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28456689 Has Biscuit Manufacturer Britannia Industries Found A

28456689 Has Biscuit Manufacturer Britannia Industries Found A

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Has Biscuit Manufacturer BritanniaIndustries Found a Fresh Recipefor Growth?
Published: January 09, 2009 in India Knowledge@Wharton
 
For more than a decade, biscuit manufacturer Britannia Industries has called onconsumers to "Eat Healthy, Think Better." Now, emerging from a period of internalcrisis and preparing to address a larger slice of India's growing food space, the 90-year-old Bangalore-based company is taking on a new slogan:
Zindagi mein Life
.Translated literally from Hindi, the new slogan means "adding life to life" -- or, asmanaging director Vinita Bali puts it, "adding enjoyable vitality to life."According to Bali, who has been at Britannia's helm since 2005, "Over the past fewyears, as we looked at what we stand for and what we could stand for, we felt that if our promise to consumers [is to] make products that are not just enjoyable but alsogood for them, then we need to make that promise come alive through ourproducts."This is perhaps best exemplified by Britannia's decision to remove 8,500 tons of trans fat from its biscuits in the last year, making them completely trans fat-free.The company was under no regulatory compulsion to do so; in fact, it is the onlybiscuit manufacturer in India to have taken such a step. Over the last few years,Britannia has also fortified many of its products with vitamins and micronutrientssuch as iron. Currently, 50% of its products are fortified.Positioning the Britannia brand as both enjoyable and healthy is core to Bali's growthstrategy. She stresses that Britannia is not in the "health food" business, but rather"in the business of delight and enjoyment," competing not only with other biscuitsbut also with savories, chocolates and other snacks.By marketing itself as a healthier alternative, however, Britannia seeks to sharplydifferentiate itself from other brands -- and that move has paid off. Last September,Microsoft founder and philanthropist Bill Gates included Britannia's fortified snacks ina list of eight examples of 'creative capitalism' published in
Time
magazine. Thecompany was also recently recruited to participate in former U.S. President BillClinton's campaign against childhood malnutrition through the high-profile ClintonGlobal Initiative.
 
Hungry for More
The new positioning is also intended to strengthen the mother brand itself. With theintroduction of the "Eat Healthy, Think Better" campaign in 1997, Britannia focusedon building its individual brands, such as Tiger glucose biscuits, Good Day cookiesand Treat cream biscuits. That was fine, as biscuits accounted for the bulk of thecompany's revenues. (For the year ended March 2008, biscuits brought in about90% of Britannia's net sales of $650 million.)But now Britannia wants to broaden its menu. In addition to growing its core biscuitbusiness, it wants to significantly expand its small businesses including dairy, bread,cake and rusk (known as zwieback in the U.S.). The dairy business, which Britanniaentered in 1997 and spun off as a joint venture with New Zealand's Fonterra Groupin 2002, has revenues of barely $36 million and has yet to become profitable.Britannia has dabbled with bread and cake for more than two decades and enteredthe rusk market a few years ago. These three businesses together take in just $68million.More important, Britannia looks to explore other opportunities within the growingfood space. According to a November 2008 report by the Federation of IndianChambers of Commerce and Industry and management consulting firm TechnopakAdvisors, the Indian food industry is estimated to have been at $200 billion in 2006-07 and is expected to grow to $300 billion by 2015. The report considers the foodindustry to include fruits and vegetables, dairy products, marine and fish, meat andpoultry, breads and bakery, confectionary and packaged foods, and alcoholic andnon-alcoholic beverages."Our vision is to become a larger player in the food space, and as we get into newerproducts and newer categories, their strength will be derived from the Britanniamother brand," says Durgesh Mehta, who was Britannia's chief financial officer whenhe was interviewed for this article. He has since moved on to become CFO of Bombay Dyeing, which, like Britannia, is a Wadia Group company.What new areas might Britannia enter? Company officials aren't saying, thoughspeculation includes breakfast items and ready-to-cook and ready-to-eat products.Bali says that Britannia will not look at staples such as rice, wheat flour and sugar."We will pursue profitable growth opportunities where we can create propositionsthat are relevant and differentiated from a consumer point of view," she notes.Adds Neeraj Chandra, Britannia's vice president and chief operating officer: "We arelooking at categories that gel with our principles of enjoyable and healthy food. Wewant to participate in as many consumption moments as possible in the food space
 
through both leveraging our current products better and through different kinds of products."Industry players and analysts see Britannia's move as both smart and inevitable."Britannia certainly has the capability to be a larger player in food," says HarishBijoor, chief executive officer of Harish Bijoor Consults and a visiting professor at theHyderabad-based Indian School of Business. "The brand equity of Britannia can be aselastic or as inelastic as its vision is for the Indian market."Nikhil Sen, who was with Britannia for more than 25 years, including a brief stint aschief operating officer, adds: "Redefining its boundaries to become a larger player infood is a great strategy for Britannia, and it certainly has the capability to do so."Sen is currently managing director of Unibic Biscuits India, the Indian arm of theAustralian biscuit company.Both Sen and Bijoor add a note of caution. "Britannia has been very good atdeveloping its current business, but it has not come out with any innovations inrecent years," Sen says. "There has not been a single new product in the past fewyears which has been pioneering for the category. There has been no new energy, no'wow' factor. Britannia needs to innovate."Adds Bijoor: "Dairy and biscuits is still a wide-open arena, and there is [a lot of growth] in this space itself. Britannia is in an enviable position to leverage [these]opportunities, but it needs to be far more aggressive." Bijoor is also not convincedabout Britannia's positioning as health-cum-enjoyment: According to his research,taste and health are mutually exclusive in the Indian context.B. P. Agarwal, managing director of Surya Food & Agro, which makes the Priya Goldregional brand of biscuits, says that while Britannia undoubtedly remains a marketleader, much of its strength is derived from past glory and its strong consumerequity. "The new products that Britannia has been introducing in recent times havebeen more by way of tweaking the existing portfolio. It has been launching variantswith new packaging, but there is nothing dramatically new," Agarwal says. Recentlaunches including Chutkule, a snack product, and Fruit Rollz -- both of whichBritannia has discontinued -- failed to excite consumers, he says.
A Period of Turmoil
Any lack of innovation -- and Britannia insists that it is constantly innovating -- canbe traced to the company's internal turmoil a few years ago. Sunil Alagh, who ledBritannia as managing director and chief executive officer for more than 10 years,was fired in 2003 amid allegations of financial mismanagement. A number of senior

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