Britannia’s dairy business should grow to Rs1,500 crore in 5 years: MD Varun Berry
Britannia MD Varun Berry on the challenges in the dairy business, its premium biscuit business, and on the overall FMCG sector
Bengaluru: India’s dairy market is a tough nut to crack, as multinationals have found out the hard way. But for Britannia Industries Ltd, milk and dairy products is the way to go, as it tries to transition from a biscuit maker to a total foods company. A month after Danone SA of France decided to shut its dairy business in India, Britannia’s managing director Varun Berry spoke on the challenges in the dairy business, its premium biscuit portfolio driving domestic volume growth, and on the overall fast-moving consumer goods (FMCG) sector. Edited excerpts:
Will we see growth in the dairy business really take off once your Ranjangaon dairy line is up and running later this year?
It’s not as easy as putting up a factory of biscuits. Here, you have to build collection centres, farmer connects, start to collect milk, look at processing plants, you have to have quality parameters, what kind of products do you want to do, what kind of machinery do you need, all of that. It’s a long way off from having the back-end ready. We are currently Rs400 crore (in total revenue) and within five years, we should be hopefully be Rs1,500 crore. Over a period of time, it does have the potential to become as big as the biscuits business.
Do you still see a big enough opportunity in the space considering the challenges?
Dairy is a protected market. The import duties are high so even though there are great dairy products internationally, those products will not come to India. So, someone will have to take the initiative of doing them here and doing them in a way that it becomes easy to distribute. It’s not an easy business but there’s a gap, and that’s the gap that we have to fulfil with world-class products available in India from a trusted brand.
On the biscuits side, how have premium brands performed in the most recent quarter versus value brands?
The premium portfolio is mostly driving domestic volume growth; most premium segments are growing at a fairly nice clip. Good Day would be growing in very high double-digits, around 20%.
The value portfolio is not growing for us but there will still be some play for value products. We want a toehold in value but it’s not like we want to become dominant players and market leaders. I don’t think the mix is going to change much. It will remain at an 80-20 (premium-value) kind of a mix. We’ve already shrunk our value portfolio quite a bit. Cream biscuits we had five or six variants but we’ve shrunk it and made it fairly manageable.
Within biscuits, apart from your main power brands, which ones have large potential for growth?
We’ve put everything under Treat (cream biscuit brand) as far as premium cream biscuits are concerned, besides Bourbon, and we’ve launched these dark chocolate cookies with chocolate and vanilla cream under Treat. That has given us tremendous response in the market because it’s a known brand and very well positioned. We’ll be putting more and more under Treat as we go forward. It certainly will become one of our power brands. (Britannia’s power brands include Good Day, Marie Gold, Tiger, 50:50 and NutriChoice).
FMCG growth rates haven’t been great over the past few years. Are you seeing any change in that trend?
The growth of the FMCG category has been subdued for a long time. But the market growth has accelerated, which is really the good news. I think if that trend continues, then it becomes much easier for us to play in the market and do a lot more innovation because then, everyone feels good and there are no fisticuffs.
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