The time for higher volume growth within fast-moving consumer goods (FMCG) is coming as inflation concerns moderate within the sector, Britannia’s vice-chairman and MD Varun Berry has said.
Addressing investors during an analyst call on Wednesday, Berry, 62, who was re-appointed as vice-chairman and MD of the company for a five-year term starting this April, said that the aspiration for Britannia would be to get back to “high single-digit or double-digit volume growth” after reporting a 5.5% volume growth in Q3FY24.
Britannia’s focus would be to grow topline aggressively as input prices have stabilised, Berry said, adding that the aim in the future would be to grow adjacent businesses (such as cheese) into stronger segments. For instance, the aspiration for cheese was to make it a Rs 1,000 crore business in five years. Britannia has a 51:49 joint venture with French cheese maker Bel Foods.
“The demand environment is progressively recovering and consumption is coming back. The time for higher volume growth is coming in FMCG. While it will not happen in the next quarter or so, but we are moving towards it. I am hopeful that we will get into high single-digits or double-digit volume growth in the future,” he said about future growth prospects.
Berry’s statements acquire significance since market researcher NielsenIQ on Tuesday pointed to a slowing FMCG market in both urban and rural areas on a sequential basis. NielsenIQ also said that FMCG value growth for calendar year 2024 would be in the region of 4.5-6.5%, which is lower than its outlook of 7-9% that it had for calendar year 2023.
Berry has a contrarian view on NielsenIQ’s outlook, saying that urban markets continued to outperform for Britannia versus rural markets. “Urban growth is outpacing rural growth. This is reflecting in our premium portfolio which is doing very well versus our value segment which is under pressure because rural demand is lagging,” he said.
He added that the company had expanded direct reach and partnered with 29,000 rural distributors during the December quarter despite rural growth being muted for the period.
“As a result, our focus states outperformed other regions, growing 2.4x that of the rest of India,” he said. Britannia’s focus markets include the Hindi heartland covering markets such as Bihar and Uttar Pradesh, where it has manufacturing units.
On the cost and profitability front, Berry said that Britannia would stay vigilant with regard to commodity prices and the evolving geopolitical situation in West Asia.
“We will continue to invest behind our brands and stay price competitive with a clear objective of driving market share while sustaining profitability,” he added.