Britannia Industries plans to find a partner to improve its dairy business and withdraw a few brands from the segment as part of a strategy to concentrate on products with higher margins.
Dairy project is now in its final stages and in another month we can give a clear view, Varun Berry, MD Britannia Industries. Home for this project will be Punes Ranjangaon food park, in the middle of districts which produce the highest amount of cow milk. The objective is to become more competitive and make better margins, he adds.
This will be the companys third attempt at a joint venture in this segment, which has been exhausting its overall growth. No potential partner has been named till date.
In 2002, Britannia joint ventured with New Zealand-based Fonterra Dairy to sell dairy products under a brand called Milkman. Fonterra exited in 2009 and sold its 49% stake to Britannia due to the losses it made. Britannia also ended its connotation with French foods and dairy giant Groupe Danone SA which was around 10 years old.
The dairy market in the country is mainly controlled by cooperatives such as Amul and Mother Dairy.
Britannia reported 7.4% jump in sales even after the implementation of goods and services tax (GST), which resulted in destocking in the month June. Berry said destocking was about 10% in June as traders were not sure about the new tax regime.
Britannia pulled back on advertising in the first quarter due to the passive environment after demonetisation and the commencement of GST. The company spent Rs 80 crore on marketing and advertising in the quarter, Rs 15 crore less than the previous year. According to Berry advertising and marketing spend will now get back to normal.
Post demonetisation and GST, local brands manufacturing biscuits are facing pressure in the Rs 27,000-crore industry