The domestic fast-moving consumer goods (FMCG) market is poised to return to growth in FY25, Britannia’s executive vice-chairman and MD, Varun Berry said in a post-Q4FY24 earnings call on Monday, as a stable economy coupled with the election outcome in June and the onset of good monsoons this year would augur well for the sector.
“Varun Berry, the executive vice-chairman and MD of Britannia, expressed optimism during a post-Q4FY24 earnings call on Monday, stating that the domestic fast-moving consumer goods (FMCG) market is anticipated to rebound in FY25. He cited a stable economy, the forthcoming election outcome in June, and the prospect of favourable monsoons this year as factors that bode well for the sector.”
The Bengaluru-based company, which derives 75% of its revenue from biscuits and 25% from non-biscuit categories such as cakes, rusks, dairy products and bread, expects the first quarter of FY25 to be slow in terms of growth, which should rapidly gain pace up by the second half of the year. The company is also planning a new Route-to-market (or RTM 2.0) model, which is aimed at growing adjacent or non-biscuit businesses at 1.5 times its core biscuits portfolio.
A growing FMCG market should also help the company get its attention back to achieving double-digit volume growth, with price-led growth likely at around 3%, amid inflationary concerns in wheat and sugar, which are key ingredients for the company, he said.
“Over the past decade, many businesses, including Britannia, have experienced subdued volume growth compared to the previous decade when revenue and volume growth were booming for consumer businesses. I believe that the tide is changing and that the current economic environment will be positive for consumer businesses,” Berry said.
“FY25 will be a year of topline growth for Britannia. While we are closely monitoring commodity inflation, we are willing to sacrifice margins slightly to build a future-ready business,” he added. Pricing action, Berry said, would be “measured” to remain competitive amid intensity from small and regional players.
“We are making sure that we take whatever interventions are required to be taken to get to our planned numbers for the year (FY25). We have a complete programme in place to get the best price for the commodities we buy,” Berry said in response to an investor query on commodity inflation.
In Q4FY24, Britannia achieved 6% volume growth, with the company gaining market share in the biscuit category, Berry said. This came even as the company reported a 4% year-on-year fall in consolidated net profit to Rs 536.61 crore and 3% year-on-year rise in consolidated revenue to Rs 4,014.07 crore in the March quarter. Britannia’s earnings before interest, taxes, depreciation, and amortisation (Ebitda) in Q4 dropped 1.92% year-on-year to Rs 785.5 crore, its results on Friday showed.
With the focus on existing categories within biscuits and non-biscuits, Berry said the company would go slow on entering new segments in FY25.
Revenue contribution from new products such as Good Day cookies, cake rusks, Jim Jam Pops and 50:50 Golmaal had touched Rs 275 crore on an annualised basis in FY24. Sales traction for these products would likely to grow in FY25, he added, as consumer response had been good to these products.