COMPANY PROFILE

Britannia Industries
Limited

REFERENCE CODE: A2DF7855-523B-4679-9D9E-DD44D0DC1C9B

PUBLICATION DATE: 7 Feb 2014
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Britannia Industries Limited

TABLE OF CONTENTS

TABLE OF CONTENTS
Company Overview..............................................................................................3
Key Facts...............................................................................................................3
SWOT Analysis.....................................................................................................4

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Britannia Industries Limited

Company Overview

COMPANY OVERVIEW
Britannia Industries Limited (Britannia or the company) is engaged in the manufacturing and
distribution of bakery and dairy products such as biscuits, bread, cakes and rusks, milk, butter and
cheese. The company primarily operates in India. It is headquartered in Bangalore, India and
employed 2,190 people as of March 31, 2013.
The company recorded revenues of INR61,854.1 million (approximately $1,131.9 million) in the
financial year ended March 2013 (FY2013), an increase of 12.8% over FY2012. The operating profit
of the company was INR3,474.9 million (approximately $63.6 million) in FY2013, an increase of
39.5% over FY2012. The net profit was INR2,595 million (approximately $47.5 million) in FY2013,
an increase of 30% over FY2012.

KEY FACTS
Head Office

Britannia Industries Limited

Britannia Gardens
Old Airport Road
Vimanapura
Bangalore 560 017
Karnataka
IND

Phone

91 80 3940 0080

Fax

91 80 2526 6063

Web Address

http://www.britannia.co.in

Revenue / turnover 61,854.1

(INR Mn)
Financial Year End

March

Employees

2,190

Bombay Stock
Exchange Ticker

500825

National Stock
Exchange Ticker

BRITANNIA

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Britannia Industries Limited

SWOT Analysis

SWOT ANALYSIS
Britannia is engaged in the manufacturing and distribution of bakery and dairy products such as
biscuits, bread, cakes and rusks, milk, butter and cheese. The company has a portfolio of top selling
food brands. Britannia produces and distributes premium brands such as 50:50, Good Day, Little
Hearts, Milk Bikis, Marie Gold, Maska Chaska, NutriChoice, Pure Magic, Treat and Tiger. An extensive
portfolio of global brands facilitates customer recall and enhances Britannia's market penetration
capabilities. However, intense competition could lead to pricing pressures, thereby decreasing the
profitability of the company.
Strengths

Weaknesses

Strong brand portfolio

Focus on innovation
Dominance in the higher margin
non-glucose biscuit segment

High dependence on Indian market

Opportunities

Threats

Emerging Indian dairy industry

Increasing demand for healthy food
products
Growing biscuit industry in rural India

Intense competition
Volatility in raw material prices

Strengths

Strong brand portfolio

Britannia has a strong portfolio of top selling food brands. The company's premium brands include
50-50, Good Day, Little Hearts, Milk Bikis, Marie Gold, NutriChoice, Pure Magic, Treat and Tiger.
The company is one of the trusted brands in India. For instance, Britannia was rated as the Most
Trusted Food Brand and second Most Trusted Brand across all product categories by consumers
in an independent survey conducted by an industry source and India's leading business newspaper.
This is the 12th consecutive year that consumers chose Britannia among the Top 10 Most Trusted
Brands. Furthermore, Britannia holds nearly 30% of market share in the Indias biscuit category. It
also has about 21% market value share in the cheese category, distributing to approximately 30,000
outlets. Britannia is also one of the largest players in the cookies segment.
With a wide portfolio of brands and choice of product category, the company is able to differentiate
itself in the market, nurture customer loyalty, and reduce its business risk. A strong brand portfolio
not only facilitates customer recall but also enhances Britannia's market penetration opportunities.

