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Britannia is a leading packaged foods manufacturer in India with strong presence in
biscuits category where it enjoys 35% share. It also has presence in bakery products
(bread, rusk, cakes etc) and dairy products (cheese, milk, flavored milk etc). Over
past four years Britannia has doubled its turnover, however profitability has lagged
on account of firm input cost inflation and rising competition in biscuits category.
Strong brand equity. In the recent 2010 Nielsen brand equity survey Britannia was
rated the topmost foods brand in India and was the fifth ranked brand across all
categories in brand equity. It is one of the very few brands in the country which has
enjoyed such high brand equity for several years.
Innovation is a key strength. Britannia has been very innovative in biscuits segment
launching successful brands like Good Day and Nutrichoice. It has introduced new
products, pack sizes besides exploring new distribution channels (BPOs, kiosks at
bus, railway terminals etc) to propel topline growth. It has been fairly active in
diversifying its portfolio towards non-biscuits categories like dairy (flavored milk
based drinks, various cheese variants) and very recent foray into breakfast meals
(under Healthy Start brand).
Premiumisation is a key focus area for the company. It has witnessed steady
increase in share of premium products in its overall portfolio. Its strategy of
introducing premium biscuits in smaller pack sizes has supported faster growth for
this sub-segment. Focus on value added offerings (healthy, indulgence, on the go
snacks) bodes well for better margin profile in medium term as per management.
Volatile commodity costs and high competitive intensity are key risks for
margins as per management. Britannia’s EBITDA margins of 5% (vs 7-8% 2 years
back) are amongst the lowest for branded FMCG players in India. Management
noted that volatile input costs (wheat, sugar, milk) coupled with rising competition
(from ITC, Parle) have been key reasons for margin drag. However they are
optimistic that calibrated price increases and better product mix will help in
improving margin profile going forward.
Enhancing distribution reach. Another focus area for the company is to further
strengthen its distribution network. It currently directly reaches 850,000 outlets while
the overall reach is 3.5mn outlets. The company operates through 2,500 urban
distributors and a large number of rural redistribution stockists.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Britannia is a leading packaged foods manufacturer in India with strong presence in
biscuits category where it enjoys 35% share. It also has presence in bakery products
(bread, rusk, cakes etc) and dairy products (cheese, milk, flavored milk etc). Over
past four years Britannia has doubled its turnover, however profitability has lagged
on account of firm input cost inflation and rising competition in biscuits category.
Strong brand equity. In the recent 2010 Nielsen brand equity survey Britannia was
rated the topmost foods brand in India and was the fifth ranked brand across all
categories in brand equity. It is one of the very few brands in the country which has
enjoyed such high brand equity for several years.
Innovation is a key strength. Britannia has been very innovative in biscuits segment
launching successful brands like Good Day and Nutrichoice. It has introduced new
products, pack sizes besides exploring new distribution channels (BPOs, kiosks at
bus, railway terminals etc) to propel topline growth. It has been fairly active in
diversifying its portfolio towards non-biscuits categories like dairy (flavored milk
based drinks, various cheese variants) and very recent foray into breakfast meals
(under Healthy Start brand).
Premiumisation is a key focus area for the company. It has witnessed steady
increase in share of premium products in its overall portfolio. Its strategy of
introducing premium biscuits in smaller pack sizes has supported faster growth for
this sub-segment. Focus on value added offerings (healthy, indulgence, on the go
snacks) bodes well for better margin profile in medium term as per management.
Volatile commodity costs and high competitive intensity are key risks for
margins as per management. Britannia’s EBITDA margins of 5% (vs 7-8% 2 years
back) are amongst the lowest for branded FMCG players in India. Management
noted that volatile input costs (wheat, sugar, milk) coupled with rising competition
(from ITC, Parle) have been key reasons for margin drag. However they are
optimistic that calibrated price increases and better product mix will help in
improving margin profile going forward.
Enhancing distribution reach. Another focus area for the company is to further
strengthen its distribution network. It currently directly reaches 850,000 outlets while
the overall reach is 3.5mn outlets. The company operates through 2,500 urban
distributors and a large number of rural redistribution stockists.
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