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Informist, Friday, Feb. 7, 2025

 

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--Britannia: Planning to relaunch cheese, cake with new recipes, packaging 
--CONTEXT: Comments by Britannia's mgmt in post-earnings analyst concall 
--Britannia: Well prepared to counter inflationary trend 
--Britannia: Will continue to focus on increasing mkt share, sustain profits 
--Britannia: Will increase prices by 2.5% Jan-Mar, and in near future 
--Britannia: Price increases may impact sales volume in near term

 

By Avishek Rakshit and Simran Rede

 

KOLKATA/MUMBAI – Britannia Industries Ltd. will keep increasing prices in the coming months to stave off the impact of rising input costs, which have been spiralling for the past few quarters and are expected to remain higher, Vice Chairman and Managing Director Varun Berry said Friday.

 

Although the move involves risking a hit on sales volume, the company is ready to roll it out progressively in Jan-Mar and the coming quarters, Berry said at an analysts' call. For the past many quarters, Britannia has been focusing on increasing its market share, while sustaining its profits. 

 

Berry said Britannia will increase prices by 2.5% in Jan-Mar and by another 1.5% in Apr-Jun. Britannia had hiked prices by 2% in Oct-Dec. On a cumulative basis, the effective price increase by Britannia from July 2024 to June 2025 will be 6%.

 

Towards the beginning of the current financial year, the company had decreased prices, expecting raw material inflation to cool off. The lower prices helped Britannia to increase its market share, which is presently one of the prime objectives of the company. However, the company miscalculated the early trends in raw material costs, which rose instead of normalising, putting pressure on all food and consumer goods companies, including Britannia.

 

"This year nobody was clear on whether it's going to be a deflationary year or an inflationary year. We started with the feeling that it was going to be a deflationary year, and then it started to turn on us. But as we speak, everyone is becoming alive to the fact that this inflation is not going away," Berry said.

 

The top official said essential raw material costs will continue to be inflationary or stay at higher than normal levels, which will necessitate increasing prices to maintain profits.

 

"There was this feeling that palm oil duties, which have been imposed by the government, will be temporary and will go away. But no, now we know that it's not going away. Also, the feeling was that cocoa and wheat prices would start to normalise. But all of that has not normalised," Berry said. "So people are now very clear that, unless they want to destroy their profits, it (price increases) is going to be important."

 

Britannia's procurement costs for flour rose by 4% in Oct-Dec despite forward buying. Palm oil costs shot up by 43%, cocoa costs were up by 103%, and corrugated box costs were higher by 15%. Sugar costs, on the other hand, remained flat, and laminate costs were higher by 3%, which is normal.

 

"Our inflation for products that we buy is about 11%. This would have been at least 2% to 4% higher had we not done the forward buying," Berry said.

 

Amid expectations of taking a hit on sales volume in the near term after price hikes, the country's largest bakery company is set to relaunch its cakes and cheese portfolio with new recipes and packaging.

 

Britannia on Thursday reported a net profit of INR 5.8 billion in Oct-Dec against the Street's projections of INR 5.2 billion and revenue of INR 45.9 billion, as against the Street's projections of INR 44.9 billion. However, the company's shares fell on the bourses. On Friday, shares of Britannia ended 1.7% down at INR 4,870.50 on the National Stock Exchange.  End

 

Edited by Saji George Titus

 

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