Story of the day
Home  /  Strategy  /  Trend  / Britannia is raising the bar | DEC 26 , 2016

Trend

Britannia is raising the bar
Britannia Industries is evaluating new products like cereal bars and croissants. Will the strategy succeed?

Bhavik Nair

Britannia Industries recently indicated that it is looking to strengthen its bakery segment by launching new products over the course of the next few months as part of its transformation into a total food company.

The firm is evaluating segments like cereal bar and croissants where it has been absent, according to Varun Berry, managing director at Britannia Industries. To be fair, Berry has done an exceptionally good job of reviving Britannia’s sales by energising its brands and strengthening its product line. So far, the categories it tapped were tried and tested ones where it was sharing the market with its rivals. But now it is extending itself into product lines where even its rivals have encountered limited success.

It is noteworthy that the cereal bar segment has seen a lukewarm reception in India over the last few years. And for the same reason, it remains a highly untapped area with very few biggies playing around. Few brands that have marked their presence in the country include Nature Valley, Horlicks and Patanjali.

Interestingly, cereal bars is a very active segment in western nations with a global market of over $12 billion. The segment carries an image of an energy provider to young working men and women who do not get enough time for their morning cereals. The very idea was to grab a bar and keep going for a few hours without a proper meal.

But will this work in a country like India where roadside snacks come in varieties and abundance? People have enough time to go to their local stalls for a quick bite. Plus, health consciousness is just picking up and still has a long way to go. The idea thus seems questionable.

Statistics however point towards an increasing consumption trend in this segment. According to Euromonitor, the snackbar market in India stands at ₹28 crore in 2016 — a 12.5% rise from the previous year. On a global scale, the market stands at $12.28 billion.

According to Dilip Radhakrishna, research analyst at Euromonitor International, the major challenges faced by snackbars in India include lack of awareness, stronger base of traditional snacks and distribution challenges.

“Furthermore the demand for snackbars is mainly in metros and tier one cities when compared to other regions; however, availability in these centres is also low. Advertisement campaigns which contribute significantly to the growth of the product and create awareness, is a factor that most companies have ignored,” he added.

A few years back when GSK Consumer Healthcare launched Horlicks NutriBar, the company had positioned the product as an alternative to junk food and had targeted the young working adult. However, the product never seemed to gain much traction and is currently not found widely in local kirana stores.

Experts also suggest that lack of any success in the past cannot be simply attributed to the product itself. It might have been the timing, as the Euromonitor analyst points out. Consumers were not ready for this segment and there was a low awareness about it, observes Radhakrishna.

Currently, Patanjali’s energy bar seems to be one of the few active brands in the segment. The firm sells a 40 gram bar at ₹30 and the product is available in different flavours.

Patanjali does not have the kind of pan India presence that Britannia has and if the latter does come out with its own version of a cereal bar, it has everything in place for a far-reached delivery across the country.

According to an expert, if the firm decides to launch a cereal bar, it needs to educate people on the importance of this product. “People must realise that there is a need for such a product and that there is something good in what is being offered. Until you create a demand and an awareness regarding such a segment, it would be difficult to find any traction,” the expert observed.

Awareness of snack bars in India presently is created by gyms and health fitness centres, according to Radhakrishna. “While these centres promote snack bars, this target base is niche and general masses are yet to adopt and try this product. Reaching out to masses, educating them and making snack bars a healthier alternative for them is the main challenge faced by players in the industry,” he points out.

The other segment that Berry had pointed was Croissants — again a highly unorganised segment where no big player has a market share.  Local bakeries seem to be the go-to place for croissants. Will Britannia’s entry into this segment work out or not is something to be watched out for. The firm recently launched an R&D facility in Bengaluru which is seen as a step towards its goal of becoming a total foods company in the next five years. Britannia is also looking at strengthening its distribution network especially in the north.

By planning to come out with products where others have not found success, Britannia is taking a bold step. It might be hard to succeed where others have succeeded earlier. But to succeed where others have failed, makes it even more challenging.

Here's your chance to read the latest issue of Outlook Business for free! Download the Outlook ​Magazines app now. Available on Play Store and App Store
On Stands Now
Twitter