50016383 Britannia Final Report

BRITANNIA STRATEGIC MANAGEMENT

Submitted By: Aakriti Bhatnagar Abhay Chajjed Ashish Narang Sonali Nandrajog Sumit Suneja

ACKNOWLEDGEMENT We are grateful to our Strategic Management faculty, Mr. Rahul Mishra, for providing us with an opportunity to work on such a practical case which was both comprehensive and intensive. Preparation of this report is a team effort and each member of our group has given their maximum potential.

I.MISSION STATEMENT This company does not have a defined mission statement but in a recent interview in business today, Neerja Chandra, Britannia's vice president and chief operating officer said, "Our vision is to become a larger player in the food space, and as we get into newer products and newer categories, their strength will be derived from the Britannia mother brand”

Our interpretation: We believe that this statement means Britannia want to become the market leader in the category of not only biscuits but other food items as well. They plan to get into newer food categories while depending on the popularity they have gained via the Britannia brand i.e. biscuits. Besides diversification, it also aims to bring more to the consumers that just biscuits, it plans to bring innovation in the category of its existing products.

II.BRITANNIA- AN OVERVIEW In 1892, a small biscuit company was started in an ordinary house in Calcutta with an initial investment of Rs 295. Their vision was to make good quality biscuits catering to diverse tastes. Little did they foresee that this small company, started in the kitchen of a regular house would become one of India‟s favorite brands. Today, we all know this company as BRITANNIA. The beginning of BRITANNIA may have been humble, but their dream and vision was far from it. Soon after they set up base in Calcutta, they concentrated on growing their business. By 1910, with the introduction of electricity, Britannia mechanized its operations, and in 1921, became the first company east of the Suez Canal to use imported gas ovens. Their business was flourishing and they acquired a reputation for value and quality. Their reputation had become so strong that during World War II, the government contracted them to supply large quantities of "service biscuits" to the armed forces. With the passage of time, the biscuit market continued to grow, and Britannia was growing with it. In 1975, they took over the distribution of biscuits from Parry's who till now distributed Britannia biscuits in India. The year after this, Britannia Biscuit Company was re-christened Britannia Industries Limited (BIL). Four years later in 1983, they crossed the Rs. 100 crores revenue mark. In 1997, the company unveiled its new corporate identity - "Eat Healthy, Think Better" - and ventured into the dairy products market. In 1999, they used the slogan "Britannia Khao, World Cup Jao" for further promotion. This helped them fortify the affinity their consumers had with the brand Britannia. Britannia strode into the 21st Century as one of India's biggest brands and the preeminent food brand of the country. Today, more than a century after those initial first steps, Britannia is continuously setting new standards, and that miniscule initial investment of Rs 295 has grown by leaps and bounds to crores of rupees for Britannia's shareholders. The company's offerings are spread across the spectrum with products ranging from the healthy and economical Tiger biscuits to the more lifestyle-oriented Milkman Cheese. They have succeeded in garnering the trust of

almost one-third of India's one billion populations by walking on the path of innovation and quality.

PRODUCTS NutriChoice5 Grain: These are made from 5 healthy cereals; Oats that help reduce bad cholesterol, Corn which promotes heart health, Ragi which is a good source of Calcium and Fibre, Rice which is low in fat, and Wheat that provides wholesome energy. These biscuits are delicately sweetened with natural honey, and come in a unique large oval shape. Tiger Banana: Staying true to their aim, Britannia launched a new variant of their Tiger brand; Tiger Banana, packed with Iron Zor and a distinct taste of banana. Their R&D department spent considerable time developing this nutritional product for children. One pack of Tiger Banana has as much Iron Zor as one kg of bananas. NutriChoice SugarOut: This range is available in 3 delicious variants namely Litetime, Chocolate cream, and Orange cream, targeted towards all health sensitive people. It is also relevant for consumers with sugar related ailments. It is sweetened with "Sucralose," derived from sugar, which provides the same sweetness as any other biscuit, without the added calories of sugar. NutriChoice Digestive Biscuits: These are made with 50% whole-wheat and packed with added fibre and cover 10% of a person‟s daily dietary needs. Treat Fruit Rolls: These come in four fruit flavors - Juicy Apple, Strawberry Surprise, Tangy Orange and Delicious Dates. They are aimed for school children as a snack in their Tiffin. New Britannia Milk Bikis: It contains 4 vital vitamins, iron and iodine, which aids mental and physical development in growing kids. Its packaging ensures that the biscuits remain fresh and crisp.

