Britannia Makeover Case

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Transcript of Britannia Makeover Case

2010

[ A Case Study On Britannia- The Brand Makeover]

Guided by:Dr. Avinandan Mukherjee

Submitted by: Avishek Sen Gupta Gunjan Bihani Prosenjit Roy

IntroductionA report on NDTV Profit on June 2009 states that the market share of Britannia for the first time in the history has lost its market position, Parle is now number 1.Parle has gained the market position based on a single product Parle G. It is no.1 both in terms of revenue and tonnage. Recent data shows Parle passes Britannia in terms of market share. It has 32.94% market share whereas Britannias market share is around 32.88%.But just a year ago it was Britannia who maintained the healthy lead (35.8%). ITC is the distance third. Parle claims launch of Parle 20-20 in 2008 which did the trick for them. Consolidating with the distribution network and increased contract manufacturer partners also paid off. TIGER brand of Britannia has stopped roaring in the market and has slipped its market share by 1.5% than last year. According to Mr. Neeraj Chandra, VP & COO of Britannia that although Britannia has lost some share in their major brand TIGER and they are a small player in glucose segment still they are confident that Britannia will not only regain back its market share but will exceed by launching of a new superior product. Britannia is loosing out its market share in the glucose segment of biscuit industry. What should be Britannias strategy in due course with its competitors so that it retains its position of market leader in the biscuit industry also over the past Britannia has been loosing the position of the most trusted brand from no. 1 position in the year 2002 to 9th position in recent years. (Source: economic times). Some questions where Britannia needs to plan their strategy how they should go about doing the things. Should Britannia reposition their brand in the lower segment in order to compete with PARLE-G? How to capitalize in the low Market share? How to overcome with the organic and inorganic growth strategies to face the challenges in the Indian Biscuit Industry Please find a link which discuss about the one of the case problem of Britannia Industries. www.youtube.com/watch?v=BL6STcCp1HM http://www.youtube.com/watch?v=m5NPorE2Qwk

CALCUTTA BUSINESS SCHOOL | Case study on Britannia Industries Ltd

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Company ProfileBritannia was incorporated in 1918 as Britannia Biscuits Co Ltd in Calcutta. In 1924, Pea Frean UK acquired a controlling stake, which later passed on to the Associated Biscuits International (ABI) a UK based company. During the 50s and 60s, Britannia expanded operations to Mumbai, Delhi and Chennai. Exports of sea foods started in the 70s. In 1987, Nabisco, a well known European food company, acquired ABI. In 1989, J M Pillai, a Singapore based NRI businessman along with the Groupe Danone acquired Asian operations of Nabisco and thus acquired controlling stake in Britannia. Later, Groupe Danone and Nusli Wadia took over Pillais holdings. In 1977, the Government reserved the industry for small scale sector, which constrained Britannias growth. Britannia adopted a strategy of engaging contract packers (CP) in the small scale sector. This led to several inefficiencies at the operating level. In April 97, the Government de reserved the biscuit sector from small scale. Britannia has expanded captive manufacturing facilities and has modernized and upgraded its facilities in the last five years. It has also forayed into the Dairy Business with the launch of Cheese, Butter, Ghee, Dairy whitener and flavored milk products. Britannia Industries Limited (Britannia) is engaged in the provision of bakery products, including biscuits, bread, rusk and cakes, and dairy products. The company primarily operates in India. The company's products include 50-50, Good Day, Little Hearts, Marie Gold, Milk Bikis, Nice Time, Nutri Choice, Pure Magic, Tiger, and Treat. It is headquartered in Kolkata, India and employed about 1,982 people as on March 2009. The company recorded revenues of `34212.3 million (approximately $746.5 million) during fiscal year March 2009 (FY2009), an increase of 23.2% over FY2008. The operating profit of the company was `1,782.4 million (approximately $38.9 million) during FY2009, a decrease of 15.4% compared with FY2008. The net profit was `1,514.8 million (approximately $33.1 million) in FY2009, a decrease of 14.6% compared with FY2008.

