The 80:20 Rule : Story of Britannia’s Record Growth

Read the complete story of how Britannia emerged as a more stronger FMCG player and is up for new challenges now

Everyone knows that despite sliding into slow lane, Britannia has bucked during the Covid time.

Berry says that the story of present day Brittania begun in the third week of March. With subsequent extensions till end-May, for the foods company that derived roughly 95 % of its sales from biscuits, bakery and dairy had no option but to do a quick restart. By mid-April, Britannia started utilising 65 % of its capacity, and Varun Berry, its managing director (MD), led the company to new heights by following the strategic plan which he calls “the 80:20 rule”.

The rule was quite simple: 20% of the brands and SKUs (stock keeping units), which contribute to 80 % of Britannia’s revenue, were put on priority. “Good Day and cream variants, Milk Bikis, Marie Gold, and Nutrichoice were the obvious choice since they were all high throughput varieties,” underlines Berry. Not only did the 80:20 formula gave the biscuit maker an instant advantage but streamlined productivity, gave more flexibility in manufacturing capacities, ensuring efficiencies in factories and distance travelled by the products while still maintaining a laser-sharp focus in execution.

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The results showed, and how. In the April-June quarter, Britannia posted revenue of ₹3,384 crore, a spike of 26 % over a year ago. Operating profit surged to ₹669 crore, a jump of 91 percent and profit after tax (PAT) zoomed by 118 percent to ₹546 crore. He added that bread and rusk—which come under the adjacent business of Britannia—grew faster than biscuits. and within dairy, cheese was fantastic during this period which got a boost by the campaign by Saif Ali Khan.”

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Picture credits : https://bit.ly/2Rh9Nmo

The biggest part was identifying areas where the rebound would be faster. Obviously, it had to be rural, which was not as badly affected by Covid as urban during the first quarter. Despite having fierce competition from Parle, they were able to report growth at a CAGR of 16 % between 2017 and March 2020 in four weak Hindi-belt states for Britannia—Uttar Pradesh (UP), Rajasthan, Gujarat, and Madhya Pradesh due to the increased rural preferred dealers (RPDs) and methods such as direct telesales, sms blasts, distributor point’s pickup, retailer survey and digital campaigns.

Picture credits : https://bit.ly/2Rh9Nmo

The company, he adds, maintained its focus on five strategic planks

  • Distribution
  • Marketing
  • Innovation
  • Cost focus
  • Developing adjacent businesses.

Berry admits that the transformation journey was not easy and that it happened on multiple fronts. Talking about past and how they lost the innovation edge to companies like Parle and ITC, the lockdown helped britannia to plan better which facilitated Britannia to ramp up the volumes, improve productivity, and add new capacities through contract packers. In terms of distribution, the direct sales from factories to reduce the transit time was also a great move. Moreover,investment in the R&D centre, doubling down on premium products and cakes, trying to understand the needs of the youth, and venturing into new categories—rusks, croissants, milkshakes, salty snacks, health foods and wafers helped transform the predominantly biscuits company into an FMCG player.

Read more details about what challenges the FMCG giant is facing in the new segments they are deciding to venture soon in the complete story here

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