BRITANNIA OVERSEAS Middle East In March 2007, Britannia Industries Limited formed a Joint Venture with the Khimji Ramdas Group. It is one of the largest and the most respected business conglomerates in the Middle East. Britannia and its Associates have also acquired a significant stake in Dubai based Strategic Food International Co. LLC and Oman based Al Sallan Food Industries Co SAOG. The two companies are key regional players in the biscuits, wafers and cookies segment in the GCC markets and export their products across the world. With such associations and joint ventures, Britannia has managed to spread its wings abroad and create value in the eyes of their customers by linking themselves with reputed names. Sri Lanka On 29th August 2008, Britannia began manufacturing and marketing their products in Sri Lanka. They entered this market with the same purpose, vision and goal- to help people enjoy life, through healthy snacking, and make this accessible to all people anywhere, everyday. They manufacture Milk Bikis, Milk Cream Smileys, Vita Marie Gold, Creams and Cookies in Sri Lanka.

III.ENVIRONMENTAL ANYLYSIS BISCUIT INDUSTRY OVERVIEW Biscuits Industry in India is the largest among all the food industries and has a turnover of around Rs.3000 crores. India is known to be the second largest manufacturer of biscuits, the first being USA. It is divided into 2 sectors, the organized and unorganized. The organized sector contributes to 55% of the total production and the remaining 45% comes from the unorganized sector. The industry consists of two large scale manufacturers, around 50 medium scale brands and small scale units ranging up to 2500 units in the country. The unorganized

sector is estimated to have approximately 30,000 small & tiny bakeries across the country. India‟s Biscuits Industry came into the limelight and started gaining a respectable status in the bakery industry in the later part of 20th century. This was a result of a demand coming for the urbanized society for ready-made food products at an affordable price. States that have the larger intake of biscuits are Maharashtra, West Bengal, Andhra Pradesh, Karnataka, and Uttar Pradesh. Maharashtra and West Bengal, the most industrially developed states, hold the maximum amount of consumption of biscuits. The rural sector consumes around 55 percent of the biscuits in the bakery products. The growth of the biscuit industry in India has been slow, and it has been calculated to be growing at the rate of 13% per annum. Due to the heavy VAT of 12.5% and excise duty of 8% imposed of biscuit manufacturers, the per capita consumption of biscuits in India is only 1.9 kg compared to 10 kg in the USA, UK and West European countries and above 4.2 kg in the South East Asian countries like Singapore, Hong Kong, Thailand, and Indonesia. One of the major reasons for the stagnant growth of the biscuit industry is the tax laws and excise duties. While commodities like tea, coffee, namkeen are exempted completely from excise duty and have VAT of only 4%; biscuits have to suffer with higher numbers. As a result of which they cannot lower their costs to increase profit margins. At the national level, there are only two players Parle and Britannia. Therefore, one can say that they are operating in a duopoly market. But on the lower levels, where the regional players like Priya Gold, bakeman etc come in, they have to operate in a perfectly competitive market. The state markets have their own dynamics in comparison to the national markets. These players have to implement different strategies in the different market scenario‟s to face competition and remain dominating players.

PEST ANALYSIS POLITICAL FACTORS Every state in India has different laws for tax and excise duty in them as the government in every state is different. This is the main political factor that can affect the biscuit industry as it plays a vital role in the cost incurred by the companies. Britannia has manufacturing units in many states but there is no disparity in the laws of those states. Therefore this factor does not have much of an effect on Britannia. ECONOMICAL FACTORS The biscuit industry is very heavily affected by tax laws and excise duty in India. Biscuits attract VAT at 12.5 per cent - like chocolates, confectionery and ice cream that cater to a much smaller and relatively more affluent consumer base. This makes it difficult for biscuit manufacturers to operate at an optimum level. Other categories with lesser nutritional value like potato chips, jams, jellies, sweets, and namkeens attract less or no VAT at all. Biscuits deserve to be at par with tea, coffee and other basic food products that are liable to 4% VAT, in comparison to 12.5% liable for delicacies. This is restricting the growth of the industry, utilization of agricultural produce and therefore, obstructing larger revenues for the government. Also, other ready-to-eat packed food products are totally exempted from excise duty, but biscuits continue to attract an excise duty of 8%. This is a major hindrance in the growth of the industry. The raw material used in the production of biscuits is supplied by the agricultural sector and therefore dependant on it. Any shortage in production of wheat forces the companies to import it, which consequently raises their cost of raw material drastically. When this is coupled with the tax lays and excise duty, it comes down very heavily on the biscuit industry and restricts its growth. There exists a Federation of Biscuit Manufacturers of India (FBMI), an organization that monitors the growth of the biscuit industry and provides support and existence to the small scale manufacturers. Whenever the demand for biscuit in the market dip, FBMI comes in the picture to push up the demand and regulate it. This is a major help to the biscuit manufacturers.

