Focusing on rural distribution, neighbourhood stores to drive growth: Britannia


Biscuits and bakery products major Britannia Industries is strengthening its rural distribution and focusing on neighbourhood stores and online sales to drive growth after delivering a "stunning" performance in April-June in the peak of coronavirus-induced lockdown, according to the company's Managing Director Varun Berry.
The company is seeking to turn "challenges into opportunities" in the next six to nine months when consumers are still expected to remain mostly indoors and adopt safety first approach, with localised and intermittent lockdowns being imposed to combat the pandemic.

"We have seen 22 per cent volume growth and 26.5 per cent revenue growth (in the first quarter). Will that stay? I think it will stay. I don''t think that is going away in a hurry. It might just come down a bit, but I think over 6-9 months situation is not going to change because there is going to be the pandemic which is going to keep people playing safe and staying still indoors as far as possible," Berry told PTI.

The company had posted a consolidated net profit of Rs 542.68 crore in the quarter ended June 30 as against Rs 248.64 crore in the year-ago period. Its total revenue from operations stood at Rs 3,420.67 crore as against Rs 2,867.70 crore in the corresponding period last fiscal.

When asked how the company is preparing to carry forward the momentum, he said, "We will look at what is happening and convert the challenges to opportunities and move forward."

"The important thing is that there are a lot of trends which are changing. If you look at out of home versus in-home, in-home is going there to stay there for the next six to nine months, at least for one year. So you have got to take advantage of that."

The second is health and safety, which is paramount for consumers, he said, adding, "So creating products, bringing in products which are focussing on health is important".

Also, he said the company will adapt to the changing shopping behaviour of consumers to bring its products to where they buy from.

"The neighbourhood store has become the most important store for consumers. People are not looking at driving long distances to super markets for shopping but are going to the closest, which carries all the products they want to buy and bring home, or doing online shopping. Both of those are very important. You have got to roll them into your into a strategy and focus," he added.

The next one, he said is rural versus urban.

"In the last three to four years we have seen urban markets grow faster than rural. But now once again we are seeing rural growing faster than urban. The reason for that is that obviously the pandemic has not touched the rural lives as much as it has the urban lives," Berry added.

The second is that when the monsoon is good agriculture income looks better. So things are looking better in rural than in urban, he said.

"All of these we have to embrace. We have to make sure that we take all of these, look at what we can do to maximise these opportunities and move forward," Berry said

Giving an example of how the company has responded to the opportunities arising out of the health crisis, he said Britannia Industries had seen its rural distributors dropping from 21,000 when growth slowed down, but during the last month it has taken that up to almost 22,000 rural distributors.

"So, we are ramping it up. If you remember, eight years back we started from zero, we have taken it to 21,000. So those are the kind of things we are doing to keep our heads above water, to keep the growth going, push the right initiatives which are going to give us the right kind of results in the right areas," Berry said.
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