A freshly baked strategy: Behind Britannia Industries' plan to pivot from biscuits to a food player

Winds of change are brewing at one of India’s best-known companies—the Rs 14,000-crore biscuits major Britannia Industries. The company—a household name that commands a market share of 33 per cent in the organised biscuits market (Parle Products is second with 28 per cent)—is now hungry for more. And this is playing out by way of a strategy to morph into a foods player from being primarily a biscuits company. In a way, the move makes eminent sense as the Indian foods sector has several high-growth segments. But Britannia, led by former PepsiCo veteran Varun Berry, is picking its segments carefully since it does not want to lose out on its current high margins of about 12 per cent. Berry’s strategy entails getting Britannia into segments that have clear adjacencies to the company’s core biscuits business. Consequently, baked snacks like rusk, cakes and croissants are on the menu, keeping in mind the requirements of the Indian palate.

In our cover story, Berry sits down with Krishna Gopalan to explain how this transformation from biscuits to foods is playing out, and what the road ahead for Britannia will look like. The stock markets have been very welcoming of whatever the company has done thus far, with the Britannia stock outperforming the benchmark S&P BSE Sensex over the past several years. Berry explains that the foods expansion will see Britannia’s revenue split 50-50 between biscuits and other categories over five years, from the current 80 per cent share of revenues the biscuits business contributes. The first taste of success is being seen with croissants, currently generating around Rs 180 crore in sales and growing. There are also growth plans for the difficult-to-crack dairy segment; Britannia wants a value-added play in that space. And as it seeks a larger share of the critical salty snacks market, it will be up against two challenges: the presence of big names like Haldiram’s, Bikaji and Balaji, and lower margins than what the company is currently used to. But Berry is candid about it and says the company “will have to get it right on salty snacks”. The foods segment is critical for growth, and Britannia knows that well. As it rolls out its strategy, a riveting battle is bound to play out between it and foods majors like ITC and Hindustan Unilever.

As the Bengaluru-based Britannia nibbles away at its new plan, elsewhere in its home city, India’s start-up ecosystem has been feeling the jitters following the dramatic collapse of Silicon Valley Bank (SVB) in the US, a bank where several Indian start-ups with operations in America have their money parked. Sohini Mitter examines the impact the fall of SVB will have on India’s start-up ecosystem, coming as it does during a prolonged funding winter. And while the US regulators have ensured that all depositors in SVB will get their money, the crash is bound to reverberate across India’s start-ups and send many back to the drawing board.