Britannia Industries plans a fivefold growth in its cheese products business in the next five years, clocking in at about Rs. 1,250 crore.
According to Britannia’s Vice-Chairman and Managing Director, Varun Berry, the bakery giant has recently entered a joint venture with the French cheese maker Bel and currently has a turnover of around Rs. 250 crore from its cheese business.
It is expecting commodity prices will come under control going forward with the softening of palm oil prices while those of sugar are stable, although wheat prices are on the rise. The company is also predicting consumption growth in the cheese segment coming from the domestic consumer and has plans to invest Rs 160 crore in the next three years, said Britannia Industries Executive Vice-Chairman and Managing Director Varun Berry.
Berry added that they have already invested Rs 150 crore in plant and machinery and are looking at investing around Rs 160 crore in the next three years.
Presently, the cheese market is very small, estimated to be around Rs 2,500 crore from the consumer side and another Rs 2,500 crore from B2B sales, largely dominated by QSR chains. But it is growing rapidly, with a CAGR of 22 to 23 percent. “It is definitely a blockbuster in the making, and this (consumer) market in the next five years should be closer to Rs 15,000 crore in the next seven years,” said Berry
Even if the company gets a substantial share of that, it would be a “great achievement” for the company. “We are looking at growing at least five times in the next five years,” he said.
Britannia and Bel announced earlier this week that they would form a 51:49 joint venture by selling a stake in their wholly owned subsidiary BDPL (Britannia Dairy Private Limited).Following this, the entity has been renamed Britannia Bel Foods. The JV will produce cheese products at the Ranjangaon, Maharashtra, facility and has plans to expand into adjacent categories as well.
Britannia Bel Foods will focus only on value-added products in the milk segment of the domestic market. Besides, JV has also acquired the marketing rights for some neighbouring markets, such as Nepal, Bhutan, and Myanmar. Presently some of the offerings are being imported, but in phases Britannia Bel Foods will start domestic manufacturing, making them affordable and accessible to consumers, Berry added.
BEL Group CEO Cecile Beliot said, “They (Britannia) have an emblematic brand in India and a powerful distribution system.” “By combining their expertise with our know-how and knowledge of cheese products, this joint venture is well positioned… and will become a leader in the fast-growing Indian cheese market.” Britannia, which has the ambition to be a food company, is “looking at many new adjacent formats.” “You will see lots of excitement coming on,” said Berry.