Britannia Industries gears up for big play in Rs 85,000-crore dairy segment

Britannia Industries is gearing up for a full-fledged play in the estimated Rs 85,000-crore Indian dairy market as part of its overall strategy to be a total food company.

The company will seek board approval within a couple of months for its expansion in the dairy segment, which could entail a minimum investment of Rs 300 crore in the initial phase.

"We want to be a total food company and to do so, we can't ignore the large dairy segment. The dairy segment in India is almost Rs 85,000 crore," Britannia Industries Managing Director Varun Berry said.

Elaborating on why it made sense to be a full-fledged player in the dairy segment, he said: "We sell dairy products worth Rs 400 crore and for our bakery business we buy dairy products worth Rs 300 crore. Overall, the consumption and sales is almost Rs 700 crore, which is a fairly large number."

When asked how the company is preparing to enter the segment, Berry said: "We have reached a very interesting stage where we have got a fairly good grip on what we need to do to make the plunge in dairy. We just want to make sure that we get all the details together before take this proposal to the board, which will be in the next couple of months."

The company has also roped in dairy expert, Sarad Garodia, who has joined the company as Business Head Dairy Operations. He had earlier worked for 16 years with Schreiber Dynamix, one of the leading dairy products manufacturers in India.

"He is helping us validate all the assumptions... In the next couple of months we should definitely be ready with the plan. I am pretty bullish on it but it has to pass a few tests because it is going to be a fairly large investment," Berry said.

When asked about investments, he said: "The first phase will be about Rs 300 crore. In the next two or three months we will be able to take a decision on it."

The company today said that its board has approved a plan for the demerger of the manufacturing and retails sales divisions of its subsidiary Daily Bread Gourmet Foods (India) to be merged into itself. The step will help it in optimum utilisation of resources, achieve cost saving and economies of scale, among others.

Commenting on the company's dairy strategy, Berry said: "Our first step will be establishing the back end, making sure that we have a fully integrated dairy business, right from collection of milk to processing. First step will be to bring part of what we sell in-house and then once we have done that we will look at how to innovate and enter into new categories."

In the first phase Britannia Industries will focus on value added dairy products that it already sells.

"Cheese will be a big category," Berry said.

Besides cheese, the company already sells fresh packed milk, dahi, flavoured yoghurt and accompaniments such as ghee.

When asked about plans for flavoured milk, where Coca Cola has also entered with its Vio brand, Berry said it will "certainly be a part that we would like to get into but not in the phase one".

Britannia Industries is aiming to be a Rs 20,000 crore company in the next 5-6 years as a total food company. The company had posted consolidated net sales of Rs 7,775.09 crore in the last fiscal.