Biscuit is a comparatively low margin food product in the PMCG (Packaged Mass Consumption Goods) sector. The commodity is also price sensitive, as a consequence of which, even when the Excise Duty and VAT tax is high, the manufacturers are not able hike MRPs as the price would not be accepted by the consumers. Another economic factor affecting the biscuit industry is the presence of multiple food laws and their enforcing agencies in the central and state governments with overlapping functions and implementations. In order to implement better compliance, the FBMI pressurized the ministry of Food Processing industry to harmonize the multifarious legislations. This would help in an accelerated growth and development of the industry. The current economic scenario of rising inflation is another factor affecting the industry. The CEO of Britannia, Ms. Vinita Bali, was quoted in an interview with Economic Times, saying, “We are operating in an extremely high and unprecedented cost scenario and some irrational competition too. The result is a huge pricing pressure with limitations on price hikes for the entire industry and a shrinking profit pool of the industry.” The steep increase in crude oil prices and hike in petrol & diesel prices announced by the government leads to a significant increase in the price of packaging materials, freight and production cost. This adds to the low profitability and high cost situation that the industry is working in. SOCIO-CULTURAL FACTORS Biscuits were assumed as sick-man's diet in earlier days. Biscuit manufacturers have had to fight this image and position their product as a healthy snack. With time, they have managed to break that image and made the masses accept it as one of the most loved fast food products. They introduced a brand called TigerBanana, which had very high iron content, especially targeted at young children. One packet of TigerBanana biscuits contained as much iron as 1 kg of bananas. Britannia had a very clear understanding of the demographic and psychographic trends of their customers. With the introduction of this product, they changed the image of biscuits completely and portrayed it as a health product. This product attracted mothers and children.

TECHNOLOGICAL FACTORS For the small scale local and state level biscuit manufacturers, lack of advanced technology hinders their growth. Therefore, the ministry has undertaken the procedure to upgrade and diversify technology with the objective of enabling the food processing industry. But the bigger players like Britannia, Parle and ITC ltd do not face the problem of outdated technology. They can invest modest amount of funds into their R&D and technology to keep up the image of their company in terms of quality products. They use the most advanced technology available for the manufacture of biscuits. Their main suppliers of technology are Prima Engineering Industries, who are successful manufacturers, exporters and suppliers of a wide range of biscuit and bread making machines. The technology supplied to them is not only of premium quality, but also custom made for their (Britannia) requirements. Their technology is at par with the international standards of safety, quality and design. They are very easy to operate manually and are low maintenance. Some of the technologically advanced machinery used by Britannia is rotary cutting unit, biscuit oven, cooling conveyor, packing table and magnetic stacker, biscuit mixer, rotary molder, spiral mixer, planetary mixer, dough feeder, electric/gas.

IV.COMPETITIVE STRATEGY Britannia is a leading brand in the Biscuit Industry, but that does not rule out the existence of other small scale and large scale manufacturers. The other major brands of biscuit in India are Parle Bakeman, Priya Gold, Elite, Cremica, Dukes, Anupam, Horlicks, Craze, and Nezone. Amongst these brands, only Parle has been able to give Britannia some competition. Britannia is very well established in the market and completely insulated from competition from the others.

Even with Parle‟s presence in the industry, both these brands managed to coexist in harmony. Parle focused primarily on the low-end glucose biscuit segment, its Parle G brand being one of the world's best-selling biscuits, and Britannia focused on the premium segment. Due to this, they had nearly equal shares of more than 80% of the market value. Britannia is the leader in all biscuit categories, except glucose, where Parle has an edge. Parle is the market leader by volume, but still trails Britannia marginally in value terms. Glucose biscuits account for 57 per cent of the Indian biscuit market and Parle G accounts for 50 per cent share of this segment. Parle priced its 100 gram pack of glucose biscuits at Rs 4, due to which no competitor could afford to increase prices by even 25 paise. This was putting pressure on margins and affecting growth. Parle had a very strong competitive advantage over any other player in the market. Since they were a smaller company, they could keep a better tab on their overheard expenses and therefore keep costs low. But even then, Britannia did not feel very threatened as they maintained that they led the overall market in terms of value. They believed that more activity in the biscuits market created more opportunities for them. Britannia encountered its first threat from a competitor when ITC ltd entered the biscuit industry with an aim to expand in the FMCG segment. They entered this turf as part of their diversification strategy in 2003. Analyzing ITC‟s competitive strategy, we found that they used offensive tactics, and their attack on Britannia can be classified as a Frontal Assault. They barged straight into the biscuit industry and matched the existing players in price, promotion and distribution. With the help of their financial support and massive distribution network, they quickly emerged as a third player in the industry and completely shook Britannia and Parle from their comfort zones. They had been coexisting peacefully for a long time and did not adapt well to the sudden change. ITC grabbed an 8-10 per cent market share within hardly any time of entering the market. Many big players like HLL had tried to enter the biscuit market but failed to establish themselves, but ITC squeezed its way through and settled in snugly on some part of the market share. This was possible for them as they intensively researched the market before entering and realized that they could fill the gaps existing at that time. There had been no new energy or wow factor in the market in a long time, no new product or innovations had been made by either of the big players. ITC decided to launch

