Britannia Industries is in intentions to fetch-in a new partner to fortify its dairy business and cease few brands in the segment as a strategy to stress on products that are of higher margin.
Managing Director of Britannia, Varun Berry said, “The work of the dairy project is at present in the final stage and we can give a clear view on this by next month. The project will be based in Pune’s Ranjangaon food park, which is located at the center of the district producing a large quantity of cow and milk. The aim is to get more competitive and gain better margins.”
The name of the potential partner is yet to be disclosed. This will be the third attempt of Britannia in the dairy segment that is impacting the overall growth of the company. Long back in 2002, the biscuit maker collaborated with Fonterra Dairy based in New Zealand to sell milk and its products under the brand name Milkman. Further, owing to the loss, Fonterra departed from the alliance and sold its 49% to its Britannia in 2009.
Almost at the same time, Britannia also discontinued its 10 years long alliance with dairy giant Groupe Danone SA and French foods. The Indian dairy market is massively dominated by existing players such as Mother Dairy and Amul. Britannia saw 7.4% rise in sales in the first quarter of this fiscal year. The spur in the sales was on the grounds of goods and services tax implementation in the previous month that resulted in destocking in June. The MD of the company shared that there was 10% of destocking in previous months as merchants were indecisive owing to the new tax regime.
The company pulled back on promotion and marketing in Q1 owing to the aftereffects of demonetization and inception of GST regime. The biscuit maker Britannia invested around Rs 80 Crore on advertising and marketing in the first quarter. The total expenditure went up to Rs 15 Crore in less than a year.
The spending on marketing and advertising will now be normal, Berry added.
As per the company, the local brands are witnessing pressure post demonetization and GST implementations, which in numeric goes up to Rs 27,000 Crore in biscuit category.
Chairman of Britannia Industries, Nusli Wadia while communicating with its stock holders said, “There is also a joint venture plan with Greece-based Chipita to bring in new types of croissants.”