Biscuit maker Britannia Industries Ltd’s third quarter profit grew 13.81% while revenue increased 11.48% as its efforts to expand direct distribution, focusing on geographies where it is weak, and keeping costs under check continued to pay off.
The company reported an increase in consolidated profit to ₹300.07 crore from ₹263.65 crore in the October-December quarter of 2018-19 versus the same period a year ago. Total revenue grew to ₹2,902.44 crore from ₹2,603.42 crore last year, it said in a filing with the BSE on Thursday evening.
“The building blocks of the business continued to be: expanding distribution reach in urban and rural markets, increasing presence and share in weak territories, accelerating innovation journey and doubling down on cost through our cost efficiency programs," Varun Berry, managing director of Britannia said in a statement.
Britannia’s decision to focus on expanding distribution came soon after Berry took over as managing director in 2014. Traditionally, Britannia stocks products at its distribution centres. Products first go to its exclusive wholesale dealers, then distributors and direct retailers. The entire process takes anything from one week to three weeks, depending on the distance between the retail outlet and the factory.
In the new direct distribution model, the entire supply chain is controlled by Britannia. Every day, a bunch of employees visit retail stores, analyse local demands, suggest required tweaks in product placements based on the company’s in-house analytics and take orders on their mobile phones through an app. The orders are then delivered directly by Britannia from the nearest distribution centre within a day.
The company also continued to focus on premiumisation and innovation in the third quarter and launched products like Swiss rolls, layer cakes, cream wafers and flavoured milkshakes. These launches are part of Britannia’s wider long-term strategy to become a total foods company.
It said it will continue to focus on bridging portfolio gaps in the bakery business and other adjacent macro snacking business opportunities. The company’s greenfield plant in Nepal is expected to be commissioned by the end of the current year, it said. It has also commissioned additional cake and biscuit lines at its factory in Ranjangaon, Maharashtra.