NEW DELHI: Biscuit maker Britannia Industries has drawn up plans to turn the coronavirus-induced crisis into opportunity. Cashing in on the sudden surge in demand especially home snacking amid the lockdown, the company has launched new products and expanded its rural reach.
The maker of Good Day and Tiger Biscuits now plans to invest ₹700 crore over the next two years to set up greenfield facilities and scale up capacities of core products and another ₹300 crore for new launches including dairy, taking total investment to over ₹1,000 crore, said Varun Berry Managing Director, Britannia Industries.
“We are looking at a capex of around ₹700 crore to set up new facilities in Uttar Pradesh, Tamil Nadu and Bihar, while also expanding manufacturing capabilities of our existing plants in Ranjangaon (Maharashtra) and Odisha,” Berry said. Even with the localised lockdown, the demand trend is sustaining and not decelerating he said, adding the forecast however, is that volumes will slowly taper off, but certainly remain for the next 6-9 months
The new factories will be owned by Britannia and funded by the company itself, from internal funds. They will increase Britannia’s capacity by 10 per cent.
In a normal month, the biscuit maker’s production is about one lakh tonnes a month and currently it has even gone up to 1.15 lakh tonnes a month. Croissants and salty snacks are still in the test market stage but are likely to hit markets tentatively by December, 2020 after getting the taste right.
The Wadia group company has also been steadily deepening its distribution network, particularly in rural markets that contributes 37 per cent to revenue.
According to Berry, Uttar Pradesh is an example of the company’s success story in rural markets where the company grew 42 per cent year-on-year during the April to June period to emerge as the second-largest market. The company also plans to step up its presence in other weak markets, which include Gujarat, Madhya Pradesh and Rajasthan. Besides, Britannia is implementing S4 Hana, a new distribution system in a bid to become digitally very strong.
The market leader in the biscuit category will continue to outstrip the industry in FY21, said Abneesh Roy, executive vice-president, Edelweiss Securities. “Britannia’s cost-saving initiatives continue to be quite robust, helping it sustain margin expansion. It also has big plans in the dairy business, poised for a leg-up once the new plant comes on stream. A gradual improvement in the product mix and deepening reach would also aid in gross and EBITDA margins,” he added. Britannia is targeting cost savings of Rs. 230-270 crore this year.