BRITANNIA SEEKS PARTNER FOR DAIRY VENTURE
Company plans to foray into value-added segments, increase distribution footprint
The Nusli Wadia-promoted Britannia Industries is seeking a joint venture (JV) with a global player to expand its presence in the dairy segment. At present, dairy is a ~4 billion business for the food major.
Within dairy, Britannia’s focus has been the cheese segment, which includes products like cheese slices, cheese cubes and blocks that have a longer shelf life.
With this joint venture, the company was attempting to take complete control of the entire process, from collection of fresh milk to processing and then to introduction of value-added products such as cheese deserts, cheese rolls and lollypops, Varun Berry, managing director, Britannia Industries, told Business Standard.
“We are also evaluating whether it makes sense to have a joint venture for some of these categories. Hopefully, in another 3-4 months, we will be ready with the answer,” Berry added.
There is fierce competition in the dairy segment, with companies like Nestle, Amul, Mother Dairy and Danone and new players like Patanjali, Coca-Cola and ITC jostling for space.
However, Britannia did not want to get into the commodity market, which include fresh milk and where the competition was more intense, and instead focus on the premium segment, where there were hardly any international players, Berry said.
“If you are getting into valueadded categories, then it (the competition) is not that fierce. If you think about it, there are not many international players because it is a protected business — you can’t import. If you are able to do international quality products with the right kind of taste, then the opportunities are huge,” he added.
If the joint venture materialises, this will be Britannia’s second operational joint venture focusing on the Indian market after the one with Chipita, the Greek baker, announced last February.
Britannia holds a majority stake in the venture with Chipita. Together, the companies will infuse around ~1 billion in the venture. The venture will focus on snacking categories, including croissants, rolls and other dough products.
To make the dairy segment more effective, Britannia has started collecting fresh milk on a pilot basis in Maharashtra. It will go full scale once its food park at Ranjangaon in Pune becomes operational. “We will have a fully integrated dairy business, from sourcing milk to processing. We will be sourcing milk from almost 25,000 farmers,” Berry said.
The Ranjangaon plant will be spread across 150 acres and will be fully integrated. It will house the dairy processing unit and plant for dairybased products, apart from units catering to the JV with Chipita and other segments such as biscuits, rusk, flour mill and a warehouse. The plant will be ready by the end of 2019.
The company is also focussing on increasing its distribution footprint. According to Berry, Britannia has been able to reach 4.8 million outlets, which has given it a strong presence in the Hindi-speaking belt and led to profit growth in the just ended quarter. In the third quarter ended December, Uttar Pradesh has, for the first time, shown a growth of close to 20 per cent. “It is all about distribution; about taking products to more outlets and making sure we do the merchandising. It is not about price cut but hard work,” Berry said.