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 pre-
eminent 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 butterscotch-flavoured 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%
Britania
36%
ITC
10%

Parle
34%

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
Strengths
INTERNAL FACTORS  Market leader
(IFAS)  Fastest growing FMCG
 Its net profit increased by
77.5 per cent
 'Britannia' among the 'Top
EXTERNAL FACTORS 10' most trusted brands
(EFAS) across categories for 5
successive years.
 Trans-fat free.
 Widely accepted ,available
and non- seasonal food
 Doubled advertising budget.
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
  Trade marketing
Opportunities SO Strategies WO Strategies
 People are more health  Grow market by horizontal  Invest more in R&D.
conscious integration.  Keep an eye on the
 Improved standard of  Innovation in terms of small competitors market
living packages to be sold in rural  Expand product portfolio
 Higher disposable markets
income
 Rural India Market
 Biscuits covers 80
percent of the total
bakery products in
India
Threats ST Strategies WT Strategies
 Price sensitive  Make use of the least input  Invest more in marketing
 Subject to VAT at to minimize costs while not to position the product
12.5 per cent distracting from the quality properly
 Use of Britannia  Expand the product  Offer lower prices
Industries Ltd's portfolio
biscuits brand "Tiger"
in other countries
 Commodity inflation.
 Fickle segment.
 Highly penetrated
category
 Completion form
foreign companies
 Poor quality for 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
add-on 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 2009-2010.

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
oil-dripping 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.