britannia makeover case

2010 [ A Case Study On Britannia- The Brand Makeover] Guided by:- Submitted by: Dr. Avinandan Mukherjee Avishek Sen Gupta Gunjan Bihani Prosenjit Roy

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Page 1: Britannia Makeover Case


[ A Case Study On Britannia- The Brand


Guided by:- Submitted by: Dr. Avinandan Mukherjee Avishek Sen Gupta Gunjan Bihani Prosenjit Roy

Page 2: Britannia Makeover Case

CALCUTTA BUSINESS SCHOOL | Case study on Britannia Industries Ltd 2


A report on NDTV Profit on June 2009 states that the market share of Britannia for the first time

in the history has lost its market position, Parle is now number 1.Parle has gained the market

position based on a single product Parle G. It is no.1 both in terms of revenue and tonnage.

Recent data shows Parle passes Britannia in terms of market share. It has 32.94% market share

whereas Britannia‟s market share is around 32.88%.But just a year ago it was Britannia who

maintained the healthy lead (35.8%). ITC is the distance third. Parle claims launch of Parle 20-20

in 2008 which did the trick for them.

Consolidating with the distribution network and increased contract manufacturer partners also

paid off.

TIGER brand of Britannia has stopped roaring in the market and has slipped its market share by

1.5% than last year. According to Mr. Neeraj Chandra, VP & COO of Britannia that although

Britannia has lost some share in their major brand TIGER and they are a small player in glucose

segment still they are confident that Britannia will not only regain back its market share but will

exceed by launching of a new superior product.

Britannia is loosing out its market share in the glucose segment of biscuit industry. What should

be Britannia‟s strategy in due course with its competitors so that it retains its position of market

leader in the biscuit industry also over the past Britannia has been loosing the position of the

most trusted brand from no. 1 position in the year 2002 to 9th position in recent years. (Source:

economic times).

Some questions where Britannia needs to plan their strategy how they should go about doing the


Should Britannia reposition their brand in the lower segment in order to compete

with PARLE-G?

How to capitalize in the low Market share?

How to overcome with the organic and inorganic growth strategies to face the

challenges in the Indian Biscuit Industry

Please find a link which discuss about the one of the case problem of Britannia Industries.

Page 3: Britannia Makeover Case

CALCUTTA BUSINESS SCHOOL | Case study on Britannia Industries Ltd 3

Company Profile Britannia was incorporated in 1918 as Britannia Biscuits Co Ltd in Calcutta. In 1924, Pea Frean

UK acquired a controlling stake, which later passed on to the Associated Biscuits International

(ABI) a UK based company. During the ‟50s and‟ 60s, Britannia expanded operations to

Mumbai, Delhi and Chennai. Exports of sea foods started in the ‟70s. In 1987, Nabisco, a well

known European food company, acquired ABI. In 1989, J M Pillai, a Singapore based NRI

businessman along with the Groupe Danone acquired Asian operations of Nabisco and thus

acquired controlling stake in Britannia. Later, Groupe Danone and Nusli Wadia took over Pillai‟s

holdings. In 1977, the Government reserved the industry for small scale sector, which

constrained Britannia‟s growth. Britannia adopted a strategy of engaging contract packers (CP)

in the small scale sector. This led to several inefficiencies at the operating level. In April ‟97, the

Government de reserved the biscuit sector from small scale. Britannia has expanded captive

manufacturing facilities and has modernized and upgraded its facilities in the last five years. It

has also forayed into the Dairy Business with the launch of Cheese, Butter, Ghee, Dairy whitener

and flavored milk products.

Britannia Industries Limited (Britannia) is engaged in the provision of bakery products,

including biscuits, bread, rusk and cakes, and dairy products. The company primarily operates in

India. The company's products include 50-50, Good Day, Little Hearts, Marie Gold, Milk Bikis,

Nice Time, Nutri Choice, Pure Magic, Tiger, and Treat. It is headquartered in Kolkata, India and

employed about 1,982 people as on March 2009.

