Britannia says suppliers of ingredients should also be scrutinised

Before having instant noddles, you munch on your biscuits in the morning. That makes Britannia much more vulnerable to perception about the stuff that goes into our bakery products. Always sure about winning and retaining consumer perception of quality till recently, the bakery leader is now looking at the whole issue with a fresh perspective. But managing director Varun Berry believes the government has a role to play doing its bit in ensuring quality in the entire food supply chain. Credited with putting Britannia on to the path of profitable growth consistently for the past ten quarters, Berry has also lot many other things on his mind, including how to make Indians bite more on its cookies and less on pani-puri and chaats. Berry unpacks these thoughts and concerns before Sumit Moitra.

Despite its large category size, biscuit consumption in India lags rest of the world considerably on a per-capita basis. For example, Indonesia spends 1.5 times and Brazil spends 10 times per-capita than India on biscuits. Why is that and do you see this changing?

I used to work for soft drinks, juices, snacks brands and now bakery products. In India, comparative consumption per capita for all these categories is much low. Ever wonder why is that? When I went to Mexico, I found consumption of bakery products dramatically higher. It's because of our street food. When you and me stand on the street, we have pani-puri, chaat, samosas, pakoras and lot many other things. But when you go to Mexico there's nothing save nachos or tacos. Same is true for drinks where here you have choices of nimbu-paani or lassi. So, consumption of processed foods in general is low in India. Biscuits is one of the most evolved categories. It would take time but we have to ensure that we build on it by expanding our portfolio bringing in more delicious products.


You have recently launched a handful of premium products like NutriChoice Heavens, Good Day Chunkies and Nut n' Raisin Romance Cake. How do you go about developing these products, deciding on what would the consumer prefer and what they would reject?

It's clear that consumers, with all their senses, want taste. So, we decide on our products judging them on as many as eight organoleptic qualities (properties of food that an individual experiences through senses including taste, sight, smell, and touch). We take consumers' feedback on these eight parameters and then go back to our labs. We also compare with the best in the world. To illustrate, while working on the Chunkies, we compared it with two of the best global products in the world: Chips Ahoy (of Nabisco) and with another niche cookie brand.

While Britannia, and others too, continue to flourish from consumer acceptance of premium products in the cookies range where they can easily price them upwards of Rs 50, yet Rs 5 a pack still remains a price barrier. How do you see this segregation remaining in future?

It's not about price points but about a brand catering to a particular category of consumer. So, if you look at our value portfolio, we are very weak, with glucose contributing less than 10% share. Same with value cookies or cream biscuits. These are not very profitable areas but still there is an opportunity here by selling at little bit of premium and making some profit. So, we basically fix our pricing parameter per kilo and formulate accordingly, depending upon whatever targets are given by marketers.

In bakery, small local brands still play a major part. Will their presence shrink as market goes for more premiumisation?

In the premium portfolio, for sure. Their right to succeed is low. The change is already happening. Like, when you go to modern trade, you would find lesser of small local brands.

Britannia continues to tell shareholders about cost optimisation. Is it still an issue? How you have been tackling this?

Cost will always be a focus area. In India we get a little spoilt after getting good growth and then we don't focus on costs as much as we should. In countries where the market is growing by 1-2% and price hikes are not possible, profits would come only when costs are optimised. So, we are creating a culture of productivity, cutting waste - not cutting it to the bone but identifying areas where wastage can be eliminated.

Food safety is now a much talked about and debated subject across the country. Strict compliance means higher costs. How Britannia is approaching and tackling the issue?

Food safety would always involve costs and we have already incurred costs. If you consider all our new plants, they are more expensive than our earlier plants. But we have decided to invest more in better equipment, quality control systems and better infrastructure. If anything else is required, we would certainly put that through as food safety is something which is our number one priority.

But a product is as good as the quality of the raw materials. How are you tackling the issue of sourcing?

The approach is that we are testing all the inputs that we receive. But the thing is we can only test on a sample basis and there are chances that we can get a batch which hasn't been tested and which might not be as per our standards. So, it continues to be a challenge. What the government needs to do is to equitably put pressure on supply chain, right from the guy who stores the wheat to grinding right up the value chain. So, at some stage it has to be a private public partnership involving the companies and the government looking at each aspect of the supply chain.

So you see a role of the government?

Absolutely. We can't manage the entire supply chain, starting with the farmers. Like there is a scrutiny on food companies, there should also be scrutiny on supplier of flour and other ingredients that goes into food items. That would evolve over time. As for the present we are doing our best to make test everything we use.