At a time when most of the FMCG companies are tightening their purse strings and trying to hold on to their market shares, Britannia Industries believes that it can increase its market share despite a depressed sentiment.
According to Varun Berry, the company’s managing director, smaller players, who hold 27 per cent of the Rs 30,000 crore biscuit market in the country, will "struggle a bit" to retain their hold.
“It will be an opportunity to strengthen our market share further. We have traditionally been weak in the north and west and strong in the east and south”, Berry said.
He is of the view that while local producers face distribution, liquidity and production issues, the Wadia Group Company has "deep pockets".
The firm will be pushing for introducing new categories apart from pushing for dominance in markets where it has lesser presence.
Britannia is estimated to have a one-third market share in the overall biscuits category. While the company is strong in urban markets, its share is lower in rural areas.
As a result, unlike other FMCG companies, which are cutting down on their advertising and marketing spends, Britannia has decided that it will continue to spend on branding.
“It is important that we continue to spend on brand building depsite times like this”, Berry said.
In fact, during the company’s Annual General Meeting (AGM), it’s chairman Nusli Wadia had noted that the company will continue to focus on brand building activities despite muted market conditions as this exercise is in "long term interests of the company".
In view of the rising raw material costs, particularly in dairy and bakery, Britannia has decided to go for an average price hike of four per cent in select categories and packs which will absorb higher input costs.
“The hike will be in specific portfolio and pack sizes. We have already initiated a few hikes in dairy which is around 10 per cent but it would not be so much in other categories," Berry said.
However, the company will be refrain from any aggressive hikes as market sentiment remains muted.
Berry is of the view that it will take anything between 6 months to a year and a half for the market sentiment to normalise.
As the market sentiment remains muted, Britannia has decided to defer the investment in scaling up its production capacity in east India by a year. While it is keen to set up a plant in Kharagpur in West Bengal, it is also considering the feasibility of increasing production capacity at its other plants in Assam and Bihar.