Themes : Marketing Mix
Period : 1997-2000
Organization : Britannia Industries Ltd
Pub Date : 2001
Countries : India
Industry : Food, Beverages & Tobacco
The Balancing Act Contd...
Said Alagh "As with other large markets, we will seek to segment the market for dairy products too. This could mean that our portfolio will include premium brands, with a high degree of value-addition, as well as popular-priced brands that could add critical mass." BIL entered the dairy segment in 1997 with cheese and milk powder or dairy whiteners. By 2000, BIL captured about 35% of market share of the cheese market and 20% in the dairy whitener segment. It launched butter in 1998, flavoured milk, sub-branded 'zipsip' in tetra packs in 1999 and ghee in February 2000. The company relaunched its entire dairy business in late April 2000 by bringing it under the 'Milkman' name. The pricing, communication, package, design had all been revamped.
The word 'flavoured' was dropped from the milk range, as research had shown that in India, the word 'flavoured,' connoted 'artificial' to consumers. BIL's diversification reflected its parent, Danone's portfolio. Ever since it got control of BIL, Danone had been providing it technology in biscuits and pastries. Danone's biggest business, dairy products, was the driving force for BIL's diversification. However, dairy products accounted for a meagre 9% of BIL's turnover. But BIL hoped that was going to change. Said Alagh, "In the next 3 years, we expect new businesses to contribute about a quarter of our turnover." The Road AheadBIL's makeover plan seemed to have worked well. The sales increased from Rs 752.3 crore in 1996-97 to Rs. 1169 crore in 1999-00 and net profits increased almost 4 times since 1996-97. Although BIL's biscuit business seemed to have done well, its diversification into dairy segments did not seem to be an unqualified success. |
Analysts observed that the value-added dairy market which BIL had targeted was a minuscule 0.10 per cent of the market. While the size of the cheese market was a mere Rs 140 crore, it was growing at 20 per cent per annum. The Rs 400-crore butter market was growing at 10 per cent a year, and Amul-the only national butter brand-had an 85% share. The Rs 350-crore dairy-whitener market was growing at 10% a year, but large brands like GCMMF's Amulya (marketshare: 45%), Nestle's Everyday (32%), and HLL's Milkana (14 %) dominated it.
Analysts felt that for BIL, using brand equity alone to break into competitors' domain, may not be that easy. BIL had to make sure that the products it made were acceptable to Indian tastes. The mere fact that a product in its parent, Danone's portfolio was successful abroad was no guarantee that it would succeed in India. The best example, analysts pointed out, was that of 'Mini roule,' a Swiss roll from Danone, which failed to take off, in India.
BIL, however seemed to believe that its core competence was foods, and that by going into dairy products, it was not moving from its original focus. BIL also believed that its makeover plan had worked well, and that this was reflected in the remarkable improvement in profits. Accordingly it set ambitious targets for the future. Said Alagh, "Our vision is to make every third Indian a Britannia consumer within the next three years ...We want to be part of our consumer- at home, out of home, a natural part of his life. Consume the product of your choice, but consume Britannia."
Analysts felt that the challenge for BIL lay, in continuing to remain aggressive and in evolving to meet the needs of dynamic markets of the new millennium. If BIL was to achieve the objective it had set for itself, it had to continuously strive to deliver products with value that exceeded consumers' expectation. BIL's gamble and its long-run success would ultimately depend on whether consumers liked the new products it introduced in the market or not.