The company recorded revenues of `34212.3 million (approximately $746.5 million) during

fiscal year March 2009 (FY2009), an increase of 23.2% over FY2008. The operating profit of the

company was `1,782.4 million (approximately $38.9 million) during FY2009, a decrease of

15.4% compared with FY2008. The net profit was `1,514.8 million (approximately $33.1

million) in FY2009, a decrease of 14.6% compared with FY2008.

Page 4: Britannia Makeover Case

CALCUTTA BUSINESS SCHOOL | Case study on Britannia Industries Ltd 4

Business Description

Britannia, a wholly owned subsidiary of The Bombay Burmah Trading Corporation Limited, is a

Leading player in the Indian biscuits industry. The company is engaged in the manufacture and

distribution of food products primarily comprising of bakery products like biscuits, bread, cakes

and toast; and dairy products.

The company operates in the Indian and overseas market through its subsidiaries, joint ventures

and associates. The company‟s operations in the country is managed by International Bakery

Products Limited, TC Balam, Tamil Nadu; J B Mangharam Foods Private Limited, Gwalior,

Madhya Pradesh; Manna Foods Private Limited, Bangalore, Karnataka; Ganges Vally Foods

Private Limited, Kolkata, West Bengal; and Sunrise Biscuit Company Private Limited,

Guwahati, Assam.. The company markets its biscuit products in India under the brand names of

Tiger, Good Day, 50 - 50, Marie Gold, Treat, Milk Bikis, Nutri Choice, Time Pass, Pure Magic,

Little Hearts, Nice Time, Bourbon and Greetings. Bread products are sold under the Premium

Bakes, white sandwich bread brand. Cake products are sold under the Premium Bakes, Cakes

and Rusks brands. The company also offers 'Cup Cakes' in its cakes category. Britannia New

Zealand Foods Private Limited (BNZF), the joint venture of Britannia with Fonterra Cooperative

Group Limited of New Zealand, markets and sells dairy products comprising cheese, dairy

whitener, curd, butter and clarified butter. These products are sold under the Britannia Milkman

brand. Daily Bread Gourmet Foods Private Limited (Daily Bread), a wholly owned subsidiary of

the company, is engaged in the business of premium bakery products under the brand name

Daily Bread. The subsidiary manufactures and retails a range of breads including French bread,

Italian breads, Italian white breads, Italian sandwiches, rolls, multi-grains, pastries, bagels and a

range of ultra premium health breads. In addition to this, Daily Bread also offers doughnuts,

cheesecakes, mousse cakes, fruit cakes, fruit tarts, pastries, brownies, cookies and Belgian

pralines and truffles. Deluca, a division of Daily Bread, offers a wide range of gelato, sorbet,

gelato cakes, sundaes, and desserts. Besides, the subsidiary operates Daily Brew espresso bars

serving a variety of coffee, tea and light snacks. Strategic Food International Co. LLC (SFIC), a

70% subsidiary of Britannia, operates in the Middle East. The subsidiary offers a wide range of

biscuits and wafers under the brand name Nutro. Al Sallan Food Industries Company (Al Sallan),

a 64.5% subsidiary of the company, also operates in the Middle East. The subsidiary offers a

range of cookies, rolls and chocolates under the brand Name Baker‟s Pride. In addition to this,

Britannia is also a kea player in the Sri Lankan biscuits market offering products like Milk Bikis,

Milk Cream Smileys, Vita Marie Gold, Creams and Cookies. Besides, the company exports its

products to the US, Ghana, Seychelles, Singapore, Oman, Saudi Arabia, United Arab Emirates,

Qatar, Bahrain and Kuwait.

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CALCUTTA BUSINESS SCHOOL | Case study on Britannia Industries Ltd 5

The food Industry

The following information on the Biscuit Industry in India is provided by the Federation

of Biscuit Manufacturers of India

Biscuit industry in India in the organized sector produces around 60% of the total production,

the balance 40% being contributed by the unorganized bakeries. The industry consists of two

large scale manufacturers, around 50 medium scale brands and small scale units ranging up to

2500 units in the country, as at 2000-01. The unorganized sector is estimated to have

approximately 30,000 small & tiny bakeries across the country.

