Britannia Industries Rural Biz Contribution May Increase to 50 PC in 3 Years

Britannia Industries, which is one of the largest biscuit-maker in India, the rural focus remains intact. The company's rural revenue may touch 50 percent in the next three years amid a gradual rebound in urban demand. It was also targeting to makeup the unprecedented annualized cost inflation of Rs 1,300 crore by March 2022 in a combination of the price increase and reduction in pack size.

The cost of inflation in 2021-22 for Britannia is more than the cumulative six previous years, the company’s official said. 

"Rural revenue will reach 50 percent in the next three years for Britannia as the company continues to focus on the rural market," sources said. 

The company's revenue from rural segment contribution is already around 35 percent, analysts estimate.  

“The rural market-share gain is 2.5 times in the Q2 period ending September. In the last few quarters, the rural market has been strong and the company continues to stay upbeat at expanding rural distribution,” Britannia said. 

The company has increased 2,000 rural direct dealers in the last months to 25,000. It said the focus states were also showing some positive numbers than national growth.  Meanwhile, the annualized total estimated inflationary pressure which is about Rs 1,300 crore will be recovered by the end of the year.

"Till September quarter, five percent hike had been taken and another 17.5 percent will be taken in the next two quarters," company’s sources stated.

While a third of this price increase comes into effect at the consumer-end hiking direct price and the remaining two-thirds in reducing pack sizes.  Unprecedented inflation in the price of palm oil of 54 percent, industrial fuel of 35 percent and the packaging material of 30 percent led to overall inflation of 14 percent during the quarter.

Commodity price inflation has resulted in a lower profit for Britannia in the second quarter of 2021-22. The company posted a consolidated net profit of Rs 381.84 crore for the second quarter.

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