Final 32_report

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  • 1. Britannia Industries Limited A Report on Tiger BiscuitsMAYANK THUKRAL (08P089)SUDHANSHU GARG (08P108)SUPRABH SAMSUKH (08P110)

2. 1. Executive SummaryThe FMCG market is set to reach to US$ 33.4 billion in 2015. Penetration level aswell as per capita consumption in most product categories like jams, toothpaste, skincare, hair wash etc in India is low indicating the untapped market potential.Burgeoning Indian population, particularly the middle class and the rural segments,presents an opportunity to makers of branded products to convert consumers tobranded products. Growth is also likely to come from consumer upgrading in thematured product categories. With 200 million people expected to shift to processedand packaged food by 2010, India needs around US$ 28 billion of investment in thefood-processing industry.India is one of the largest emerging markets, with a population of over one billion.India is one of the largest economies in the world in terms of purchasing power andhas a strong middle class base of 300 million.Around 70 per cent of the total households in India (188 million) reside in the ruralareas. The total number of rural households is expected to rise to 153 million in2009-10. This presents the largest potential market in the world. With growingincomes at both the rural and the urban level, the market potential is expected toexpand further.An average Indian spends around 40 per cent of his income on grocery and 8 percent on personal care products. The large share of fast moving consumer goods(FMCG) in total individual spending along with the large population base is anotherfactor that makes India one of the largest FMCG markets.In India per capita consumption of biscuits is estimated at a low 1.5 kg, reflecting thehuge potential for growth of the industry. Over 900 million Indians buy and eatbiscuits with varying frequency in any year. The penetration of branded product inthis segment is quite significant, and is valued at Rs 2,500-3,000 crore. None of theother wheat-based segments is as developed as the biscuits industry. The biscuit 2 3. segment has developed with large markets of mass consumption covering over 90%of the overall potential market. The Indian biscuits market is estimated to be 1.1million tonnes per annum and valued at over Rs 50 billion. The unorganized sectoraccounts for over 50% of the market. The market has been growing at a CAGR of6-7% pa.The present biscuits-bakery sector in India looks like a battlefront. The battle beingled by stalwarts like Britannia and Parle with close competition from other companieslike ITC, Nutrine, HLL Kissan, Kwality and even international brands like Kellogg,Nestle and United Biscuits. 3 4. Contents1. Executive Summary ............................................................................................ 22. Company Overview .. 53. Product Overview .. 64. SWOT Analysis .. 7 4.1 Strengths 8 4.2 Weakness .. 10 4.3 Opportunities ... 11 4.4 Threats ... 125.Competitor Analysis ... 13 5.1 Analysing strategies and activities of direct competitors .... 15 4 5. 6. Analysis of Consumer Behaviour . ... 226.1 Survey Methodology . 226.2 Demographics of the Respondents ... 226.3 Details about Family . 246.4 Consumption Behaviour .. 256.5 Buying Behavior 286.6 Brand Awareness . 316.7 Most Liked functionalities . .. 336.8 Outcomes ... 357. Conclusion .. .. .. 378. References . .. 399. Questionnaire used for Survey... ... 40 2. Company Overview5 6. Britannia Industries Ltd is the leading bakery products company in India with apredominant focus on sale of branded biscuits. The companys history goes back to1892, when it was incorporated in Kolkata under the name of Britannia BiscuitCompany. BIL got its current name in 1979. Four years later, in 1993, the NusliWadia group acquired a stake in BILs parent, Associated Biscuits International Ltd,UK and became an equal partner in BIL with French Major, Groupe Danone.The company is engaged in the business of biscuits, bread, cakes and rusks. Inaddition to the bakery business, Britannia runs its dairy operations through its jointventure Britannia New Zealand Foods Pvt Ltd.It caters to diverse needs and tastes of the Indian consumer across age groupsthrough its optimum range of biscuit brands. Some of its popular brands are -- Tiger,Good Day, Marigold, Milk Bikis, Treat, 50:50, Little Heart, Bourbon, Pure Magic,Snax, Premium Bake and Nutrichoice.The companys strategy of consistently renovating its existing brands and launchingnew ones has helped it garner larger share of the Indian biscuits market every year.Its market share stands at about 35 per cent. It is essentially a biscuit company with90.2 per cent revenues coming from sale of biscuits. The company has a biscuitsmanufacturing capacity of 1,63,500 tonnes per annum, spread over five units locatedat Delhi, Mumbai, Chennai, Kolkata and Uttaranchal. 