The mood of the Britannia Industries team is upbeat. The senior management says that the team has never been so energetic and fiercely competitive as it has been in the last couple of years since Varun Berry has taken over the reins of the company. The energy is also visible in the company's recently announced September quarter results. Its consolidated net profits have nearly tripled from what it was a year back, to Rs 270 crore. In a conversation with Ajita Shashidhar, Britannia MD, Varun Berry, says that the biggest learning that he has brought on to the table of Britannia from his former employer Pepsico, is competitiveness. "The big change that I brought in is strands of competitiveness and my strength really is people. I have an inherent advantage when it comes to people, my judgment somehow is right and that went my way." Edited excerpts.
Q- Britannia has had an impressive growth in past few quarters after you took over first as COO and now MD. What's the secret behind this success?
A- The secret is basically getting the building blocks in place, strengthening infrastructure, distribution, putting the right people in the right place and also bringing in a culture of competitiveness.
Britannia is a lot more competitive today as an organisation. If you remember, my previous company, Pepsico, was a hugely competitive organization.
I have tried to replicate that spirit by creating a passionate team of people doing the right things, that's basically the difference. I haven't necessarily created an entirely new team, but I made changes in the team.
For example, our current Marketing Head, Ali Harris, used to be handling one category, now he is the head of marketing. Similarly, Manjunath Desai, used to be handling marketing insights, he is now the head of strategy and business development.
The trick was to figure out who has got the potential to work the way a company like Britannia should in terms of creating that passion and hard work.
Half the people were promoted from within, and some were hired to get an outside perspective. We hired Hemant Rupani from Vodafone, he is our head of sales.
Q- What was that one thing that you thought was lacking when you took over the reins?
A- The biggest challenge was the spirit of competitiveness. I don't think there was anything wrong. It was just creating the spirit of competitiveness which everyone likes. It was a subdued requirement in everyone's mind. Now that the infrastructure and the foundation are strong, we are doing all our innovations, because you can build only on a strong foundation. If you try to build on a slightly weaker foundation, you will trip.
If you notice, we haven't done any new brand launches in the last few years. We wanted to get things in place before we wanted to build on it, else we wouldn't get anywhere. Now we know that we are in a much better position to do anything new.
Q- While you were busy streamlining your business, competition was on a product launching spree. Didn't that bother you?
A- I was quite happy with what we were doing. I was clear that we needed to get the foundation in place before we did anything which was extraordinary. We were not putting any pressure on ourselves. Now, you will see lot of innovations coming from Britannia.
Q- You talked about focusing with great detail on strengthening distribution, can you elaborate on your distribution strategy?
A- We set two targets within distribution - one was the quality of distribution which was making sure that we get more SKUs (stock-keeping units) of more brands into the outlets we were available in.
We then looked at an initiative which was about making sure that we had the right human intervention to be able to get more brands, more SKUs into the outlets.
Salesman were going to the outlets and trying to sell 250 SKUs, and we are not going to get anywhere with that. So, we got two salesmen to go to the same outlet and we did it in a way in which the costs didn't go up dramatically.
That gave us very good dividends as far as getting more SKUs and getting more depth in the outlets was concerned.
The second was width. We identified the States we were weak in. We were weak in the Hindi speaking States, so we decided to go hard after those States.
We identified rural as a weakness in certain States and we did some initiatives in rural distribution, making sure we got good coverage. We built depth in urban and width in rural. That gave us very good returns.
Q- You must have invested a significant amount in order to strengthen you distribution muscle?
A- It was more hardwork than investment. It was about doing the right things in the market. The big difference was the hard work and processes.
Q- Britannia in the past has tried its hands in snacks, oats and ready-to-eat foods, which didn't work. What were the learnings?
A- The learning was that you can't go wrong with the logistics, also make sure we do enough research before we do the launch.
For instance, we import oats from Perth, they land at Chennai port, our factory was in Punjab and they traveled all the way by road, they got packed there and the demand centre was South, and it had to come all the way back to sell. It doesn't work.
I think the thoughts were right, but you also need to get the supply chain, the logistics right. When you do it the first time you can always walk out, once you have got those learnings, you always have the advantage of hindsight.
Q- Would you consider re-entering these categories at some point?
A- Not at this stage. We are in the process of writing a strategic plan which should be ready by the end of the first quarter. Post that we will take a call on which are adjacent categories we should play in.
Q- How do you plan to take the dairy business forward?
A- Dairy is becoming competitive, its part of our strategic plan, where we will figure out how we are going to play this game.