In a recent statement, Britannia’s Executive Vice-Chairman and Managing Director, Varun Berry, hinted at an imminent verdict regarding the sustainability of regional business models. He emphasized that while regional rivals may offer cheaper price tags and higher margins to traders, the true test lies in consumer demand over the next few months.
Berry cautioned that some regional competitors may find themselves in a precarious position if they fail to maintain consumer interest after initial market penetration. He highlighted the risk of overindulgence in promotional activities leading to stagnant inventory and eventual business failure.
Britannia, India’s largest biscuit maker, recently experienced a 2% increase in sales alongside a 30% drop in net profit, attributed to price reductions to counter intensified regional competition, particularly in rural markets.
The rise of homegrown brands, especially in segments like soaps, detergents, hair oil, tea, and biscuits, has posed a significant challenge to established consumer product companies. Despite pandemic-induced disruptions and subsequent inflation in raw materials, falling commodity prices have enabled smaller regional brands to expand operations and lower price points.
While large food players typically operate on higher margins, Berry noted that smaller players are content with minimal profits. He stressed the importance of carefully navigating this competitive landscape without compromising Britannia’s business objectives.
Looking ahead, Britannia anticipates double-digit volume growth in the coming quarters as cost inflation begins to taper off. Berry expressed optimism regarding the overall economic trajectory and consumer spending patterns, expecting a return to high single-digit or double-digit volume growth in the near future.