New Delhi: Biscuit maker Britannia Industries Ltd’s research and development (R&D) team is looking at creating new categories in the premium segment while reinvigorating its mainstay Tiger brand of biscuits in the value segment.
The Bengaluru-based company, apart from exploring expansion in categories such as salty snacks and value-added dairy, is looking at entering the breakfast segment in its drive to evolve into a total foods company.
“The whole idea is going to be that how do we basically not substitute the housewife with a packaged breakfast but help her in delivering the kind of healthy, tasty, nutritious breakfast which is wholesome and also safe for the family,” said Britannia’s R&D and quality vice-president Sudhir Nema.
“You have to become the third hand for the housewife so that you are helping and supporting her in terms of getting the breakfast ready,” Nema added.
In the premium segment, evolved cakes and rusks with inclusions are in the launch pipeline. Britannia also plans to add products in the dairy segment under which it currently sells cheese, ghee, butter, milk and yogurt among other products.
Nema’s team is trying to balance the premium and value segments, while also competing with ITC Ltd, maker of Sunfeast biscuits, and Oreo cookie maker Mondelez International Inc. in the higher end, and Parle Products Pvt. Ltd in the lower end.
Premium products account for about 40-45% of Britannia’s product portfolio. Tiger contributes around 12% to the revenue.
“Value as a business we have ignored or haven’t done enough in many years actually. We want to really reinvigorate the Tiger portfolio in terms of the kind of product we have, the kind of experience which we deliver and how we can do each and every variant of Tiger (and yet keep the cost intact). So it’s about focusing on the core portfolio (Tiger) and then really innovating on the premium segment,” said Nema.
“Basic biscuits are available almost in all villages. An important carrier brand of growth in these markets is Tiger. Tiger Glucose and Tiger Creams are doing very well compared to the value brand market (which is stagnant or declining but Tiger cookies are not doing as well),” Motilal Oswal Securities Ltd said in a November report.
Britannia set up a 55,000-sq. ft R&D facility at Bidadi, on the outskirts of Bengaluru, at an investment of Rs200 crore in November. The facility is expected to boost innovation and become more cost-efficient at a time when the company faces tough competition from others.
Britannia’s second-quarter profit rose 5.84% to Rs234.03 crore from a year earlier and revenue increased 11.2% to Rs2,430.28 crore in the three months ended 30 September. It launched two new products in the second quarter—50-50 Mathri Masti and Good Day Chocochips.
“If you think about the consumers today, they are more aspirational. They want to experiment a lot more on premium, indulgent products. It’s not only in food, it’s (in) everything. And hence you’ll see a lot of activity happening in that segment, even from Britannia’s side,” said Nema.
“Premiumization caters to a profitable niche. The niche area is small and there is only that much that you can grow. If everyone starts to focus on premiumization, then there comes a point in time that the finite space becomes severely restricted and all the players are fighting in that opportunity pie,” said Ankur Bisen, senior vice-president at retail consulting firm Technopak Advisors.
The premium space does not account for more than 10% of the market no matter how the pie is sliced. Close to 70% of retail consumption in India is food and food-related but the branded penetration of food into this category is in single digits. The value segment is severely under penetrated and has got maximum opportunity but it is the least served by brands, Bisen added.