The annual turnover of the organized sector of the biscuit manufacturers (as at 2001-02) is Rs.

4,350 crores.

In terms of volume biscuit production by the organized segment in 2001-02 is estimated at 1.30

million tonnes. The major Brands of biscuits are - Brittania, Parle Bakeman, Priya

Gold,Elite,Cremica, Dukes, Anupam, Horlicks, Craze, Nezone, besides various regional/State


Biscuit industry which was till then reserved in the SSI Sector, was unreserved in 1997-98, in

accordance with the Govt Policy, based on the recommendations of the Abid Hussain


The annual production of biscuit in the organized sector, continues to be predominantly in the

small and medium sale sector before and after de-reservation. The annual production was around

7.4 Lakh tonnes in 1997-98 In the next five years, biscuit production witnessed an annual growth

of 10% to 12%, up to 1999-00.

The annual Growth showed a decline of 3.5% in 2000-01, mainly due to 100% hike in Central

Excise Duty (from 9% to 16%). Production in the year 2001-02 increased very marginally by

2.75% where in 2002-03 the growth is around 3%.

The Union Budget for 2003-04 granted 50% reduction in the rate of Excise Duty on Biscuit i.e.

from 16% to 8%. The Federation's estimate for the current year indicates a growth of

approximately 8% to 9%.

However the average utilization of installed capacity by biscuit manufacturers in the country has

been a dismal 60% over the last decade up to 2001-02.

Though dereservation resulted in a few MNCs, i.e. Sara Lee, Kellogs SmithKline Beecham,

Heinz etc entering the biscuit industry in India, most of them, with the exception of SmithKline

Beecham (Horlicks Biscuits), have ceased production in the country.

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CALCUTTA BUSINESS SCHOOL | Case study on Britannia Industries Ltd 6

On the other hand, import of biscuits, specially in the high price segment has started from 1998-

99, but however, the quantum of imports has not so far increased alarmingly and has remained at

around 3.75% of the consumption of biscuits in the country in the year 2001-02. However, recent

imports from china industries cheaper verities of biscuit, needs to be examined with cautions,

especially in the context of the price as the low margin based domestic industry, which is

operating at 60 % of the total installed capital. Exports of biscuits from India has been to the

extent of 5.5% of the total production. Export are expected to grow only in the year 2003-04 and


Biscuit is a hygienically packaged nutritious snack food available at very competitive prices,

volumes and different tastes. According to the NCAER Study, biscuit is predominantly

consumed by people from the lower strata of society, particularly children in both rural and

urban areas with an average monthly income of Rs. 750.00.

Biscuit can he broadly categorized into the following segments:

(Based on productions of 2000-01)

Glucose 44%

Marie 13%

Cream 10%

Crackers 13%

Milk 12%

Others 8%

In recognition of industry's obligations towards the community, being a part of it, biscuit

manufacturers supply biscuits to the social welfare agencies in all States for the benefit of school

children, senior citizens and other needy sections of the society. FBMI Members have always

responded positively to our appeal as also by the Government, to rush truck loads of biscuits to

the people affected by earthquakes, floods, famine etc. Our industry has also participated in

supplying biscuits to the people of war ravaged Afghanistan and presently to the Iraqi people,

under the aegis of the UN.

As regards the consumption pattern is concerned. surveys and estimates by industry from time to

time indicate the average consumption scenario in the four Zones have been more or less close to

each other, as below:

Northern States: 28%

Southern States: 24%

Western States: 25%

Eastern States: 23%

Page 7: Britannia Makeover Case

CALCUTTA BUSINESS SCHOOL | Case study on Britannia Industries Ltd 7

Though India is considered as the third largest producer of Biscuits after USA and China, the per

capita consumption of biscuits in our country is only 2.1 Kg., compared to more than 10 kg in

the USA, UK and West European countries and above 4.25 kg in south cast Asian countries, Le.

Singapore, Hong Kong, Thailand, Indonesia etc. China has a per capita consumption of 1.90 kg,

while in the case of Japan it is estimated at 7.5 kg.

