‘Only 20 per cent of families in India buy cheese twice a year.’
Kindly note the image has been published only for representational purposes.. Photograph: Francois Lenoir/Reuters
Two years after announcing its joint venture, Britannia Industries and Bel Group last week inaugurated their first cheese factory in Ranjangaon, Maharashtra, with an investment of Rs 220 crore.
Varun Berry, executive vice-chairman and managing director of Britannia Industries, and Cecile Beliot, chief executive officer of Bel Group, discuss capturing a larger share of the cheese market in India in an exclusive telephonic interview with Sharleen D’Souza/Business Standard.
Will you be launching other milk products beyond cheese under Britannia Bel Foods?
Cecile Beliot: This JV is dedicated to cheese, and we believe that we have so much to do in the cheese category right now.
The cheese category is very nascent in India and has only 20 per cent penetration.
Only 20 per cent of families in India buy cheese twice a year, and when you look at it in detail, 50 per cent of them are light users.
If we succeed in convincing mothers in India to put a piece of cheese in every kitchen for their kids, the possibility of growth is exponential.
This JV is dedicated to cheese, in a broad sense, with a lot of innovation already in the pipeline.
Will you be using a different supply chain, or will you use the existing supply chain that Britannia already has in place?
Varun Berry: It will use the Britannia distribution network.
We are undertaking a project with Bain to determine how we can create more emphasis on cheese distribution as we move forward, which may involve having separate salespeople in certain centres where cheese is popular, like Mumbai and Delhi.
We are conducting a large route-to-market study with Bain, and in about three months, we will have all those models ready.
We will do whatever is necessary to give the right emphasis, but we will use the distribution muscle of Britannia.
How will the cheese from Britannia Bel Foods be priced in India?
Berry: For the time being, we are maintaining all the formats we currently offer.
In addition to that, we are providing portions imported from the Bel factory in Vietnam.
We are also offering key sachets priced at Rs 15. That is the extent of our portfolio expansion for now.
However, as time goes by and we feel we have established a certain depth with these products, Bel has the capability to produce a wide range of formats for us.
It will require some capital expenditure, but that’s fine; we are ready to invest. The products have legs.
Will you consider listing the JV at any point in the future?
Berry: Not in its current state; it is too small.
Would you consider opening more greenfield factories in this JV?
Berry: The category is somewhat different from all the other categories we are involved in.
Even if we need to expand, we will probably do so in the same location because these are high-value products.
Locational closeness doesn’t make as much of a difference. Efficiency in the collection and processing of milk, as well as the efficiency of the factory, is more crucial to our profit-and-loss statement.
We have a lot of land in Ranjangaon, Maharashtra, and we’ve set aside 50 acres for dairy, with more land available for expansion.
With competition heating up in the segment with more players entering the market, do you have an advantage over others?
Beliot: We should not view them as competitors. When you are in a very nascent category with such a low level of penetration, it’s beneficial not to be alone; it’s advantageous to collaborate.
Joining forces can help us build usage and awareness of the category among every family in India.
It’s not solely about gaining market share; it’s much more about how quickly we can grow the overall market together.
I believe we have a limited perspective on the market.
We want to bring value and innovation. It’s really about introducing innovations that are not currently available.
We have the technical know-how and the research and development capabilities, but we lack a deep understanding of Indian consumer needs.
That’s where our partnership is beneficial: Britannia will provide a profound understanding of Indian consumers and families, while we will contribute the technical edge needed to accelerate and deliver value-added innovation to the market.
What kind of revenue contribution will Britannia see from the JV?
Berry: It will not make a material change to Britannia’s revenues, but it doesn’t matter, as we would like to grow this threefold in the next five years and capture one-fourth of the market in terms of market share.
Feature Presentation: Aslam Hunani/Rediff.com
