Vinita Bali, Managing Director, Britannia Industries, joined the company as Chief Executive Officer in January 2005. Since Vinita joined Britannia as CEO in 2005, the company almost doubled its turnover in just four years, growing at an annual rate of c23%, as compared to the previous three years’ 10-11% growth. She has led Britannia’s charge beyond its core biscuits business into categories such as dairy and bakery, and moved into international markets with Britannia’s range of products. She received her Bachelor's Degree in Economics from LSR at the University of Delhi and her MBA at the Jamnalal Bajaj Institute of Management Studies at Bombay University. She pursued postgraduate studies in Business and Economics at Michigan State University on a scholarship from The Rotary Foundation, and was selected to work as a Graduate Intern at the United Nations headquarters in New York. She started her career with Voltas Ltd.-a Tata Group company focusing on consumer products, where she launched Rasna soft-drink concentrate. In 1980, Vinita joined Cadbury India. The Coca-Cola Company chose her as its worldwide Marketing Director in 1994 where she was responsible for the worldwide strategy for Coke. In 1997 she took over as Vice President of Marketing for Latin America, and in 1999 relocated to Chile as President of the Andean Division with sales in excess of US$1bn. In 2001, she was made a corporate officer of The Coca-Cola Company and appointed Vice President of Corporate Strategy reporting to the Chairman. After a nine-year association with Coke, Vinita joined her mentor at Coke, Sergio Zyman at the Zyman Group in July 2003 as a Managing Principal and Head of the Business Strategy practice in the company's Atlanta office. As a member of the company's Board of Managers, Vinita shared responsibility for developing and managing Zyman Group's consulting business.
Britannia was started in 1892 in a nondescript house in Calcutta (now Kolkata) with an initial investment of Rs295. By 1910, with the advent of electricity, Britannia mechanised its operations, and in 1921, it became the first company east of the Suez Canal to use imported gas ovens. In 1975, the Britannia Biscuit Company took over the distribution of biscuits from Parry's who till then distributed Britannia biscuits in India. In the subsequent public issue of 1978, Indian shareholding crossed 60%, firmly establishing the Indianness of the firm. The following year, Britannia Biscuit Company was re-christened Britannia Industries Limited (BIL). Four years later in 1983, it crossed the Rs1bn revenue mark. 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.
In an interaction with Anil Mascarenhas and Arnab Mitra* of India Infoline, Vinita Bali says, "The combination of more discretionary spend, increasing aspirations, and accessibility of prices is creating the growth that we have been witnessing."
The FMCG market is seeing growth like never before in recent years. What has led to this change of gears?
The FMCG industry has been mirroring what is happening in the economy. New emerging sectors have put more money in the hands of younger people in urban India, whose propensity to spend is quite different from earlier generations. Young managers today have their own homes and drive their own cars. When I look back at my times as a brand manager, I was staying as a paying guest, waiting for the company to provide a car. In villages, programmes like NREGA have put more money into the hands of the consumer.
A major phenomenon is the emergence of choice, at prices that are affordable and accessible. Products are available, at one rupee a pack, which is merely four cents. It is an unbelievable price yet true. As a result of the low-unit packs that every FMCG company has explored, products have become more accessible and affordable. Another interesting aspect is that in a lot of categories, from a generic commodity, people are moving towards brands. Earlier, no one cared about brands in certain categories, but today every manufacturer, from the cooperatives to local shops are stepping up brand awareness of their portfolio
This combination of more discretionary spend, increasing aspirations and accessibility of prices is creating the growth that we have been witnessing.
Where do you see Britannia’s role in this industry?
I see Britannia becoming an increasingly significant player in what I would call the snacking arena. We are not talking about selling staple food—not selling wheat, but converting wheat into bread and biscuits. Similarly, we are not talking of selling milk, but converting milk into cheese and milk based drinks. We are not in the business of selling commodities, but converting them into distinctive products and brands.
What kind of growth rate can we see from Britannia?
In the last four years, we have delivered compounded annual growth of around 20%, as compared to 10-11% in the previous four years. Over the next four years, I envision a double-digit growth.
What would be key growth drivers for a mature market like biscuits?
Among all packaged-food categories, biscuits represent the largest market. However, I wouldn’t call this a mature market, as the per capita consumption continues to be very low. We are at less than half the per-capita consumption of countries like Sri Lanka. India’s per-capita consumption of biscuits is hardly 2kg a year.
Like every other category, if we make our products more relevant, more accessible and more affordable then biscuits themselves have a huge opportunity to grow.
Britannia has started focusing on categories other than biscuits in the past three years. Tell us about this transformation.
In 2005-06, we were hardly doing Rs1 billion across bread, cake and rusk. Around three-and-a-half years later, the segment has become a Rs4 billion business. That business has quadrupled in the last three and a half years, albeit on a smaller base. Dairy, which was then less than a Rs1 billion business has now grown to over Rs2 billion. We will continue to see growth in the sectors we operate in, plus we will expand through other offerings.
We are exploring spaces other than bakery and dairy too, but it’s not going to be jumping on the bandwagon just because others are doing it. It’s a bit premature to comment on the same.
With steep inflation in agricultural commodities, how will the company manage growth with margins?
That’s a tough challenge because even though the price of sugar has doubled, there is no way we can take all of that and increase the price of biscuits.
I think commodities are going to be a stress point and we are doing two things. Firstly, what can we do in terms of revenue management—what is the right profile of pack size, brand and channel. Secondly, we are focusing on taking cost out of the system. Over the last four years, as we have taken about Rs1.8 billion of costs out and that effort continues.
Do you think Britannia lacks the pricing power that an iconic brand like Britannia should have?
I am increasingly beginning to question the theory of iconic brands. If iconic brands are so iconic that the consumer says “It doesn’t matter how much it costs, I am still going to buy it,”, but we know that that is not true across categories because several iconic brands have lost share to insurgents. So I think iconic brands have a lot of reflection and thinking to do because every iconic brand has at some stage in its life been challenged by an insurgent.
What are Britannia’s plans for its international business?
There are three ways in which we are going international. Firstly, we are exporting to many countries from here. Secondly, we bought two businesses in the Middle East based in Dubai and Oman; from there, we not only service the Middle East market but also Africa. Finally, we opened up Sri Lanka with a manufacturing partner. The international business is now less than 10% of total turnover. But it is not unthinkable for it to be 15–20% of overall business in future.
You have had a long working stint outside India. How do you compare Indian managers with managers outside the country?
I can pick up a few areas where I personally feel corporate India can benefit from. First is the area of individual ownership and accountability. Somehow, in India we tend to keep using the word ‘we ’. Everything is plural in terms of “we need to”… where is “my ownership” and where is “my accountability as a member of a team? I think the second shortcoming we have is process orientation. If you don’t have that it is very hard to create recurring processes that are imperative for recurring success. Third is the lack of a high standard of excellence and quality expectation. We tend to make compromises in our personal lives as consumers and in our work lives as employers/employees—if something is not absolutely of the right quality, we are okay with it. If Indian managers improve on ownership and accountability, greater process orientation and excellence in quality, then we will be unstoppable.
*Arnab Mitra is Asst. Vice President, IIFL, (the institutional arm of India Infoline).