In view of the meager per capita consumption even as penetration of biscuits manufactured by

the organised sector, into rural areas in India, has been very good during the last 10 years, as also

in the metro and other cities, small towns etc. However, in spite of this, the industry has not been

able to utilize about half of their installed capacities.

Biscuit is a comparatively low margin food product in the PMCG (Packaged Mass Consumption

Goods ) sector. The commodity is also price sensitive, as a consequence of which, even when the

Excise Duty was doubled on biscuits in 2000-01 biscuit manufacturers, including the major

brands, were not able hike MRPs to the extend of the steep increase in the Duty. Taxation, both

Central Excise Duty as also State Sales Tax, other miscellaneous levies i.e. turnover tax, local

area tax, mandi taxes, purchase tax, octroi etc etc, has been a major deterrent in the growth of the

biscuit industry. The CII Study Report has identified Biscuit as one of the products that should

treated as "Merit Good for the purpose of liberal tax policy both by the Centre and States.

Besides lack of technology up gradation in manufacturing, packaging etc has also been a factor

affecting our industry, along with inadequate financial credit and support particularly for the

medium and small scale biscuit units.

On the other hand, the Government of India has identified food processing industries as a priority

area to be encouraged for growth and development and created the Ministry of Food Processing

Industries (which was till then a Dept in the Ministry of Agriculture), headed by an Ministry of

State with Independent charge.

The Food Processing Ministry has been rendering yeomen service to the industry, of which

biscuit manufacturing is an important part. The Ministry, with the objective of enabling food

processing Industries to undertake technology upgradation diversification. expansion as also to

set up new units has formulated scheme of Grants and Financial

Other areas of concern to industries of food products like Biscuits include multiplicity of food

laws and their enforcing agencies in the Central and State Governments with overlapping

functions & implementation. At the persistent instance of industry organizations including FBMI

the Ministry of FPI took the initiative in evolving an Integrated Food Act, harmonizing the

existing multifarious legislations enabling better compliance. The Draft Unifled Food Bill 2002

has been prepared and now awaits approval by the Cabinet and the Parliament, which will fulfill

an important need of the industry and pave way for accelerated development and growth.

Biscuit manufacturing as well as other bakery products like Bread etc are agro based industries,

with the major inputs - wheat flour/atta sugar, milk vanaspati/vegetable oil etc all being

agriculture produces.

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CALCUTTA BUSINESS SCHOOL | Case study on Britannia Industries Ltd 8

Industries such as Biscuit are also languishing as they are not able to achieve their potentials for

higher production, in the absence of the concrete food Processing Industry Policy. FBMI in close

coordination with other organizations and apex Chambers, initiated to urge the Govt of India to

formulate a comprehensive Policy Document, for smooth growth and harmonious development

of the industry. The Food Processing Industry Policy, which has been evolved as a result of

various workshops, deliberations and representations by a large cross section of food processing

industries, is yet to be finalized. It is hoped that the Ministry of Food Processing Industries, GOI

would initiate action for implementation of the Policy expeditiously.

Biscuit Production

According to the production figures of member‟s available upto the calendar year 2003, the total

production was 625000 tonnes as against 475000 tonnes in the previous year. The production of

biscuit for the last 11 years is as under:

1993 - 167750 1994 - 180526

1995 - 202567 1996 - 222371

1997 - 362000 1998 - 400000

1999 - 425000 2000 - 450000

2001 - 465000 2002 - 475000

2003 – 625000

Note: the production of members of FBMI consist of 50% (approx) of the total production of

biscuit in the organized sector.

Page 9: Britannia Makeover Case

CALCUTTA BUSINESS SCHOOL | Case study on Britannia Industries Ltd 9


Britannia is a producer and distributor of bakery and dairy products. It manufactures, distributes

and sells a range of branded products including:

Distribution Strategy

As it has been shown in the figure ,the process of operation of distribution occurs in this way in Britannia

Industries. After the Biscuits are manufactured and packaging are done in the production center they

are supplied to the depot. There is only one depot in the whole city. From the depot they are being

distributed to various authorized Wholesalers. From the Authorized wholesalers ,distributors collect the

products according to their need and they supply it to the retailers according to the order placed by the

retailers. The distributors have a major role to play in the sales. Their job is to increase the sales.

