Britannia Industries’ managing director Varun Berry said the new GST slabs will have a positive impact on market share gains for the organised players, thereby giving market leaders an upper hand in terms of both growth and market share.
Talking to analysts on Friday, Berry said 85% of the business underwent a change in GST rates for the company. He expects the "transitory impact" of destocking by distributors and channel partners in September to get normalised during the October-December quarter.
“There will be gains because the grammage that we will be increasing, but I think the market share gains because of this will definitely be moving towards the organized players. This is going to give us an upper hand in terms of where growths and shares are concerned,” said Berry.
On September 22, the GST slab for biscuits and many other FMCG products was reduced from 18% or 12% to 5%. This led to a lot of chaos between brands and retailers who started to destock in order to wait for the new MRPs to be reflected on the new stock. The transition period led to a pause on purchases by retailers and impacted the sales of FMCG products adversely.
Berry also mentioned that rural continues to outpace urban, and the most profitable channel for the company is general trade. "Its for sure we are going to continue that, because that is our big muscle,” he said.
Vipin Kataria, chief commercial officer, said Britannia will continue to go deeper and deeper into rural areas through direct models. "Rural we have a strong story, and with the entire GST change, affordability and value becoming better, we will grow faster in rural," he said.
Earlier this week, Britannia announced the appointment of a new CEO, Rakshit Hargave, who will be taking on the role from December 15th, succeeding Rajneet Singh Kohli.
"He (Hargave) will be handling the entire business and my job will be to help him wherever he needs any help. I will not be directly handling anything once he joins, my job will be to make sure he settles down absolutely well in the role. And that’s my role, and that’s what I will fulfill going forward." said Berry.
Britannia reported a 34% year on year growth in standalone net profit at Rs 689.95 crore for the second quarter ending September, while standalone revenue from operations grew by 4% on a year-on-year basis at Rs 4,567.76 crore which the company attributed to stable commodity pricing and sustained efforts to optimise costs across the value chain.
Berry also mentioned that the company is not looking for a 50% market share with their value brand of Tiger biscuits. “As far as Tiger is concerned, we were, a me too, from a competitor standpoint. We thought through what was important for our consumers in small towns and villages, and this came out to be a proposition which could really help us get established in the rural areas and small towns," he said.
“The brand which is the cheapest form of food, we are not looking at becoming 50% share, we are a single digit share in this, we would like to keep up share, rather than double triple this share, and be available everywhere,” added Berry.
Talking to analysts on Friday, Berry said 85% of the business underwent a change in GST rates for the company. He expects the "transitory impact" of destocking by distributors and channel partners in September to get normalised during the October-December quarter.
“There will be gains because the grammage that we will be increasing, but I think the market share gains because of this will definitely be moving towards the organized players. This is going to give us an upper hand in terms of where growths and shares are concerned,” said Berry.
On September 22, the GST slab for biscuits and many other FMCG products was reduced from 18% or 12% to 5%. This led to a lot of chaos between brands and retailers who started to destock in order to wait for the new MRPs to be reflected on the new stock. The transition period led to a pause on purchases by retailers and impacted the sales of FMCG products adversely.
Berry also mentioned that rural continues to outpace urban, and the most profitable channel for the company is general trade. "Its for sure we are going to continue that, because that is our big muscle,” he said.
Vipin Kataria, chief commercial officer, said Britannia will continue to go deeper and deeper into rural areas through direct models. "Rural we have a strong story, and with the entire GST change, affordability and value becoming better, we will grow faster in rural," he said.
Earlier this week, Britannia announced the appointment of a new CEO, Rakshit Hargave, who will be taking on the role from December 15th, succeeding Rajneet Singh Kohli.
"He (Hargave) will be handling the entire business and my job will be to help him wherever he needs any help. I will not be directly handling anything once he joins, my job will be to make sure he settles down absolutely well in the role. And that’s my role, and that’s what I will fulfill going forward." said Berry.
Britannia reported a 34% year on year growth in standalone net profit at Rs 689.95 crore for the second quarter ending September, while standalone revenue from operations grew by 4% on a year-on-year basis at Rs 4,567.76 crore which the company attributed to stable commodity pricing and sustained efforts to optimise costs across the value chain.
Berry also mentioned that the company is not looking for a 50% market share with their value brand of Tiger biscuits. “As far as Tiger is concerned, we were, a me too, from a competitor standpoint. We thought through what was important for our consumers in small towns and villages, and this came out to be a proposition which could really help us get established in the rural areas and small towns," he said.
“The brand which is the cheapest form of food, we are not looking at becoming 50% share, we are a single digit share in this, we would like to keep up share, rather than double triple this share, and be available everywhere,” added Berry.
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