment in terms of sales," Berry said in an interview. “The onus is on us to keep driving this segment to grow faster." Edited excerpts:
Do you see any major jump in demand?
The monsoon having been good and Seventh Pay Commission cash being released, we are hoping that both urban and rural demand should increase. Though, for the past few years, rural sales has been growing faster than urban, I’m pretty sure that urban demand will also start to grow now.
In the urban market, the task is to having more SKUs (stock-keeping units, or products) in every outlets. We also have to identify categories which are weak, and have to make sure that we improve.
How do you propose to strengthen your distribution channel?
For us, distribution in urban markets in the states in which we are strong is not a problem. But in the Hindi belt, our distribution is weak. So the first task is to strengthen our distribution channel by getting more outlets to sell our products.
The gap between us and the company with the largest distribution network is around 800,000 outlets, all states combined.
But the gap that we have with the same company in the Hindi belt is over a million outlets. So our weakness really is in the Hindi belt. The gap we are talking about is not of a few thousand, and bridging it is not going to happen in a year. We’re trying to catch up within five years.
How do you propose to improve your product portfolio?
Our second key task is to identify the gaps within our product portfolio. For example, there are deficiencies in the premium creams segment. In this segment, we used to have three-fourth market share, but today we are down to a third. So that certainly is a weakness. In 6-7 years from 2007 to 2013, we saw a huge decline in the market share because we did not have the ability to compete with the leaders in this segment.
So it is a combination of those two factors: it is about building our distribution network and making sure that we provide absolutely flawless service of booking orders and delivering our products to these outlets.
How does portfolio consolidation help?
I’ll give you an example. Our entire value (or economy) portfolio is currently under the Tiger brand. But it wasn’t like that always. There used to be 2-3 different brands in this segment. So, we consolidated all our value products under Tiger, which created better advertising efficiencies.
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Going forward, we would like to have five large brands: Tiger, Good Day, NutriChoice, 50-50, and the fifth one is likely to be Treat, into which we consolidate the likes of Marie and Bourbon.
We are still trying to figure out how to get these smaller units within our portfolio consolidated under one brand. It’s possibly going to be Treat.