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Britannia: Expanding portfolio - Views on News from Equitymaster
 
 
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  • Oct 25, 1999

    Britannia: Expanding portfolio

    Britannia Industries is looking at expanding its product portfolio in an effort to increase its target market. For this, it is thinking of expanding its wafer biscuit portfolio to take on Cadbury and Nestle. It is also planning to launch a slew of snack foods under the 'Tiger' mother brand.

    Britannia is the largest bakery product manufacturer in India. It is the leading manufacturer of biscuits with a 38% market share (value-terms) in the organised (read branded) sector. It also manufactures bread and cakes. Currently, Britannia is focusing on expanding its business to dairy products like cheese, butter, dairy whitener and flavoured milk.

    The company already has a presence in the wafer biscuit segment in the form of 'Chekkers'. It plans to build on its existing band so as to compete more effectively in this segment.

    The company had successfully penetrated the mass glucose biscuit segment with its Tiger branded product. It has become the No. 2 glucose brand after Parle in just two years. Britannia's decision to extend the 'Tiger' brand to other products must be spurred by this success. It also makes economic sense. Britannia has spent huge amounts to endorse the Tiger brand. It will find it easier to enter other related segments by using this brand name, as brand recall and association for 'Tiger' will be high.

    Britannia wants to be identified as a snack food company and to this end is planning to introduce a slew of new products. The aim is ultimately to widen its consumer base and reach out to the rural areas.

    The strategy looks sound on the face of it. Britannia has the requisite distribution muscle (over 500,000 retail outlets) to push through its new products. Moreover, it has the necessary expertise to cash in on the growing popularity of snack foods. The expansion of products will generate volumes and hence add to the bottom line.

    On the other hand, entering new product segments will mean greater advertising budgets. But the new products may not be successful, as there is intense competition in the segment. Industry majors like Cadbury and Nestle are already in an intense battle for market share. How Britannia will cope is anybody's guess.

     

     

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