Britannia expects rural segment to contribute 35% to turnover in next 18 months

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October 20, 2020 8:58 PM

On Monday, Britannia Industries had reported a 22.91 per cent increase in consolidated net profit at Rs 495.02 crore for the second quarter ended September 2020.

Britannia, Britannia products, Britannia profit, Britannia business, Britannia network, varun berry, Britannia Q2 resultsBritannia is investing to create a hub-and-spoke model in rural markets to be able to distribute products in far-flung areas.

Food company Britannia Industries expects the rural segment to account for about 35 per cent of its total sales in the next 18 months from 30 per cent currently on the back of network expansion, its Managing Director Varun Berry said. The company is using the current opportunity, when the rural market is showing a higher rate of growth than the urban segment, to expand its reach by investing and adding more distributors, he added.

Besides, the company is also “democratising” some of its premium offerings by making them available in small packs for lower-income consumers. “I think in next 18 months or so, it would get at least to 33 to 35 per cent of our turnover as rural is growing faster than the urban markets,” Berry told PTI. Britannia is investing to create a hub-and-spoke model in rural markets to be able to distribute products in far-flung areas.

“If you look at pre-COVID numbers, the number of 20,000 rural distributors has gone up to 22,000… We continue to add to the number of distributors that we have for the rural markets,” he added. The company is introducing affordable products targeting those markets, he said.

“We are democratising and taking the products to an affordable level. Most of our brands are now playing in the Rs 5 category,” he pointed out. The company has launched cakes and Swiss rolls priced at Rs 10 onwards. “…we launched a Rs 5 layer cake about a month-and-a-half back which is doing extremely well,” he added.

While talking about the urban marker, Berry said modern trade channels have been impacted as people are not visiting stores but e-commerce has gained traction. “For e-commerce, our growth has been very aggressive, but it is still just about 1 per cent of our business, but we are nurturing that business. “We are hoping that at some stage it will become maybe 2 per cent of our business, but it still will be small, it is never going to be a very, very large part of our business,” he said.

However, he added that e-commerce deals with a different set of consumers, particularly the younger generation, and is important for the company. On Monday, Britannia Industries had reported a 22.91 per cent increase in consolidated net profit at Rs 495.02 crore for the second quarter ended September 2020. Total revenue from operations rose 12.15 per cent to Rs 3,419.11 crore from Rs 3,048.44 crore in the year-ago period.

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