3. Tiger BiscuitsLaunched in 1997 as a mass-market product, now Tiger constitutes 50% ofBritannias market share in organized biscuit sector. Tiger became the largest brandin Britannias portfolio in the very first year of its launch and continues to be so tilltoday. Tiger has grown from strength to strength and the re-invigoration in June 2005has further helped bolster its growth in the highly competitive glucose biscuitcategory.6 7. Why Britannia Tiger? Britannia Tiger is a mass-market product Tiger is in Glucose biscuit segment which caters to the need of low-pricemarket Tiger has distribution in metro, suburban and rural sectors Promotion mix of Tiger is very diverse, viz. celebrity promotion, competitions,emotional pitch etc Tiger brand is in the market for last 11 years and it has evolved with changingcustomer needs Tiger is the most successful brand in its category7 8. 4. SWOT AnalysisSTRENGTH WEAKNESS Contract Manufacturing Model Brand name tussle Strong brand positioning as a health Low profit margin force biscuit Low penetration in sub-urban and Quality Accreditationsrural sector Various Tigers Alternative Distribution and Marketing strategies Excise duty holiday Value for MoneyOPPORTUNITYTHREAT Cost-control Increasing Inflation Untapped Market Potential Bleak near-future industry outlook International Market Competition Growth Potential Price sensitive market Customer behavior shift 8 9. 4.1 Strengths1. Contract Manufacturing ModelWhat makes Britannia unique amongst its peers is its contract manufacturing model.The company outsources entire production of bread, cakes & rusk sold by it. Around76 per cent of its biscuits are also produced by third party units. This strategy hashelped Tiger brand in catering to growing market needs quickly and at lowest pricepossible.2. Strong brand positioning as a healthforce biscuitTiger as a brand has been a roaring success. Within a year of launch, Tiger Glucoseand Tiger Cashew have, together, achieved a turnover of Rs 100 crore and amarketshare of 30 per cent in the glucose biscuits segment.At the low-end price-points targeting the mass market, Tiger Glucose (Rs 5 for a100-gm pack) and Tiger Cashew Badam (Rs 6 for 75 gm) are positioned ashealthforce biscuits. Consumer research showed that good health is theoverwhelming objective when mothers choose snacking options for their children; italso revealed that mothers are aspirational for their children. So, the selling line forBritannia Tiger was Jam Ke Khao, Kuch Ban Ke Dikhao (Eat Lots, BecomeSomething). The proposition repositioned Tiger brand, and brought a contemporaryfeel to the advertising.3. Quality AccreditationsOther than Cremica, Priya Gold and Britannia Tiger, none of the other brandscarry the ISI mark.In a comparative test study done in 2003 by Voice, a voluntary organisation ininterest of consumer education, it was revealed that only the claims of BritanniaTiger as a health product matched the actual content of the biscuit. On the contrary,Parle G, which claimed to have eight per cent proteins, actually has just 6.8 per centof it while Kelloggs had only 6.2 per cent against the claimed 7.4 per cent.9 10. 4. Various TigersBritannia has gained market share for its Tiger brand by introducing different variantscatering to all segments of society viz. glucose, cream(Orange, Elaichi, Chocolate,Rose Milk and Kesar), coconut, Chota-Tiger and recently-launched banana variant.Enhancing the portfolio of varieties under the Tiger brand is intended to giveconsumers more reasons to buy.5. Alternative Distribution and Marketing strategiesa) Along with normal distribution, Tiger is also focusing on bulk supplies at railwayplatforms, canteens and BPO offices, thereby increasing its reach across regions.b) Also launched "Chota-Tiger"(smaller packs) with two to three biscuits to facilitatequick eating at consumption avenues. Separate market structure and sales force isdevoted to handle these alternative distribution.6. Excise duty holidayThe combined taxes, central-vat, excise & local taxes used to amount to 26% of totalcost of Tiger biscuit. Recently government gave relief to biscuit industry byexempting the biscuit variants with cost below 100per kg from excise duty. Thismeasure has come as a great relief to Tiger as it falls under the privileged segment.7. Value for MoneyTiger biscuit is positioned at low-end price-points (Rs 5/ Rs10) targeting the massmarket. Tiger biscuit has maintained quality at low prices, maximizing value for thecustomer. Tiger had maintained the same price for its flagship glucose brand forseveral years to enhance customer satisfaction.4.2 Weakness1. Brand name tussle 10 11. The relation between Britannias major stake holders -- Wadias and Danone, hasturned sour since 2005--06 over the alleged unauthorized use of the Tiger brand byDanone in five countries; viz. Singapore, Pakistan, Malaysia, Indonesia and Egypt.Britannia has filed a case against Danone at Singapore court regarding the same.2. Low profit marginAfter a drop in operating profit margin