Distributors supply the products to the retailers doorsteps and collect the payment. Distributors job is to

introduce news product to the retailers for sale and try to capture more shelf and air space in the retail


Production Center

Depots Authorized Wholesalers’

Distributors Retailers


Good Day

Little Hearts

Milk Bikis


Maska Chaska


Pure Magic



Time Pass













Page 10: Britannia Makeover Case

CALCUTTA BUSINESS SCHOOL | Case study on Britannia Industries Ltd 10

Corporate Strategy

Mission :

To dominate the food and beverage market in India through a profitable range of “Tasty

Yet Healthy” products by making every Indian a Britannia consumer.

Vision :

To dominate the food and beverage market in India with a distinctive range of “Tasty Yet

Healthy” Britannia brands.

Supply Chain

There are two types of trading in Britannia Industries Limited

1. General Trading and

2. Alternate Channel for Development Trading.

General Trading includes retails shops, stores, sales service outlet like Big bazaar, Spencers etc

from where people can buy Britannia products.







Page 11: Britannia Makeover Case

CALCUTTA BUSINESS SCHOOL | Case study on Britannia Industries Ltd 11

Alternate Channel for Development Trading includes all trading which are done outside

general market. Selling of Britannia products in schools & colleges, hospital, hotels, office

canteens/café, railway stations, airports etc comes under ACD.

Alternate Channel development includes two types of selling categories such as

1.Welfare Account &

2. Non Welfare Account or MRP selling in an organization.

Welfare Account in any organization is such that where organization doesn‟t charge anything

when they provide cake, biscuits to their employees.

MRP selling category includes Selling of biscuits, cakes, cookies at different institutions like

hospital canteens, hotels, office canteens, school & college canteens, bus depots etc.

Here in these institutions Britannia products are supplied through a distributor at dealer price for

MRP selling to their employees.

That is company receives the Britannia products at dealer price and they are supposed to sell

these products to their employees if they need at MRP price.

Strategic Marketing

“Britannia khao world cup jao”—promotion was for 3 months which promised free 3 days trip

to UK for 100 lucky consumers of Britannia.

The company rolled out a wide range of its products bearing the `Britannia khao world cup jao'

slogan on the packaging.

Cricket is a craze in India

Britannia started giving white marble free with every pack of Britannia Treat.

Marble has a caricature of Indian cricketer printed on it.

Consumers were required to collect 100 runs obtained on the purchase of Britannia products

and redeem these for cut out coupons -- the key to the lucky prizes -- that can be collected at

designated prize centers.

Britannia made up to 37% profit of this communication mix.

Page 12: Britannia Makeover Case

CALCUTTA BUSINESS SCHOOL | Case study on Britannia Industries Ltd 12


The Company believes that its business is brands. Therefore, the right and adequate investment

in brands is a key priority. This investment includes everything that the Company does to gain

consumer insights and convert those into meaningful and differentiated propositions that delight

& satisfy consumers and create value for all other stakeholders. During the year, investment in

Advertisement & Sales Promotion increased by 17.5% and together with the renovation &

innovation efforts across the portfolio, resulted in a healthy double digit growth of 20.1%.

The Company further streamlined and strengthened its marketing approach across the two

portfolios of „delight and lifestyle‟ brands like Good Day, Treat, 50-50, Pure Magic, etc., and

„health and nutrition‟ brands like Tiger, Milk Bikis & MarieGold. A 7th new Power Brand was

added to the Company‟s portfolio with the launch of NutriChoice 5 Grain, which created a

meaningful stake in the „health and nutrition‟ space.

A large number of initiatives were taken to fortify the health and nutrition aspect of the

Company‟s portfolio and in that respect, as stated last year, your Company made the responsible

decision of removing transfat from its entire portfolio of biscuits, the only Company in India to

have done this.Consequently, a total of 8,500 T of transfat was removed.

To further strengthen the „health & nutrition‟ benefit, several key brands were fortified with

essential micro-nutrients and today 50% of your Company‟s biscuit & bread portfolio is fortified.

