COMPANY ANALYSIS: BRITANNIA

Certain areas that we will look out for judging your article:1. Trends supported by figures

2. Competitor analysis

3. Your own insights

Competitor analysis

Britannia was founded in the Year 1892 and its registered office is in Calcutta. It is a leadingnational producer of  different types of  biscuits of which well-known brands are Tiger, Good

Day, Mari Gold, 50-50 and many more. In the year 2004, it was accorded with “Super Brand” of 

India for targeting the different segments of customer . It has grown exponentially since its

inception and has 33% local market share in the bakery product segment. It is also a leading/ prominent market player of other bakery products and dairy products like Ghee, Butter, Nutri-

Choice Sugar Oats and Nutri Choice Oat cookies.

India, being a diverse and a huge country of about 1.1 Billion  people from different religions and

with different earning segments; BIL has different strategy and a variety of  product types for all

segments of people offering different price ranges. It has cheap products like Tiger biscuits and 

 premium products like Bourbon. BIL is revamping its “GO-TO MARKET” strategy to competewith new International players like PepsiCo and Kraft Foods. The Company is restructuring its

hierarchy for faster decision making process to suit the present market scenario. The company

had separate 'category directors' for its biscuits business, one each under Health & Wellness andDelight & Lifestyle; but has now done away with both and has adopted the strategy of  one

director-marketing spearheading both the categories.

BIL is facing competition from international and local player s. Among local players, Parle and

ITC are challenging Britannia and among Global players Kraft and PepsiCo are cutting marketshare of Britannia. Kraft, which recently acquired Cadbury, is the largest food giant in world.

To have a  competitive edge over competitors, Britannia has expanded its variants as per changing food taste and growing demands of healthy food in the country. For e.g. launch of 

“Tiger -Iron Zor” milk, fortified with iron and other ingredients is for health conscious people.

The emerging health and wellness trend in the country is a growth potential for Britannia whichoffers a range of low-fat and sugar free products such as NutriChoice Digestive and NutriChoice

SugarOut. BIL’s competitive advantage is its continuous pipeline of innovation and aggressive

 brand  building  programs. It has a very robust R and D system to innovate and re-innovate to

meet market changing taste and health concerns. Britannia has also targeted premium classcustomer s by different modes of marketing and packaging. 

 

Trends

Almost one-third of India’s one billion-strong population trusts in the brands and products provided by Britannia. The raw materials used by BIL chiefly comprise of Wheat, vegetable oil

and Sugar and since these are agricultural products, production is nature and climate dependent.

Also, a major portion of these materials are imported and hence their  price fluctuates dependingupon global economic conditions, transportation costs, currency exchange rates, government

rules and regulations etc. The profitability of BIL suffers as per the food inflation. Currently food

inflation is 16 to 17 %. According to an industry survey, 62% of surveyed consumers said they prefer eating natural and fresh foods. Moreover, 77% of urban Indians are cutting down on fats-

the driving factor for changing food habits is increasing due to the awareness created by various

media.

For the financial year ending March 31, 2008, the company generated gross revenue of INR 

25,848 million as compared to INR 21,993 million, an increase of 18%. The operating profit

increased by 99% over 2007 to INR 1,937 million in 2008. Profit after tax increased by 76%

over 2007 to INR 1,982 million. "Sales of innovations have increased by 1.5 times in the past

two years. Realization 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 stood 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.

Your own insights:

Britannia will continue to be the leading market player as it is upgrading its product as per

customers and aligning its strategy with needs of situation. The only concern is how it will

penetrate in international market because for that it has to revamp its product as per

country specific needs.