Sunfeast with six ranges, orange-flavoured Marie, Marie light and butterscotchflavoured cream biscuits. While Parle looked at a high volume, low margin strategy, Britannia and ITC looked at a two-forked strategy, i.e. high margins in cream variants and volumes from the Marie and Glucose segments. At this point of time, Britannia was completely unprepared internally to combat ITC‟s competition. They also started facing stiff competition from regional players like Priya Gold in the north and west, Anmol and Bharat in the north and east, and Duke in the south. Britannia soon realized that they need to restructure themselves and bring some changes in their internal environment in order to secure their position as the No.1 brand in the biscuit industry again. There was a need for them to analyze their company and find competitive advantages which would help them clearly stand above their competitors. While ITC ltd used their strong brand image and financial back up to collide head on with Britannia on their own turf, Britannia understood that throwing it right back at ITC would not be a wise decision. Therefore, they decided to go for a Bypass attack. Instead of marketing their products more aggressively or changing price etc., they decided to give their product a new identity, completely different from the identity of biscuits currently in the market.

Market share 4th Qtr 20% ITC 10% Parle 34%

Britania 36%

They began by sharply differentiating their products from its competitors by intensively marketing them as a „healthier alternative‟. They stressed up on the fact that Britannia was not in the "health food" business, but rather "in the business of delight and enjoyment", competing not only with other biscuits but also with savories, chocolates and other snacks. This was a major competitive advantage over ITC as their food products were not perceived as healthy. They have a very strong presence in the tobacco industry, and therefore it was hard for them to shake off that image from the minds of customers and portray themselves and producers of healthy biscuits. Britannia recognized that this was the time for them to innovate and introduce new products in the market and move closer to gaining competitive advantage. They had not introduced anything new in the market for a long time. They invested in their R&D department, and started work on new recipes for biscuits. Making their image of providing „healthier alternative‟ even stronger, their research and development department found a way of removing 8500 tons of trans fat from their biscuits, making them completely fat-free. They are the first in the biscuit industry to have taken such a step. They even fortify their biscuits with vitamins and micronutrients like iron. Currently, 50% of their biscuits are fortified. They decided to invest in people, brand and infrastructure in light of fighting competition. They planned on achieving that by improving efficiencies, reducing costs and looking for new customers. They also tried to reposition their product in the minds of the consumers. They wanted to shed away the boring image of biscuits while retaining its core of energy and health. They began to explore new ways to deliver the “goodness of biscuits in a more interesting and fun way”.

PORTERS FIVE FORCES

In order to analyze the competition existing in an industry, Porters came up with 5 forces that may influence the profit potential of the industry. These 5 forces are:     

Threat of new entrants Rivalry among existing firms Threat of substitute products or services Bargaining power of buyers Bargaining power of suppliers

If all these forces are high, then the companies present in the industry are more limited to raise prices and earn greater revenues. Therefore, according to this model, a high force is regarded as a threat and a low force is regarded as an opportunity. We will now analyze the biscuit industry in relation to these 5 forces and understand the profitability and attractiveness of this industry. Threat of New Entrants New entrants in an industry bring to it new capacity and a desire to gain market share. Therefore, they are a threat to the existing companies. But the entrance of

new players depends on the entry barriers affecting the industry. For the FMCG industry, it is very hard for a new company to enter as it requires high product differentiation and a strong distribution network. However, the biscuit industry is attractive to new players as higher disposable income and the willingness of consumers to try new products gives them an opportunity to make good profit. Also, this industry is extremely price sensitive and therefore does not give much flexibility to the companies to increase prices. They depend on the agricultural sector for raw material, due to which they do not have control on the cost incurred for raw material purchase. If the cost of wheat goes up or it‟s a bad crop, they have to import raw material from outside, thereby increasing their cost of production. These factors make it hard for new companies to enter the industry, and bring down the industry attractiveness. Furthermore, it is a slow growing industry, with the current growth rate of 13%. The government policies regarding tax and excise duty is another barrier for new entrants, while commodities like tea and coffee are liable for VAT of 4% and no excise duty, biscuits are liable for VAT of 12.5% and an excise duty of 8%. It has been seen in the biscuit industry that many new players like HLL and Cadbury tried to enter with new products, but could not establish themselves successfully. Only one new player, ITC ltd managed to push its way through and grab a market share of 6-8%. Therefore, for the biscuit industry, there is not too much threat of new entrants. This force can be rated as medium.