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SWOT Analysis

Focus on innovation
The company has a strong orientation towards product innovation. Through its ability to innovate
and extend its brands and products, the company plans to strengthen and sharpen its brands. The
company launched egg-less fruit cake under brand name Britannia Veg cake; Treat Chocoz, a new
cream range; and new flavors and addition in its fruit cake range, in 2009. Further, in 2010, the
company added the Milk Bikis Almond Cookies line to its existing Milk Bikis category and expanded
its health biscuit brand, NutriChoice, to the diabetic friendly essentials range. In the beginning of
2011, the company entered into the branded breakfast food sector with the launch of Britannia
Healthy Start, a new range of ready-to-cook breakfast mixes. In addition, to enhance its presence
in the healthy milk based drinks, the company launched TigerZor Choco Milk and TigerZor Badam
Milk during the same year. Britannia also launched new tea time biscuit, Vita Marie Honey Oats, in
2011. This biscuit is made up of two visible layers of oats and wheat fiber that help to reduce
cholesterol by removing bad cholesterol from the body.
Britannias continuous focus on research in the areas of nutrition, ingredients, packaging, process
technology and food safety enabled it to launch new products, to improve products with upgraded
technology and cost efficiencies, and to upgrade packaging of its products. In FY2012, Britannia
launched several new and renovated products across the entire portfolio, including NutriChoice
Multigrain Thins and Roasty, Pure Magic, Treat Fruit Creams, Marie with Honey and Oats,
50-50-Snackuits, Good Day Fresh Bake Butterscotch and Chocolate Ecstasy. In FY2013, the
companys new product launches included a wide range of Time Pass Classic Salted biscuits and
a new coffee variant in Bourbon. The company also upgraded packaging to differentiate consumption
occasions and consumer segments. It introduced tighter packs for Good Day and Tiger brands, and
transitioned from polyvinyl chloride (PVC) to polypropylene (PP) trays for greener packaging.
The introduction of new brands and innovative product ranges has been one of the strengths of the
company and has helped it in retaining its leadership position in the Indian market. Product innovation
adds to strength of the company's power brands and enables it to stay ahead in the competitive
market.
Dominance in the higher margin non-glucose biscuit segment
The Indian organized biscuit industry has been largely dominated by Britannia and Parle. The
operational strategies of both the companies have however been different. Britannia till now has
been a major player in the non-glucose segment while Parle primarily caters to the glucose segment.
Britannia offers several premium products such as Good Day, Bourbon, and Treat in the higher
margin non-glucose segment. Parle, except for its Hide & Seek brand of biscuits, mainly operates
in the lower margin glucose and Marie segment. As per industry estimates, the premium biscuit
segment is expected to grow at a higher rate compared to the glucose segment whose contribution
by value decreased to 24% in 201112 from 33% in 200910. Britannia with majority of its sales
from non-glucose segment is well positioned to tap the higher margin segment.
Furthermore, the company can leverage the profitability and cash flow generated from the premium
segment to fuel the growth and offset the price-war in other segments. Besides, the changing

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Britannia Industries Limited

SWOT Analysis

demographics and improving disposable income coupled with the improving economic condition,
increases the potential of growth in the premium segment. Additionally, the premium biscuit segment's
volume growth prospects have improved as a result of heightened focus on smaller packs and
innovative products. Britannia with its favorable sales mix and strong brand portfolio can utilize the
opportunity to further its market share.

Weaknesses

High dependence on Indian market

In spite of making forays into other international markets, Britannia is still dependent on the Indian
market for majority of its revenues. As compared to this, Mondelez International, the US foods major,
is expanding its presence in the Indian biscuits market. Mondelez International manufactures and
markets packaged foods in around 165 countries. Furthermore, it generated $35,015 million in
revenues in the financial year ended December 2012, with approximately 82.9% of its revenues
derived from international operations. Britannia, on the other hand, derives almost all its revenues
from Indian market.
In a competitive environment, high dependence on Indian market not only exposes Britannia to the
vulnerability of the local market conditions but also limits the growth opportunities. Besides, the
company is also deprived of the economies of scale and benefits which its competitors enjoy because
of their global operations.

Opportunities

Emerging Indian dairy industry

The dairy industry in India is expected to grow significantly. According to industry estimates, the
dairy industry is expected to grow at a compound annual growth rate (CAGR) of nearly 15% during
201320. Increasing consumption of value-added products, including yogurt, cheese, ice cream and
baby food, are expected to drive this growth. In addition, the milk consumption growth rate is also
expanding significantly; it was almost double the milk production growth rate in recent years.
Britannia, apart from biscuits and breads, also markets and sells dairy products comprising cheese,
dairy whitener, curd, butter, and clarified butter. Besides, the company is also focusing on the flavored
drinks market. With recent launch of milk-based healthy drinks such as TigerZor Choco Milk and
TigerZor Badam Milk, the company further enhanced its flavored drink portfolio. The new launches
and strong brand equity of Britannia would enable it to target and penetrate the consumer group
with ease. This would increase the revenue sources and growth opportunities for the company in
the next few years.
Increasing demand for healthy food products

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Britannia Industries Limited