CALCUTTA BUSINESS SCHOOL | Case study on Britannia Industries Ltd

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Business DescriptionBritannia, a wholly owned subsidiary of The Bombay Burmah Trading Corporation Limited, is a Leading player in the Indian biscuits industry. The company is engaged in the manufacture and distribution of food products primarily comprising of bakery products like biscuits, bread, cakes and toast; and dairy products. The company operates in the Indian and overseas market through its subsidiaries, joint ventures and associates. The companys operations in the country is managed by International Bakery Products Limited, TC Balam, Tamil Nadu; J B Mangharam Foods Private Limited, Gwalior, Madhya Pradesh; Manna Foods Private Limited, Bangalore, Karnataka; Ganges Vally Foods Private Limited, Kolkata, West Bengal; and Sunrise Biscuit Company Private Limited, Guwahati, Assam.. The company markets its biscuit products in India under the brand names of Tiger, Good Day, 50 - 50, Marie Gold, Treat, Milk Bikis, Nutri Choice, Time Pass, Pure Magic, Little Hearts, Nice Time, Bourbon and Greetings. Bread products are sold under the Premium Bakes, white sandwich bread brand. Cake products are sold under the Premium Bakes, Cakes and Rusks brands. The company also offers 'Cup Cakes' in its cakes category. Britannia New Zealand Foods Private Limited (BNZF), the joint venture of Britannia with Fonterra Cooperative Group Limited of New Zealand, markets and sells dairy products comprising cheese, dairy whitener, curd, butter and clarified butter. These products are sold under the Britannia Milkman brand. Daily Bread Gourmet Foods Private Limited (Daily Bread), a wholly owned subsidiary of the company, is engaged in the business of premium bakery products under the brand name Daily Bread. The subsidiary manufactures and retails a range of breads including French bread, Italian breads, Italian white breads, Italian sandwiches, rolls, multi-grains, pastries, bagels and a range of ultra premium health breads. In addition to this, Daily Bread also offers doughnuts, cheesecakes, mousse cakes, fruit cakes, fruit tarts, pastries, brownies, cookies and Belgian pralines and truffles. Deluca, a division of Daily Bread, offers a wide range of gelato, sorbet, gelato cakes, sundaes, and desserts. Besides, the subsidiary operates Daily Brew espresso bars serving a variety of coffee, tea and light snacks. Strategic Food International Co. LLC (SFIC), a 70% subsidiary of Britannia, operates in the Middle East. The subsidiary offers a wide range of biscuits and wafers under the brand name Nutro. Al Sallan Food Industries Company (Al Sallan), a 64.5% subsidiary of the company, also operates in the Middle East. The subsidiary offers a range of cookies, rolls and chocolates under the brand Name Bakers Pride. In addition to this, Britannia is also a kea player in the Sri Lankan biscuits market offering products like Milk Bikis, Milk Cream Smileys, Vita Marie Gold, Creams and Cookies. Besides, the company exports its products to the US, Ghana, Seychelles, Singapore, Oman, Saudi Arabia, United Arab Emirates, Qatar, Bahrain and Kuwait.

CALCUTTA BUSINESS SCHOOL | Case study on Britannia Industries Ltd

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The food IndustryThe following information on the Biscuit Industry in India is provided by the Federation of Biscuit Manufacturers of India Biscuit industry in India in the organized sector produces around 60% of the total production, the balance 40% being contributed by the unorganized bakeries. 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, as at 2000-01. The unorganized sector is estimated to have approximately 30,000 small & tiny bakeries across the country. The annual turnover of the organized sector of the biscuit manufacturers (as at 2001-02) is Rs. 4,350 crores. In terms of volume biscuit production by the organized segment in 2001-02 is estimated at 1.30 million tonnes. The major Brands of biscuits are - Brittania, Parle Bakeman, Priya Gold,Elite,Cremica, Dukes, Anupam, Horlicks, Craze, Nezone, besides various regional/State brands. Biscuit industry which was till then reserved in the SSI Sector, was unreserved in 1997-98, in accordance with the Govt Policy, based on the recommendations of the Abid Hussain Committee. The annual production of biscuit in the organized sector, continues to be predominantly in the small and medium sale sector before and after de-reservation. The annual production was around 7.4 Lakh tonnes in 1997-98 In the next five years, biscuit production witnessed an annual growth of 10% to 12%, up to 1999-00. The annual Growth showed a decline of 3.5% in 2000-01, mainly due to 100% hike in Central Excise Duty (from 9% to 16%). Production in the year 2001-02 increased very marginally by 2.75% where in 2002-03 the growth is around 3%. The Union Budget for 2003-04 granted 50% reduction in the rate of Excise Duty on Biscuit i.e. from 16% to 8%. The Federation's estimate for the current year indicates a growth of approximately 8% to 9%. However the average utilization of installed capacity by biscuit manufacturers in the country has been a dismal 60% over the last decade up to 2001-02. Though dereservation resulted in a few MNCs, i.e. Sara Lee, Kellogs SmithKline Beecham, Heinz etc entering the biscuit industry in India, most of them, with the exception of SmithKline Beecham (Horlicks Biscuits), have ceased production in the c