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Makeover of Britannia

Makeover of Britannia

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MAKEOVER OF BRITANNIA
Casecode-MKTG-006
Published-2001

"Our markets are poised for exciting times. As a successful organisation, we must not only keep pace with consumer expectation, but also anticipate them. Our new identity is to lay the base to project our future as a successful 'food' company, a company that provides high quality and tasty, yet healthy foods and beverages"

-Nusli Wadia, Chairman, Britannia Industries Limited.

"I conform to the view that there are three kinds of companies - those that watch things happen; those that make things happen; and those that wonder what happened. We certainly wish to make things happen\u2026..My personal commandment is Do unto others what you don't wish Done unto you. It's not the big who swallow the small, it is the fast who swallow the slow"

-Sunil Alagh, CEO, Britannia Industries Limited.
A PATH LESS TRAVELLED

An old maxim goes, 'Why do something when it ain't broke?' This may be the credo of most firms, but not of the food major, Britannia Industries Limited (BIL). In 1997, BIL, whose business seemed to be doing well, instead of concentrating on it, virtually charted a new course by seeking to reinvent itself. It built a new corporate identity and adopted a colourful and identifiable logo with a new base line - 'Eat Healthy, Think better.' From being a manufacturer of baked products, BIL kicked off a diversification exercise to become a comprehensive foods and beverages company making cheese and other dairy products, in addition to its bakery products.

BIL seemed to be doing something radical by venturing into totally new areas, while this
puzzled many, some analysts felt that it was BIL was doing this out of compulsion. They

reasoned that the 16% growth rate of BIL sales, which was just 8% in real terms when corrected for inflation, though good by the standards of a mature market, was not good enough for a growing market like India, specially in the foods segment. Others felt that BIL's makeover decision may have been influenced by the threat of potential competition. They also felt that with the organised biscuit market in India being commoditised, and the major chunk being controlled by the unbranded segment, reliance on biscuits alone could be detrimental to its long-term interests. However, some analysts were of the opinion that the diversification of BIL into relatively new areas was risky, and that it should have concentrated on its core competence, the biscuit business.

By the end of 2000 the exploits of BIL seemed to have fructified, at least in the short-run. In a survey conducted by A&M[1] , BIL emerged as the number one food company well ahead of competitive brands like Nestle and Cadbury. BIL's dairy business seemed to be doing reasonably well. In the cheese segment it stood second with about 35% market share. In the bakery segment also it was doing well, with its biscuits business making significant inroads. Its positioning plank, 'Eat Healthy, Think Better' also seemed to have struck the right chord with its customers. Said Sunil Alagh (Alagh) "Our brand today represents family trust, quality with a contemporary, youthful image.

FLASHBACK
1892Inception as a small house manufacturing biscuits in central Calcutta with an
investment of Rs 295.
1897The Gupta Brothers acquired the business, and moved the operations to Dum
Dum, a suburb of Calcutta, under the name of V.S.Brothers.
1918
An English businessman C.H.Holmes joined as a partner.
1918 The BIL Biscuit Company (BBCo) was registered.
1924 BBCo established its second factory at Mumbai.
1954BBCo acquired the Delhi Biscuit Co and began the manufacture of sliced and
wrapped bread in Delhi.
1961 The production of bread was started in Mumbai.
1967The company set up a fourth factory for the manufacture of biscuits and bread in
Chennai.
1971 BBCo diversified into seafood.
1973An integrated processing and freezing plant for seafood was commissioned at
Thane.
1976Bread was introduced in Calcutta with the commissioning of two modern
indigenously fabricated automatic baking plants.
1978
BBCo came out with a public issue as a result of which the Indian public's
shareholding crossed 60% and the foreign shareholding (which was 53.37% held
j
ointly by Control Nominees Ltd. and Associated Biscuits International Ltd, both
of the UK), decreased to less than 40%.
1979In October the company's name was changed from Britannia Biscuits Company
to Britannia Industries Limited (BIL).
1981 Rajan Pillai, a non-resident Indian bought a 5% shareholding in BIL.
1988Pillai bought Associated Biscuits International Ltd. (ABIL), for $44 million
(mn), which at that time had a 38% stake in BIL.
1993Groupe Danone wrested the management control of BIL from Rajan Pillai in a
hostile take-over leading to a complex holding structure at BIL.
1995Nusli Wadia bought 50% of ABIL and became BIL's joint owner. Groupe
Danone, which till then held 44% in BIL, divested 22% in favour of Wadia.
'FOOD FOR THOUGHT'

BIL, since its inception had been mainly involved in the manufacture of biscuits, which contributed around 85% of its revenues (1997). The biggest problem then, for the 80- year-old BIL was that its name was strongly associated by customers with biscuits (or more broadly bakery products). With the de-reservation of biscuits from the small sector and commoditisation of the Rs 3500 crore biscuit market, coupled with cutthroat competition after the entry of multinationals and stagnating net profits, BIL looked for a fresher approach to survive and prosper. BIL realised that it would have to scale up its

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