Britannia to invest ₹100 crore to revamp cream biscuits range

Britannia is planning to invest ₹100 crore for refurbishing its creams portfolio where it has brands like Treat, Bourbon and Pure Magic, enjoying margins at 10 per cent compared to the average biscuit margins in other categories.

Ali Harris Shere, Vice-President, Marketing, Britannia, told BusinessLine that, “We want to increase our share in the creams segment from 35 per cent to 50 per cent in the next two years.

“The first step is to re-stage brands like Treat with new variants and advertising with a ₹50-crore investment and then the rest of the creams portfolio for brands like Bourbon and Pure Magic, which can go up to ₹100 crore.’’

Creams is a ₹1,800-crore category with brands from all biscuit companies.

However, the ₹27,000-crore biscuits category has been facing slow growth in the value segment (comprising the glucose and crackers categories) unlike the premium segment with categories such as cookies, creams and marie.

“Margins in the creams category is the highest at 10 per cent, which is almost two times the average in the biscuits category.

“Being the market leader in the creams segment, we are revamping our creams portfolio to strengthen our position where we have competition from ITC and Mondelez (Oreo),’’ added Shere.

Britannia has a sales turnover of ₹7,500 crore from the biscuits portfolio and is a market leader with a 58 per cent share in the premium segment, which is devoid of categories such as glucose and crackers.

While it does have the Tiger brand in the glucose segment, it is hoping customers will upgrade to its premium portfolio with brands like Good Day and Marie Gold.

“We are giving our consumers a ladder to shift to premium brands since we have SKUs (stock keeping units) at similar price points across our brands. We expect someone buying a ₹5-Tiger brand to upgrade to Good Day at the same price point but lesser grammage,’’ added Shere.

Britannia has also managed to double its distribution in the past three years from 7.5 lakh to 15 lakh outlets.

“Although we have about 35 per cent of sales from the wholesale trade, we have been trying to reach out directly to outlets, which has led to better sales,’’ added Shere.

In fact, GST did impact the biscuits major since there was de-stocking by wholesale traders to a certain extent but it managed to tide over the crisis since it already had a substantial direct distribution in place.

“We will continue to have about 35 per cent of sales from wholesalers as the channel will not go away but at the same time by doing direct sales, we will have a better pay back from every outlet that we reach out to. We have been building direct distribution for the past five years and today reach out to 15 lakh outlets directly,’’ he added.

Besides, GST has also taken a toll in the value segment where biscuits with price below ₹100 per kg have now been slapped with GST at 8 per cent (it was exempt from excise before GST), while the premium segment is almost intact at 18 per cent GST.