Rivalry among existing firms In any industry, companies are mutually dependent on each other, i.e. neither can ignore the changes or competitive moves made by the other players. A new strategy implemented by one company to gain competitive advantage is always countered by some changes made by the other company to neutralize that competitive advantage. In any industry, it is a constant was between companies, but the degree of rivalry may vary. This depends on a lot of factors. In the biscuit industry, there are three main players; Britannia, Parle, and ITC ltd. Other regional players like PriyaGold and Bakeman also exist, but they only give the bigger firms competition in certain geographical areas. Britannia and Parle hold almost equal market share, where as ITC ltd holds a relatively lower market share,

but is growing at a fast rate and implementing strategies to pull away part of the market share from the big guys. As there are only three firms competing at all levels, they can keep a close watch on the changing strategies of each other. There is very close competition between all three, and the smallest of changes in policies by one has to countered immediately by some changes in the other, in order to stay in the game. Therefore, rivalry among firms can be rated as a high force.

Threat of Substitute Products Existence of substitute products in an industry puts a ceiling on the price the companies can charge for higher profitability. Tea and coffee are regarded as substitutes of one another as they solve the same purpose. Therefore, if tea prices were to rise, then tea drinkers might begin to shift towards consuming coffee. This shows that the price of coffee puts a price ceiling on tea. Tea manufacturers cannot increase their price as there is a threat that they may lose their market share to the substitute products. The substitutes of biscuits are namkeens, chips, potato wafers, rusks etc. Biscuits are usually eaten as snacks with tea/coffee, or as a substitute for a meal when there is lack of time. Therefore, if prices of biscuits rise, there will be a shift from consumption of biscuits to consumption of rusks, chips etc. However, biscuits are now part of people‟s everyday life. It may not be a necessity like bread, but it is an integral part of people‟s life style. One may expect consumers in rural areas to shift to rusks or wafers, but it might not be too prominent in the urban areas. Biscuits are a low priced commodity, therefore a small increase in price would be acceptable in urban areas but may cause a shift to substitutes in rural areas. The threat of substitutes can be rated as a medium force for the biscuit industry.

Bargaining power of buyers Bargaining power of buyers is the ability of the buyers to force down prices. If there are alternate suppliers of the same product, then the buyers have the option of shifting to another supplier if their original supplier does not meet their requirements and demands. In the biscuit industry, consumers have the option of shifting brands according to their liking of price, quality and taste. This does not

give much flexibility to the biscuit manufacturers to increase price, or compromise of quality. Also, with bakery stores mushrooming everywhere and providing biscuits for bulk purchases in kilograms, consumers today have the option of buying from them as well. They provide flavors that the packed biscuits do not and they sell any quantity that the consumer requires, from 100 grams to kilograms. This further increases the bargaining power of the buyers. Therefore, this force is high in the biscuit industry.

Bargaining power of suppliers Suppliers have the ability to raise their prices and increase cost of production for the manufacturing firms. In the biscuit industry, the main ingredient required for baking biscuits is wheat. Therefore, their raw material is dependent on the agricultural industry. During times of inflation when the price of wheat goes up, biscuit manufacturers have no choice but to purchase wheat at the price quoted by the farmers as wheat does not have a close substitute. Therefore the bargaining power of suppliers is high.

V.INTERNAL ANALYSIS SWOT ANALISIS STRENGTH  Britannia is the market leader in its industry and is among the fastest growing FMCG companies in the last two years  Its net profit increased by 77.5 per cent and operating margin by 307 basis points to 7.5 per cent in 2007-08, despite inflation in key commodities by 20-25 per cent in the last two years.  In a survey conducted by AC Nielsen ORG-Marg, consumers voted brand 'Britannia' among the 'Top 10' most trusted brands across categories for the fifth successive year.

