Think Dairy, Think Better

It is a pleasant May evening. Bangalore-based Britannia Industries' CEO Sunil Alagh is at Mumbai's Cricket Club to announce a new, related promotional activity: 'Britannia khao, cricketer ban jao.' Some time after most journalists have queried Alagh on cricket and biscuits, one voice shoots from the back. "And what about your dairy business, Mr Alagh? How is it going?" A brief pause. "Well, it is in accordance with our plans," the salt-and-pepper-haired Alagh replies with a smile. For once, the smile hides more than it says.

Britannia, which ventured into dairy products in 1997, targeted the new business to contribute about 15-20 per cent to its total turnover in 1999-2000. But currently, it chips in about 9 per cent, slightly up from the 7 per cent of 1998-99 (Rs 70 crore on total sales of Rs 1,030 crore). Biscuits continue to form Britannia's staple, contributing nearly 85 per cent to company sales (along with high-protein food). In an interview to Businessworld last year, the company expressed its intention to hike dairy products' contribution in five years up to 25 per cent of total sales of Rs 4,000 crore. That looks tough now.

 

In fact, there's a bit of a scaling down, to be precise. "We hope to contribute 15 per cent to Britannia's sales in the next five years," corrects Pavan Malik, vice-president, new business division, Britannia. "Sales last year did not meet our expectations," he admits. "But now we have a new strategy in place.

What went wrong the first time?

Zipping away

Take a look first at Britannia's dairy portfolio and the progress made so far. Butter was the first product that marked the company's foray into dairy products. It came through a soft launch in Bangalore in 1997. It entered Mumbai in 1998. It is still waiting to move beyond the Delhi and Mumbai. It has managed volumes of a mere 2 tonnes in a 30,000-tonne market (Rs 340-crore). Amul reigns with a leaders' share of a whopping 90 per cent. Is the premium pricing to blame? "See, brands like Amul have delivered a good product at a nominal price. So consumers do not see any notable benefit in switching to another brand," reasons Jagdeep Kapoor, CEO, Samsika consultants. Britannia butter is priced at a 7-8 per cent premium.

Zip Sip, a brand of flavoured milk launched last year, is the second dairy brand. Its progress has been anything but healthy. One competitor describes its launch as a "flop". Kapoor says a retail study undertaken by his consultancy showed a major loss of market share for Zip Sip in April 2000 (the time Britannia was withdrawing the brand). He feels Zip Sip's positioning was not consistent with the category. "It tried to take on the health platform with the Vitamin A content. But it competes with tetrapak beverages and people see them as fun drinks," says Kapoor who has ample experience in this market, courtesy Frooti, Onjus and Life. "The moment some health value is added, the consumer may look at it as something to be had when one is sick," he feels.

That is a possibility. On a more tangible front, Zip Sip encountered product problems. "If you take the chocolate flavour, there was a sedimentation and one had to shake the pack before having the drink," recalls one retailer. "But customers usually did not notice that, nor was it stressed in any communication. So not many came back for a second buy," he adds. "The drink left a powdery taste in the mouth if it was had without a good shake."

Besides, Britannia launched Zip Sip in five flavours - strawberry, chocolate, pineapple, elaichi and mango. "Coming up with a large number of flavours creates an inventory problem," believes Kapoor. "With some flavours moving faster than others, the retailer may refuse to accept more stock. And once the goodwill of the retailer is lost, the crucially-needed push fades at the retail outlet."

New, improved milk

Recently, Zip Sip was relaunched as Milk man. In fact, Britannia has adopted this brand as an umbrella for all existing and new dairy products (like ghee). If there is one saving grace, processed cheese surely is it. Being among the first to redefine cheese slices, Britannia today claims a 35 per cent share of branded processed cheese. "But the market itself is so small," feels Kapoor. The cheese market is worth only Rs 95 crore, barely more than a fourth of the butter market.

Malik agrees that the company was not able to reach a critical mass last year. Even in terms of sheer coverage, Britannia failed to reach the targeted 75,000 outlets by end of last year. Now, it has a new strategy: a renewed focus. "Which is why we are planning an umbrella brand strategy for the brand this year. So Zip Sip has draped the Milk man brand name and we will try to create an identity for all dairy products through this brand. The Britannia brand name will merely act as a support," he explains. "We plan to cover about 75,000 outlets this year and besides also look at some 3,000 beverage outlets in five key cities of Mumbai, Chennai, Hyderabad, Bangalore and Delhi," adds Malik.

To start with, the company has made some changes in its flavoured milk plan. The flavours have come down to chocolate and strawberry. Product quality has been improved and a powdery taste reported earlier has been addressed. "We are also making a few changes in the butter and it will be due for a relaunch in some time," assures Malik. Britannia launched Milk man ghee this month and plans to enter a whole lot of categories. It was slated to launch its yoghurt early this year - a product that is closely associated with its parent, Danone - but it has been postponed with the new repositioning action plan.

"Dairy will continue to be a minuscule part of Britannia's business," feels a research analyst. "It is certainly going to be a rickety ride," he adds. The increasing competition from Nestle, Dabon and the like, coupled with Big Brother Amul's active initiatives, will keep Britannia busy for a much longer time.