It's eight months since Vinita Bali stepped down as Managing Director of Wadia Group company Britannia Industries after a nine-year stint. But the 58-year-old says she is leading a far more jet-setting lifestyle than ever before. Being on the boards of international organisations like the Scaling Up Nutrition initiative of the United Nations, the Global Alliance for Improved Nutrition, and Cornell University's division of nutrition science involves frequent travel overseas. However, she says she is enjoying herself to the fullest, doing multiple roles rather than focusing on a particular business which she has done all her life."I have one foot in the corporate world and the other in the development sector. In fact, I just returned from speaking at the ICN2 Conference in Rome organised by the FAO and also addressed by the Pope," says Bali, who remains on the boards of Wadia Group companies Bombay Dyeing and GoAir. She is also on the boards of Crisil India, Titan and Piramal Glass, and on the advisory board of the World Gold Council. Despite the hectic schedule, she is happy to dedicate a large part of her time to a cause she has been passionate about - nutrition for children.
In fact, a large part of her business calls in Britannia were also influenced by her passion for nutrition. "We knew that biscuits are an excellent carrier of micronutrients, can be consumed anywhere and are enjoyed by both young and old. We combined this with the stark reality of the pervasiveness of malnutrition and decided to fortify several of our brands with micronutrients, thereby creating a confluence between social needs and business. We also created the Britannia Nutrition Foundation [in 2009] that works in partnership with NGOs," says Bali. Today, more than 55 per cent of Britannia's products, from the NutriChoice range of biscuits to Milk Bikis and bread, are fortified with minerals.
Bali's focus on the health-plus-taste agenda worked and the company's revenue quadrupled to Rs 6,342 crore in 2013/14 from Rs 1,615 crore in 2005/06 (she took over as MD in 2005). Net profit has jumped from Rs 148.77 crore to Rs 370 crore during the same period. In the July to September quarter of 2014/15, the company's consolidated net profit nearly tripled from a year earlier to Rs 270 crore. "This is a continuation of the company's performance trajectory, significantly boosted by a benign commodity scenario and falling fuel prices...," says Bali.
Her strategy did come in for criticism later in her tenure as the company's profitability failed to match its revenue growth. Competition, especially new entrant ITC Foods, was extremely aggressive with new launches. Britannia lost market share in categories such as cream biscuits where it always had an edge. With products such as Choco-Fills from the rival camp, Britannia lost out in the premium play. But, Bali, points out an analyst who does not wish to be named, didn't believe in short-term course correction. "Her focus was on long-term growth and profitability was important for her," he says.
"... [We] decided to fortify several of our brands, thereby creating a confluence between social needs and business"
Bali's successor, Varun Berry, attributes the stellar growth in the past couple of years to the robust distribution system that he has succeeded in building and also by bringing in the much-needed competitive spirit in order to win in the marketplace. "We made sure that we get more SKUs (stock-keeping units) of our brands in the outlets where we were available," says Berry. The company also identified regions where it was weak and plugged the gaps. "We identified rural as a weakness in certain states and launched some initiatives in rural distribution, making sure we got better coverage. That gave us very good returns," he says.
While competition has been on a fast-forward mode when it comes to product launches, Britannia slowed down over the past couple of years. Berry says the slowdown was intentional. The company is now gearing up. Earlier this month it launched a premium range of cookies, Heavens, under the NutriChoice umbrella. A few weeks earlier it had launched Tiger Crunch in the value segment. "I was clear we needed to get the foundation in place before we do anything extraordinary. Now that we have our distribution in place you will see a lot of innovations coming from Britannia," says Berry.Apart from biscuits, which contribute almost three-fourths to the company's revenue, Britannia is also present in the dairy segment with products like butter, cheese and milk. It had entered into the breakfast category with oats and ready-to-eat foods but burnt its fingers and eventually pulled out of these categories. "We had done a pilot that did not meet our action standards, so we withdrew," says Bali. Berry says the lesson was that one can't afford to go wrong with the logistics. "We import oats from Perth, they land at the Chennai port, our factory is in Punjab and they travel all the way by road, they get packed there and the demand centre is south. It doesn't work," explains Berry.
Will the company look at these segments again in the future? Berry doesn't want to commit. He says the company is preparing a strategic plan, which should be ready by June. "We will take a call on which are the adjacent categories we should play in after that," he says.
Analysts call Berry a more hands-on and operations person, while they term Bali a visionary. Bali has given the foods company the scale it required, and Berry is now building on the success.