 It was also rated as the second most trusted food brand in 2008 and first in 2007.  It was rated as the seventh most trusted brand across all categories in 2008.  Its performance in 2007-08 was strong, with a sales growth 17.5 per cent, besides a 27.5 per cent growth in the previous year, adding Rs 800 crore of incremental revenue during this period (total revenue for 2007-08 was Rs 2,617 crore).  It is the only biscuit company to have removed trans-fat from all its recipes. Approximately 50 per cent of the company's bakery portfolio is now sold fortified with micronutrients  Widely accepted and available and it is a non- seasonal food which is in demand thought-out the year  Diverging into new products and categories like Tiger Pops (smaller version of the Tiger glucose biscuit) and Pepper Chakkar (the 50-50 biscuit sprinkled with pepper to give it a snack-like flavor)  It has doubled its advertising budget in the last 5 yrs.  Strategy to concentrate more on the trade marketing

WEAKNESS  Requires a high level of investment in terms of innovation and technology in which Britannia is stagnant  Britannia Industries witnessed a loss in sales momentum for the third consecutive quarter (2005-06) as the company has been feeling the heat of growing competition  Focus only on premium segment  Biscuits is the only thing Britannia is known for even though it deals with dairy products  Processed food is considered unhealthy  Biscuits were assumed as sick-man's diet in earlier days

OPPORTUNITY  Demand for a health free product as people are more health conscious

 Improved standard of living  Higher disposable income  The rural sector consumes around 55 percent of the biscuits in the bakery products.  Bread and biscuits are the major part of the bakery industry and covers around 80 percent of the total bakery products in India  India is considered as the third largest producer of Biscuits after USA and China, the per capita consumption of biscuits in our country is only 2.1 Kg., compared to more than 10 kg in the USA, UK and West European countries

THREATS  The Wadias of Bombay Dyeing Group and France's Groupe Danone have separated and Danone plans to use of Britannia Industries Ltd's biscuits brand "Tiger" in several countries.  Competitors coming up with similar products at a lower price since this commodity is very price sensitive  Rapid increase in the cost of major inputs such as wheat flour, sugar, oil, packaging material, fuel, power, transportation, etc, has made a dent in the viability of the industry as it is an agro based industry.  Biscuits deserve parity with tea, coffee and other basic food products that are liable to VAT at 4 per cent instead of being subject to VAT at 12.5 per cent applicable to delicacies  Commodity inflation continues to have a significant impact on input cost and this inflationary pressure has put industry profits under pressure.  Food is a fickle segment. And biscuits is a highly penetrated category  Completion form foreign companies  Poor quality for lower prices

TOWS MATRIX INTERNAL FACTORS (IFAS)

EXTERNAL FACTORS (EFAS)

Opportunities  People are more health conscious  Improved standard of living  Higher disposable income  Rural India Market  Biscuits covers 80 percent of the total bakery products in India Threats  Price sensitive  Subject to VAT at 12.5 per cent  Use of Britannia Industries Ltd's biscuits brand "Tiger" in other countries  Commodity inflation.  Fickle segment.  Highly penetrated category  Completion form foreign companies  Poor quality for lower prices

Strengths  Market leader  Fastest growing FMCG  Its net profit increased by 77.5 per cent  'Britannia' among the 'Top 10' most trusted brands across categories for 5 successive years.  Trans-fat free.  Widely accepted ,available and non- seasonal food  Doubled advertising budget.  Trade marketing

Weakness  Requires a high level of investment in terms of innovation and technology in which Britannia is stagnant  Showed that it can‟t handle competition  Focus only on premium segment  Product Portfolio  Processed food unhealthy  Sick-man's diet

SO Strategies  Grow market by horizontal integration.  Innovation in terms of small packages to be sold in rural markets

WO Strategies  Invest more in R&D.  Keep an eye on the competitors market  Expand product portfolio

ST Strategies  Make use of the least input to minimize costs while not distracting from the quality  Expand the product portfolio

WT Strategies  Invest more in marketing to position the product properly  Offer lower prices

According to porter‟s generic model, we feel Britannia falls under the diffentiation category as in 2008, Britannia divided its product portfolio into two distinct categories: "health and wellness" and "delight and lifestyle”. This clearly states that it believes in product uniqueness while having a broad market.

VALUE CHAIN ANALYSIS

A value chain analysis of a company is done in order to bring out its competitive advantages, core competencies and core deficiencies. According to Porter, a manufacturing firm‟s primary activities usually begin with inbound logistics, go through an operations process in which a product is manufactured, and continue on to outbound logistics, marketing and sales, and finally to service. Along with this, several support activities such as procurement, technology development, human resource management, and firm infrastructure ensure that the primary value chain activities operate effectively and efficiently. We will now analyze how Britannia concentrated on each of primary as well as support activities to further increase their profit margins and efficiency.

