Vinita Bali, Britannia Industries Ltd’s Managing Director, is on a whirlwind trip to Chennai. She’s in the city to participate in the Foodpro as well as launch Britannia’s new milk drink for children, ActiMind. Bali is gung-ho on the growth of the dairy business and says Actimind is the first in a pipeline of products planned in dairy. Post launch, Bali, a former worldwide marketing director of the Coca-Cola Co, who joined Britannia a little over four years ago, spoke to Brand Line on a variety of issues: the company’s strategy for biscuits to maintain its one-third share of the organised biscuits market, consumer trends and insights driving the company, spiralling commodity prices and its small pack strategy. Excerpts:
You’ve just launched a new brand, ActiMind, a milk drink for kids. Does this new product launch signal that you’re getting aggressive in the milk market?
Dairy is a business that in the last three years has doubled for us. We are looking at a 20-22 per cent growth; it’s tracking to be a Rs 200-crore-plus business. So far, dairy was dominated by our presence in cheese, where we have a 47 per cent share of the market. We made a lot of innovations — we brought in cheese spreads and flavoured cheese cubes apart from low-fat cheese. What we have done with this portfolio is to look at how to differentiate or add more value.
You had a presence in the liquid milk market as well earlier?
We as a company are in the business of brands. We buy a lot of wheat but don’t sell wheat flour, we sell biscuits. We don’t want to be in the business of selling just liquid milk, which is something the company had done earlier, because there is no value addition. There is nothing that we bring to milk that anybody else can’t. So, when we looked at value-added products, we brought in branded dahi. I would say there’s a time in the evolution of categories when consumers make the switch from having to make it at home to going out and buying it. The analogy I would use is that 15-20 years ago, people wouldn’t want to pay for water but today we buy branded water! Consumers today are saying they don’t need to do all that their mothers or grandmothers did at home.
Four-and-a-half years ago when I joined Britannia we made it clear that we were in the business of creating brands that offer an attractive value proposition to the consumer. So we are not about selling a commodity.
As we build our portfolio, we are looking at different categories where we can make a difference. If you look at cheese, for instance, we have low-fat cheese under the Slimz range which has 33 per cent less fat. We are creating this whole proposition called Slimz which takes into account the fact that eating healthy is about eating less fat. In biscuits, for example, we have added micro-nutrients and today, 50 per cent of everything we sell in bakery is fortified.
Is ActiMind the first of many such products in the pipeline for you?
We are looking at several products; this is the first to come to market. The quantity of essential nutrition in macro nutrients is not enough, so nutrient fortification is what a lot of developing economies have done to improve the overall wholesomeness and value of food. We developed ActiMind keeping in mind micro nutrients that are known to improve mental agility. For example, Vitamin B is essential for the brain to utilise the energy of glucose. Vegetarian food has very little choline and iodine. So, the need for micro nutrients is higher in a country like ours. We wanted ActiMind to be literally a one shot drink. The other big advantage is that it has no preservatives, it has a shelf life of six months, and is an ambient beverage so it could be put in kids’ lunch boxes (though it tastes better when cold – but that is a personal preference).
What is the kind of business opportunity you are looking at for this?
It’s a new market we are pioneering. I don’t know the size of the market, it’s not milk but in consumption terms, will compete with milk, it’s not juice but will compete with juice, it’s not a malted food drink, but it could compete with them. It’s a completely new concept, nothing like it exists in the market. We’re calling it a milk-based health drink. To describe it … how do you describe a Coke, it’s unique to itself and it’s a beverage. I would call this a health beverage. The investment has been significant … in crores (of rupees).
Do you see the contribution of non-biscuit brands increasing share?
Of course, that business is growing even faster than biscuits. Four years ago, the non-biscuit portfolio was hardly Rs 250 crore. Today, non-biscuit portfolio is Rs 600-plus crore.
You’ve also squeezed out a huge amount of costs from the system?
In the last four years, we’ve taken Rs 180 crore out of the system. There’s been a lot of wastage reduction, a new manufacturing footprint … there’s not one magic elixir, but a whole host of things that we did. On the revenue side, all the new packs we have launched have different margins by channel and geography. We therefore manage a portfolio that includes a diversity of brands, packs, channels and geographies. We don’t make the same money on our brands everywhere.
What about the competition that is hurtling at you from all sides, not just the biscuit brands?
Just like we are encroaching on their territories they are encroaching on ours. That categories are morphing is not a new phenomenon at all. As consumers move from fried to healthy products, biscuits present a good option as they are more healthy, are baked and not fried. Also, on the other hand, the fact that we have removed trans fats works in our favour. We have created a Rs 300-crore opportunity in personal consumption packs by converting those to an impulse purchase format.
What about Britannia’s Daily Bread business, it’s still making losses?
We have consolidated the business in Bangalore and it’s breaking even. We will go slow and steady in growing the business. We have about eight company-owned outlets, 3-4 franchises and we are also present in some modern trade outlets. In Hyderabad, we are working on a franchisee option.
You have withstood cost pressures and maintained your margins. How?
To put it differently, in a very tough environment, we have maintained operating margins and generated Rs 250 crore of operating cash flow in the first half. On the flip side, I wish we didn’t have to deal with the spiralling cost of commodities. Take sugar, last year it was about Rs 14.50 per kg, now it is Rs 32 per kg.
You are importing raw sugar yourselves now?
The government allowed imports only six weeks ago, so we are importing now. There is no sugar available. India produces 21-22 million tonnes of sugar; this year (expected) 16 million tonnes and we have eaten into our opening stock. The government realised that the only way to restore sanity was to allow import of sugar.
What’s new in your core business of biscuits?
The focus that we brought to what I would call the functional aspects of our business: removing what’s not good for you and adding what is! And, we have not done that on the basis of some regulation, we decided that we were going to remove trans fats and ours are the only biscuits that have no trans fats; we removed 10,000 tonnes of trans fats; we have also fortified our brands with micro-nutrients — iron in the case of Tiger. We are also looking at new opportunities. If you look at Nutri Choice 5 Grain, it has complex carbs such as oats and ragi, a dash of honey as well. We just launched a cracker with ajwain and jeera, which is good for digestion.
The other thing in biscuits is that we are looking at consumption opportunities out of home. We asked ourselves the question: if I am a teenager would I eat something that my mother buys as a grocery item … what would we have to do if we wanted to make biscuits an impulse purchase, like chocolate … and that insight led us to some very interesting things. We launched the four-biscuit pack of Bourbon, for Rs 5; it looks like chocolate, has a chocolatey taste as that’s what Bourbon is all about, and that’s what we call a personal consumption pack, which you can carry along with you. That’s tracking to be a Rs 250-300 crore opportunity for us.
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