Britannia revamps operational structure

Food products company Britannia Industries Ltd is revamping its go-to-market strategy as part of an overall top management restructuring.

The company, which earlier had 'category directors' for its biscuits business, each under Health & Wellness and Delight & Lifestyle, has now done away with the two and has said one director-marketing will spearhead both the categories. Shalini Degan, who was the category-director for Delight & Lifesytle has quit the company, while Anuradha Narasimham, who was the category director-Health & Wellness, is now made director-marketing.

The move to revamp the channels it uses to connect with customers started early in January, when Varun Berry was brought in as the chief operating officer (COO), replacing the then COO and vice-president-marketing Neeraj Chandra. Chandra was then moved as vice-president of strategy and new business development, the position which he has since quit.

Recently, Britannia announced that its Managing Director Vinita Bali would now focus on global operations and new business development, while Berry would lead the Indian operations. The move to integrate the two categories may be the first key step which Berry must be associated with, at a time when Britannia is facing intense heat from the likes of ITC Foods and Parle.

Britannia, which controls around 33 per cent in the biscuits market, almost similar to the share held by Parle, has been trying to reduce its dependence on the plain vanilla glucose biscuits and to innovate aggressively on the value-added front. Bali has been championing this cause aggressively for the past five years and as a result of which, the share of the glucose biscuits has dropped to 19 per cent from 40 per cent in 2007. Even as Britannia has been driving value in this segment, Bali has also brought about a change in the dependence of the biscuits to a lot extent, by leveraging on dairy, bread, rusks and cakes. The dependence of biscuits is now at 81 per cent from the earlier close to 90 per cent.

"Sales of innovations has increased by 1.5 times in the past two years. Realisation on these products is two-five times than the normal variants, while the cake, bread and biscuits range is growing at a CAGR (compound annual growth rate) of 25 per cent," said Amnish Aggarwal, senior vice-president-Research, Prabhudas Lilladher.

In addition, the dairy business is expected to emerge as the next growth driver. "This business has seen 22 per cent CAGR in sales with margin expansion due to huge potential in dairy and focus on higher margin niches," he added.

Backed by these key strategic moves and helped by cooling-down inflation, Britannia reported a 13.5 per cent growth in sales for the March quarter. Its profit jumped 65.6 per cent to Rs 87.85 crore during the quarter, while the operating margin at 7.8 per cent.

"Britannia remains one of our top mid-cap picks as an improving product mix drives top line and margin growth, and reasonable valuations (of the stock price) offers sizeable upside," said Gaurang Kakkad, an analyst with Religare Institutional Research.