britannia industries

Britannia Industries Ltd.• Incorporated in 1918 as Britannia Biscuits Co. Ltd in Calcutta

• Jointly controlled by Nulsi Wadia group and Groupe Danone of France, (holding 22% stake)

•Market leader in the organized biscuit and bakery product market.

• Focus on value added products instead of low margin products.

• Around 70 production facility across INDIA

• Rationalized its product portfolio from 35 to 25.

Britannia Industries Ltd•Ranked highly on the top 100 FMCG brands.

• Biscuits contribute to 80% of the total turnover.

• Leader in 4,000 crore biscuit market with 30% of the total share.

• Other products include breads and cakes.

• Diversified in dairy products which includes cheese, butter, dairy whitener etc.

SALES DATA Year Net Sales Growth1999 72482000 8621.6 18.95%2001 9783.7 13.48%2002 11073 13.18%2003 13985.12 26.30%2004 12958.28 -7.34%

SALES

72488622 9784

1107313985 12958

0

5000

10000

15000

1999 2000 2001 2002 2003 2004

YEAR

SA

LE

S (

mn

)

Market share of major players in biscuits

Market share

Britannia59%

Parle20%

Bakeman's8%

Others8%

GSKCH5%

Distribution network

• An extensive retail distribution network

• Has 2500 distributors in 2200 towns

• Caters to around 4,00,000 retail outlets

Distribution Network

Factory

Depot

Distributors (Auth Wholesalers)

Retailers

Sub distributor

List of Factories in North India for

Britannia Industries Limited

City State Number

Ghaziabad Uttar Pradesh 4

Faridabad Uttar Pradesh 2

Kundli Haryana 3

Delhi Delhi 1

Pathankot Punjab 1

Jammu Jammu and Kashmir 1

Kanpur Uttar Pradesh 1

Location of C&FA depots for Britannia Industries ltd in North India

State City

Delhi 2 depots

Harayana Kundli

Punjab/Chandigarh Chandigarh

Himachal Parvana

J&K Jammu

Punjab Jirahpur

Rajasthan Jaipur

West UP Ghaziabad

Cental UP Lucknow

East UP Kanpur

Uttaranchal Haldwani

Leh Ladakh

Margin to Retailers

Product Percentage(%)

TIGER 12

GOOD DAY 14

GOOD DAY (FAMILY) 18-25

MARIE GOLD 12

PARLE 10

Margin to distributor 4-5%

Policy of salesmanship for Britannia Industries Limited

Regional Sales Manager (RSM)

Area Sales Manager

Sales officer

Territory sales In charge (TSI)

Pilot Sales Man (PSM)

A/W Salesman

BRANCH OFFICES

Branch Offices

Organisational Structure of Branch Office

General Manager

Sales (RSM) Factory Accounts Standards Prod Plan

Area Sales Mgr

Sales Officer

Terr Sales Incharge

Pilot Salesman

A/ W Salesman

Territory Management

• Territory divided by ASM & SO.

• Depends on capacity of TSI in tones (volumes) & experience

• 1 PSM can be given to support the TSI

Route Planning

• Depends on the required days with the distributor’s and towns

• Beats within the town to retailers done geographically

Breakup of Margin at different levels of distribution network

Subdistributors Distributors Retailers

3% of Co. & 2% of Dist.

4.5% to 5% 12%-25%

Breakup of margins to retailers by different players

Tiger Parle Marie

Good day

Family

Pack

Bourbon

12% 10% 14%18 to

25%12%

Backward Channels

Biscuits are perishable goods. Basically, the spoilage can be attributed to the following two reasons:– Transport defect– Manufacturing defect

Agreement with distributors with respect to Payment schedules

• The following two points must be borne in mind with respect to the payment policies followed by Britannia Industries Limited.

• The dispatch of goods is done in lieu of advance paid on form of Demand Draft’s.

• The invoice is issued by the depots.

Regional Sales Manager

S O (Admin) ASM S O (Independent)

S O (Field)

SELECTION, MOTIVATION AND EVALUATION OF CHANNEL MEMBERS

Basis of selection of distributors

• Non-Competitor

• Infrastructure

• Existing distribution network

• Financial Muscle

• Reputation and word of mouth reference

Motivation of distributors

• The distributors are motivated by providing them with certain incentives. Contests are organized on a timely basis to motivate the distributors.

• Just for example, a recent trip to Bangkok was organized for the distributors and the TSI’s who were best able to meet the target set by the company.

• More than these kinds of contests, the company believes in making on schedule dispatch, cordial and long term relationship with the distributors in order to motivate them.