INNOVATION When Britannia started facing stiff competition from new players like IT ltd and Priya Gold, they found that in order to gain a competitive advantage over them, they needed to invest in their R&D and come up with new innovations. They began by bringing in new variants of their existing products and enhancing the quality of their products. One major step they took to enhance quality was to remove 8500 tons on trans-fat from their biscuits, making them completely fat free and becoming the only company to have done that. They also fortified their biscuits

with vitamins and micronutrients like iron, and soon 50% of their products were fortified. They invested in their segments of bread, rusk and cakes, and soon doubled their business in this category by recognizing that building brand and innovating were the key drivers of growth. Some of the new products & packs introduced included Treat Fruit Rollz, NutriChoice Digestive, NutriChoice SugarOut, Good Day Jumbo, Tiger–Banana (fortified with iron), Good Day – Classic Cookies, Greetings – gift packs and a variety of cheese variants. To tap the non-traditional Marie markets, Britannia came out with Marie Doubles, which were as light as Marie but with a slight chocolate-orange flavor.

OPERATIONS On the infrastructure front, Britannia added 200,000 tons of annual capacity, an increase of about 60%. It also devised a long-term distributed manufacturing strategy, put in place a continuous replenishment supply efficiency system, and strengthened its supply chain management as well. With the help of these measures, the stocks at their distributors were replenished within 24 hours, and they increased the availability of stock-keeping units from 60% to 90% across the country. They invested over Rs 200 crore in capacity expansion. A part of this investment was utilized to hike capacity at its Uttaranchal plant from a level of 45,000 tons to 60,000 tons. Products are sourced from several manufacturing locations spread across the country and reach their consumers through an efficient and widespread distribution chain. They improved their manufacturing facilities to meet the growing demand. They also tied up with Prima Engineering Industries, a very reputed supplier of machines used for baking biscuits, to provide them with the latest technology for better quality biscuits. This helped them increase efficiency as they could bake larger batches with advanced technology.

OUTBOUND LOGISTICS AND DISTRIBUTION Investments made in this division also helped Britannia contribute to its profit margin. They invested significantly in higher and better quality of human resources both at the front end and at the back end. They also segmented their go-to-market strategy wherein earlier they focused on simply increasing the number of outlets covered. They changed it by creating separate teams for general sales, modern trade, institutions, and semi-urban and rural markets.

MARKETING AND SALES With competition increasing from the small as well as big players, Britannia needed to bring about significant changes in their marketing and promotional strategies, in light of gaining competitive advantage. This would also help them in the future to increase their profit margins as an investment in any of the divisions eventually leads to higher efficiency and better profit. They began by aggressively marketing their products as healthier alternatives in comparison to other biscuits. They introduced new campaigns like „Eat Healthy, Think Better‟ which portrayed that Britannia biscuits were of high nutritional value. They invested heavily in advertising to promote the new identity of biscuits i.e. health foods and also made an attempt to increase trade marketing visibility. They marketed their products to the retailers and distributors to increase their loyalty towards them. This step would benefit the retailers and ensure that they marketed Britannia‟s products in comparison to the competitors. They also changed their packaging by introducing smaller packages to attract the youth and travelers. They added transit point like bus stops and small roadside shops to their distribution network.

FUNCTIONAL STRATEGY MARKETING STRATEGY- REPOSITIONING When Britannia started, they did not have any idea of the heights the company would be touching. Initially, they were only interested in producing good quality tasty biscuits and selling them to the masses at large. But as time passed, Britannia was quick to notice the psychographic changes in their customers. There was a shift in the life style of customers and they were becoming more aware of health issues. People were becoming conscious of dietary care and its correlation to wellness and good health. They were beginning to change their dietary habits and matching them to the new pace of life. This new awareness was making consumers seek foods that complemented their lifestyles and offered convenience and variety, over and above health and nutrition.

Biscuits had an image of „snacks‟ in the minds of consumers and they grouped them in the same category as namkeens and samosas. They saw biscuits as an addon while having their evening tea. Munching on biscuits was beginning to be seen as an unhealthy habit and another way to add a few extra calories. Britannia realized there was a need to reposition their product in the minds of consumers to make them understand that biscuits could still fit their changing life styles and were actually a healthy choice. They introduced their “swasth Khao Tan man Jagao” (eat healthy think better) slogan, which helped them give the new generation a healthy and nutritious alternative that was also delightful and tasty. As we move ahead in this study on Britannia, we find that all their innovations and restructuring is done around the same core competence i.e., to provide quality and healthy foods. We will see in the course of this report that they went on to increase the iron content in the biscuits and fortified them with vitamins and micronutrients in order to make them healthier. OPERATION STRATEGY Products are sourced from several manufacturing locations spread across the country and reach millions of consumers through an efficient and widespread distribution chain. They have been augmenting our manufacturing facilities to meet the growing demand. The Britannia system has invested over Rs 200 crore in the last two years in capacity expansion. They also plan to make substantial investments in this area for the next couple of years too.