SWOT Analysis

Consumers worldwide have become more health conscious in recent years. Increasing number of
consumers are opting for natural, fat-free and healthy food products. Food items containing trans-fat
are losing market share as they are linked to cardiovascular diseases. The trend is also visible in
changed Indian consumption habits in recent past. According to an industry survey, 62% of surveyed
consumers said they prefer eating natural and fresh foods. Moreover, 77% of urban Indians are
cutting down on fats. The most important factors driving the ongoing strong growth of health and
wellness products include the rising health awareness among Indians and the widening availability
of information from various media.
The emerging health and wellness trend in the country is a growth potential for Britannia which offers
a range of low-fat and sugar free products such as NutriChoice Digestive and NutriChoice SugarOut.
NutriChoice SugarOut is the first biscuit without added sugar in the Indian market. The company
sells most of its biscuits fortified with vitamins and micro-nutrients. Besides, the company decided
to relinquish the use of trans-fats from its baked products range. In addition to these, the company
entered the breakfast market with the launch of Britannia Healthy Start, a range of ready-to-cook
breakfast mixes, in 2011. In the same year, Britannia launched new tea time biscuit, Vita Marie
Honey Oats, further expanding its product portfolio in the health and wellness category. Later in the
year, the company launched its new range of Health Breads, including honey and oats bread,
multi-grain bread, 100% whole wheat bread and multi-fiber bread. During FY2013, the company
expanded the reach and distribution of NutriChoice diabetic friendly products across the country by
almost 50%. As part of its healthy snacking portfolio, it offers Tiger brand, with each serving designed
to deliver 25% of RDA of iron. Other brands that the company offers as part of its healthy snacking
portfolio containing micro-nutrients include Milk Bikis, Britannia Marie Gold, VitaMarie, Britannia
Bread, Tiger Chocolate and Badaam Milk and Britannia Flavored Yoghurt.
With the emphasis on healthy foods increasing, the company can leverage its brand strength to
introduce new products into the health and wellness space and enhance its product portfolio.
Growing biscuit industry in rural India
The biscuit industry in India is growing at a fast pace. According to industry sources, the Indian
biscuit industry is expected to grow at a rate of 15% per annum in the next five years, and is one of
the key categories in the Indian fast moving consumer goods industry. Rural markets account for
more than half of the biscuit sales in India. The penetration rate of biscuits in rural markets (5060%)
is lower compared to that of the urban markets (7585%) according to industry estimates. The
company offers various biscuit brands including Tiger, Good Day, 50-50, Marie Gold, Treat, Milk
Bikis, NutriChoice, Time Pass, Pure Magic, Little Hearts, Nice Time, and Vita Marie Gold. The
company's strong market presence in the competitive Indian biscuit industry could be leveraged to
tap the growing demand from rural markets and increase its revenues.

Threats

Intense competition

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Britannia Industries Limited

SWOT Analysis

The company faces intense competition from local and international companies in its primary business
segment, biscuits. Parle, ITC, and other local players are challenging the company's market share
in India. In 2003, ITC forayed into biscuits market with the launch of Sunfeast range of glucose,
marie and cream biscuits. Currently, Sunfeast has well-established presence in almost all categories
of biscuits. ITC is rapidly increasing its market share in the premium cream biscuit segment by
expanding its product offering in this segment. Besides, the entry of international companies like
UK's United Biscuits and GlaxoSmithKline has intensified the competition. Also, other major
multinationals like Mondelez International and PepsiCo entered the Indian biscuits market. PepsiCo
launched Aliva baked crackers in 2009, and continued to expand by launching six new baked variants
under Aliva in 2012. PepsiCo has an established distribution network in the country which could be
used to penetrate the Indian biscuits space. On the other hand, the acquisition of Cadbury by
Mondelez International has opened up avenues for the large food giant to enter the lucrative Indian
biscuit market. Mondelez International is banking on the premium brand value of Cadbury and its
distribution strength to launch its biscuits, chocolate and snacks brands in India. In 2011, Mondelez
International launched Oreo cookies into Indias biscuit market through its subsidiary Cadbury.
Mondelez International, with revenues of $35,015 million in the financial year ended December 2012,
and PepsiCo, with $65,492 in revenues during the financial year ended December 2012, enjoy
competitive advantage in term of cash and financial strength over Britannia. These global companies
along with having greater financial resources, also have substantially greater marketing and distribution
resources. Aggressive marketing and other competitive actions pursued by these large companies,
besides innovative products and price wars by national players, would make it more difficult for
Britannia to sustain its leadership position.
Volatility in raw material prices
The primary materials used by the company to produce and manufacture its products are wheat,
sugar and vegetable oils. On a global and regional basis, these raw materials and components are
susceptible to significant price fluctuations due to supply and demand trends, transportation costs,
government regulations and tariffs, changes in currency exchange rates, price controls, the economic
climate, and other unforeseen circumstances. The companys cost of sugar purchases grew by 17%
in FY2013, compare to FY2012.
Since the wheat and sugar production depends upon monsoon, an unfavorable monsoon could
affect the supply of these crops, pressurizing the already steep prices of the inputs. Moreover, India
imports majority of its vegetable oils consumption, exposing the prices to the exchange rate
fluctuations. Any adverse volatility in the raw material prices or exchange rates could materially affect
the company's profits.

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