Evaluation of Channel Partners

• - C&FA Agents– The C&FA agents are evaluated based on the

following parameters:– Regularity in dispatch.– Proficiency in handling of goods: Number of

complaints, spoilage etc.– Adhering to FIFO.– Feedback from ASM’s and Sales officer on

attitude of C&FA agents.

• Distributors

– The evaluation of the distributors is done based on past records and observation by the TSI’s which is communicated to the sales officer. The distributors are evaluated once a year based on the following factors.

– Attitude of the distributor, in terms of his dealings with the TSI’s and the PSM’s.

– Willingness of the distributors to cater to the needs of the retailers. Complaints from retailers would work against the distributors.

– Payment schedules: On time, hassle free payment schedule by the distributors.

– Current sale by the distributor and the market growth maintained.

Conflict and cooperation among channels

• Once the distributors receives the goods from the Authorized transporter (Selected by the company), the distributor gives a Good Received note (GR) with a satisfactory slip to the transporter which in turn has to be given to the depot by the authorized transporter.

• At times, when the goods are not received in the ideal condition by the distributors, the GR might have a complain note attached to it.

• To get over this problem, many a times a settlement is reached between the authorized transporter and the distributor over the damaged goods.

Undercutting

• There is a huge problem of undercutting in BIL’s

• To take stock of the practice of undercutting the company has adopted a method that would identity the distributor whose stock is being stocked by the retailer .

Undercutting

• Every distributor has a mark in a particular place on the product packet. If a different mark is found in a distributor’s territory the material can be traced to the original distributor.

X Y Z

Market Logistics and Supply Chain management

Cumulated forecast from the Sales dept

Production planning dept (Prodn plan)

Material Plan

Procurement plan

• The objective of maintaining the above supply chain is to achieve the lowest investment for the purpose of procurement.

• Forecasting is a very important tool for sales organization.

• Forecasting in Britannia is done by the Territory Sales In charge in consultation with the Sales Officer and Area Sales Manager.

• Forecasting is done with the help of the secondary data of the last month and also taking the secondary sales data of the current month of last year.

• The peak season for biscuits is in the months of JULY, AUGUST, SEPTEMBER, and OCTOBER. If the festival of Diwali is in November then peak is till October otherwise till mid- October. There is a drop in sales of biscuits just after the Diwali because of over spending by people during Diwali.

• The start of the activities is at the Sales department where the requirement from the TSI is gathered (Depot wise and SKU wise). The cumulative forecast is then calculated and communicated to the production planning department. The production plan depends upon:– Plant capacity– Area wise requirement

• The material plan is both for the raw materials and packaging material. The inventory for packaging is maintained for a period of 30 days. BIL prefers to buy flour from mills and not from traders for cost optimization

• The material plan is communicated for the preparation of the procurement plan. To avoid monopoly, at least 2 suppliers are maintained by the company.

• Britannia Industries Limited lays heavy emphasis on Vendor Managed Inventory system when it comes to managing flour.

• The following are the areas where raw materials are procured from:

• FLOUR: Delhi (From Mills and not from the traders)• Packaging: Mumbai and Hyderabad• The following are the average period for which the

inventory is stored. • Finished goods: 7 days• Flour: 4 days (2 days at suppliers end and 2 days at

BIL’s end)• Packaging material: 45 days (As lead time is 30

days).

INTEGRATION THROUGH SAP

• The business process for BIL is integrated through SAP.

• Every movement of material is reflected in the software and is updated in SAP in real time.

• All the depots are connected to the head quarter via SAP to have a real time update about the status at the depots.

• This integration of financial transaction makes the BIL’s a very robust system whereby the value at any point is known.

Recommendation

• Britannia should go in for e-sales i.e. it should develop a B2C business model through which it could interact with the customers. This would help in institutional selling.

• The company can go in for a split range distribution system resulting in improvement of poorly serviced and uncovered outlets.

Details of split strategy

PUSH (Indulgence) PULL (Need

Pure Magic Tiger

Little Hearts Marie

Nutrichoice Milk Bikis

Cream Treat 50-50

Cakes Time pass

Nicetime Goodday

Vita Marie  

Logic of the SPLIT

• Low penetration of Push varieties

• Higher gross margin

• Low resistance from AW

• Untapped market for indulgence

• The Company should be more aggressive in marketing & sales with the influx of newer brands e.g. ITC Foods.

• Newer and a standard way of removing undercutting should be followed across the country.

• Visibility should be maintained in urban areas so as to keep out competitors.

• Visibility should be increased in rural India which is rather low at present

THANK YOU