Bri­tan­nia Plans to Rope in a Part­ner for Dairy Busi­ness

Co may dis­con­tinue a few brands in this seg­ment to fo­cus on other prod­ucts

The Economic Times - - Companies: Pursuit Of Profit - Our Bureau

Ben­galuru: Bis­cuit maker Bri­tan­nia In­dus­tries plans to rope in a part­ner to strengthen its dairy busi­ness and dis­con­tinue a few brands in this seg­ment as part of a strat­egy to fo­cus on higher mar­gin prod­ucts.

“Dairy project is now in its fi­nal stages and in an­other month we can give a clear view,” Bri­tan­nia In­dus­tries man­ag­ing di­rec­tor Varun Berry said in an an­a­lysts’ call on Wed­nes­day. “Home for this project will be Pune’s Ran­jan­gaon food park, in the mid­dle of dis­tricts which pro­duce high­est amount of cow milk. The ob­jec­tive is to be­come more com­pet­i­tive and make bet­ter mar­gins,” he said. He did not name any po­ten­tial part­ner.

This will be the Good Day cook­ies maker’s third at­tempt at a joint ven­ture in the dairy seg­ment, which has been drag­ging its over­all growth.

In 2002, Bri­tan­nia had formed a joint ven­ture with New Zealand-based Fon­terra Dairy to sell milk and milk prod­ucts un­der the Milk­man Brand. Af­ter record­ing losses, Fon­terra ex­ited in 2009 and sold its 49% stake to Bri­tan­nia. Around the same time, Bri­tan­nia had also ended its decade-long as­so­ci­a­tion with French foods and dairy gi­ant Groupe Danone SA.

The In­dian dairy mar­ket is largely con­trolled by co­op­er­a­tives such as Amul and Mother Dairy.

In the first quar­ter ended June Bri­tan­nia re­ported 7.4% jump in sales year on year in spite of the im­ple­men­ta­tion of goods and ser­vices tax (GST) last month, which had led to de­stock­ing in trade in June. Berry said de­stock­ing was about 10% in the month of June as traders were un­cer­tain of the new tax regime.

Bri­tan­nia pulled back on ad­ver­tis­ing in the first quar­ter due to sub­dued en­vi­ron­ment af­ter de­mon­eti­sa­tion and the on­set of GST. The com­pany spent .₹ 80 crore on mar­ket­ing and ad­ver­tis­ing in the quar­ter, .₹ 15 crore less than a year ago. Berry said ad­ver­tis­ing and mar­ket­ing spend will now “start to come back to nor­mal”.

Ac­cord­ing to the com­pany, af­ter de­mon­eti­sa­tion and GST, lo­cal brands are fac­ing pres­sure in the .₹ 27,000-crore bis­cuit cat­e­gory.

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