Britannia Industries, India’s largest biscuit-maker, is deep into rural focus, which remains intact, and the company’s rural revenue may touch 50 per cent in the next three years amidst a steady rebound in urban demand.
The company also aimed to compensate for the extraordinary annualised cost inflation of Rs 1,300 crore by March 2022 through a combination of price increases and pack size reductions. The cost of inflation in 2021-22 for Britannia is more than the cumulative six previous years.
“Rural revenue will reach 50 per cent in the next three years for Britannia as the company continues to focus on the rural market and its profits from rural segment contribution is already around 35 per cent.
Britannia’s rural market-share gain is 2.5 times that in the Q2 period ending September. In the last few quarters, the rural market has been strong, and the company continues to stay upbeat about expanding rural distribution.
The company has increased its rural direct dealers in the last few months from 2,000 to 25,000. It has been said the focus states were also showing some positive numbers compared to national growth.
Meanwhile, the annualised total estimated inflationary pressure, which is about Rs 1,300 crore, will be recovered by the end of the year. In the September quarter, a 5% increase was implemented, and another 17.5 percent will be implemented in the following two quarters. A third of this price increase is reflected in the consumer-end hiking direct price, with the remaining two-thirds reflected in pack size reductions.
An unprecedented 54 percent increase in the price of palm oil, a 35 percent increase in the price of industrial fuel, and a 30 percent increase in the price of packaging materials resulted in a 14 percent increase in overall inflation during the quarter. Commodity price inflation has resulted in a lower profit for Britannia in the second quarter of 2021-22. The company posted a consolidated net profit of Rs 381.84 crore for the second quarter.