BRITANNIA’S ORGANIZATIONAL STRUCTURE Britannia Industries ltd follows the Strategic Business Unit structure. In this structure, each strategic business unit is a group of individual product segments and has the primary responsibility of managing their own functional areas. They have their own unique mission and identifiable competition. This helps the company to decentralize on the basis of strategic element. Britannia has three independent business units, Biscuits, Bakery and Dairy products. Each of these units has separate strategies implemented by the management to promote and sell their products. The biscuit unit is the most developed unit of them all, facing stiff

competition from other big players. The dairy unit is also relatively visible in the dairy industry, though it has players like Amul to compete with.

VI.COMPETITIVE ADVANTAGES  By marketing itself as a healthier alternative, however, Britannia seeks to sharply differentiate itself from other brands -- and that move has paid off. For instance, with the introduction of the "Eat Healthy, Think Better" campaign in 1997, Britannia focused on building its individual brands, such as Tiger glucose biscuits, Good Day cookies and Treat cream biscuits  Advantage through efficiency : Investments in people, brands and infrastructure, improved efficiencies and cost reduction, and new choices for consumers.  Britannia came out with smaller pack formats and different SKUs to target the travelling segment. And also with the `Greetings' gift pack during Diwali last year to make the emotional connect both with individuals and institutions

VII.RECOMMENDATIONS GDP : With respect to GDP, we expect Britannia to perform on current lines with the National GDP. The recessionary environment makes for overall growth picture gloomy. However, we expect Britannia to attain a GDP of 4.5-5% in the FY 20092010. With funds flowing into the economic and banking systems, it is expected that the global economics would again see the bull rally from FY 2010-11. In this year, we expect Britannia to get a GDP of 6-6.3% in the most likely scenario. Interest rate: Interest rates have fallen considerably and the government may further cut the rates to infuse liquidity in the markets. Thus, we expect int. rates to go down vis-à-vis expansion plans. We assume it to stand at 1,25,000 in FY 09-10 in the most likely scenario.

Inflation: The inflation has seen a drastic down in the current times. The overall country‟s inflation rate may even go in the red. This could work as a double edges sword for Britannia. Cost reduction could be coupled with the reduction in sales . We assume the inflation to stand at 2% in FY 2009-10 and at 5% in FY 2010-11 in the most likely scenario.  But now Britannia wants to broaden its menu. In addition to growing its core biscuit business, it wants to significantly expand its small businesses including dairy, bread, cake and rusk (known as zwieback in the U.S.). The dairy business, which Britannia entered in 1997 and spun off as a joint venture with New Zealand's Fonterra Group in 2002, has revenues of barely $36 million and has yet to become profitable.  It can also enter International market besides Middle East and Srilanka.  If it plans to become a player in the food industry, it needs to enter it to include fruits and vegetables, dairy products, marine and fish, meat and poultry, breads and bakery, confectionary and packaged foods, and alcoholic and non-alcoholic beverages.  The company needs to do horizontal integration which should include breakfast items and ready-to-cook and ready-to-eat products  The biscuit industry uses indigenously grown agricultural produce thereby adding to the income of farmers. This is a direct contribution of the industry towards improvement of agricultural sector. The industry also provides direct employment to approximately 3 lakh people & indirectly impacts employment of about 35 lakh people. Therefore, Britannia should invest heavily in agriculture as well to gain the maximum outcome.

VIII.CONCLUSION Britannia -the 'biscuit' leader with a history-has withstood the tests of time. Part of the reason for its success has been its ability to resonate with the changes in consumer needs-needs that have varied significantly across its 100+ year epoch. With consumer democracy reaching new levels, the one common thread to emerge in recent times has been the shift in lifestyles and a corresponding awareness of health. People are increasingly becoming conscious of dietary care and its correlation to wellness and matching the new pace to their lives with improved

nutritional and dietary habits. This new awareness has seen consumers seeking foods that complement their lifestyles while offering convenience, variety and economy, over and above health and nutrition. Britannia saw the writing on the wall. Its "Swasth Khao Tan Man Jagao" (Eat Healthy, Think Better) re-position directly addressed this new trend by promising the new generation a healthy and nutritious alternative - that was also delightful and tasty. Thus, the new logo was born, encapsulating the core essence of Britannia - healthy, nutritious, and optimistic - and combining it with a delightful product range to offer variety and choice to consumers Most consumers believe that to in order to stay healthy one needs to make certain compromises on some good things in life. Whether it is missing that extra hour of sleep over early morning exercise, or eating unappetizing foods over that extra oildripping samosa. At the same time most of us agree that good nutrition cannot come from one kind of food alone, but from a healthy combination / assortment of several healthy ingredients put together. Britannia NutriChoice 5 Grain Biscuits are a perfect answer to those looking for healthy eating options without as much making a compromise on taste, or convenience, or health.