Britannia Industries is preparing to take selective price hikes and grammage reductions in the June quarter to offset rising fuel and packaging costs. At the same time, it is shifting export manufacturing from Oman to India after the Iran war disrupted shipments and pushed up logistics expenses.
The maker of Good Day and Marie Gold biscuits said vessel shortages and disruption around the Strait of Hormuz affected dispatches from its Oman and Dubai manufacturing facilities during the March quarter, hurting its international business.
“We manufactured, but we were unable to dispatch because the Strait of Hormuz was locked,” managing director and chief executive officer Rakshit Hargave said during the company’s fourth-quarter earnings call on Friday. “There was significant increase in fuel costs and ocean freight rates.”
Supply Chain Pivot to India
To reduce dependence on Gulf shipping routes, Britannia has shifted manufacturing for North American exports from Oman back to its Mundra facility in Gujarat.
“We have been able to move all that manufacturing gradually back to Mundra so that we will now be able to dispatch towards North America,” Hargave said, adding that the company was leveraging its supply-chain flexibility to mitigate disruptions.
The company also warned of mounting inflation in fuel and packaging laminates, with laminate prices rising due to higher granule costs linked to the geopolitical conflict. Palm oil prices have also increased, although Britannia said it remains covered for the next five months through forward contracts.
“Selectively, we will have to take price increases,” Hargave said. “This includes both grammage adjustments and some price increase on packs above Rs 10.” Shares of Britannia fell 5% intra-day on Friday on the BSE in response to the price hike plan.
Price Adjustments
The inflationary pressure comes amid disruption in Britannia’s core mass-market biscuit business after GST-related pricing changes altered competitive dynamics in low-unit packs.
Nearly 60-65% of Britannia’s biscuit volumes come from Rs 5 and Rs 10 price points, especially in rural and wholesale channels. After GST reductions, some competitors introduced Rs 4.5 and Rs 9 packs, creating what Britannia described as “dual pricing” in the market.
The company said the move temporarily slowed transactions in wholesale and rural markets as distributors and retailers gravitated toward products offering higher trade margins.
“There has been a transaction slowdown in those channels because of dual pricing,” Hargave said. “With pricing going back to pre-GST levels as price hikes kick in, this will normalise,” he said.
Britannia maintained that demand in urban-facing channels remain strong despite the rural softness. Modern trade continued to grow in the mid-teens, while e-commerce sales rose more than 50% during the quarter.
Quick commerce now contributes nearly 70% of Britannia’s online business, helping accelerate sales of premium and impulse-led categories such as cakes, wafers, brownies and dairy products.
The company said categories beyond biscuits are growing nearly three times faster online, strengthening its premiumisation strategy.
Britannia is also increasing investments in brands, innovation and regional product customisation as it looks to build newer growth platforms beyond biscuits.