Several new and renovated offerings were introduced across Power Brands and these include


Creams in a new recipe, packaging and a wider choice of flavours; Berry Cherry cake; specialty

breads like cheese garlic bread, multi grain bread, etc.

With a view to increasing the accessibility and affordability of its brands, a number of new packs

and price points were introduced to target new consumption opportunities both „in-home‟ and

„out of home‟

Growth Strategy

Over the last two and half years Britannia has seen over 22.5% compounded annual growth. Although

the market has not grown but still Britannia has increased their share in the last 4 yrs so they have a

share advantage. These things are done in biscuits category .But they have a larger portfolio of products

like cake, rusk , bread etc which has contributed around 400 cr in their business. So when they look at

bakery they look at each of these segments .There is a large market in bakery so they planned to

renovate some of the existing brands rather than innovating new products.

Page 13: Britannia Makeover Case

CALCUTTA BUSINESS SCHOOL | Case study on Britannia Industries Ltd 13

In dairy product segment Britannia sees that Amul is a big player in dairy product market so it does not

see any advantage to move into this segment .It wants to concentrate on its core competence but it may

enter into the ice cream category as part of its future diversification plans.

this link is a video which describes the future course of action of Britannia industries where in the MD

Vinita Bali Discusses abt the future course of action.


To conclude Britannia is looking ahead the kind of strategy it wants to undertake in order to capture the

market and once again emerge as the market leader. How it will grow in the future and compete with

the other competitors.

Exhibit 1

Page 14: Britannia Makeover Case

CALCUTTA BUSINESS SCHOOL | Case study on Britannia Industries Ltd 14

Exhibit 2


Below RS5

Rs5 to Rs10

Rs11 to Rs15

Rs16 to Rs20

Rs21 to Rs25

Above Rs25

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CALCUTTA BUSINESS SCHOOL | Case study on Britannia Industries Ltd 15

Exhitbit 3


Rs. MM

As at / Year ended 31st March 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Assets employed

Fixed assets less Depreciation & Amortisation 1,588 1,632 1,481 1,283 1,338 1,516 2,144 2,507 2,839 2,931

Investments 2,156 3,104 2,969 2,913 3,301 3,599 3,200 3,808 4,231 4,906

Net current assets 257 592 747 43 (485) 309 596 2,072 1,161 421

Miscellaneous expenditure 163 217 260 463 342 161 256 232 266 -

4,164 5,545 5,457 4,702 4,496 5,585 6,196 8,619 8,497 8,258

Financed by

Equity shares 279 269 259 239 239 239 239 239 239 239

Reserves & Surplus 2,123 3,430 3,653 4,059 4,196 5,252 5,909 7,319 8,006 3,723

Loan funds 1,762 1,846 1,545 392 61 94 48 1,061 252 4,296

4,164 5,545 5,457 4,702 4,496 5,585 6,196 8,619 8,497 8,258

Profits and appropriations

Sales 13,325 14,510 13,941 14,705 16,154 18,179 23,171 26,170 31,429 34,246

Profit before Depreciation, Amortisation

and Tax 1,369 1,630 1,722 2,251 2,645 2,218 1,514 2,536 2,866 2,112

Depreciation and Amortisation 189 240 261 224 190 217 253 291 335 275

Profit before tax and Exceptional items 1,180 1,390 1,461 2,027 2,455 2,001 1,261 2,245 2,531 1,737

Exceptional items (41) 1,201 12 (183) (252) 6 (77) 78 (206) (529)

Profit before tax * 1,139 2,591 1,473 1,844 2,203 2,007 1,184 2,323 2,325 1,208

Taxation 434 559 482 656 715 543 108 413 521 43

Profit after tax 705 2,032 991 1,188 1,488 1,464 1,076 1,910 1,804 1,165

Dividends 153 201 251 272 334 358 358 430 956 597

Tax on dividend 16 - 32 35 47 50 61 73 162 99

Debenture Redemption Reserve 47 14 18 - - - - - - -

Retained earnings 489 1,564 692 910 1,117 1,056 657 1,407 686 469

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* Includes impact on account of transfer of dairy business of Rs. 1257 Mn in 2002.