On competitive intensity - the market share chart seems missing this time. Also, what is the impact of D2C competition in your categories, especially with Tata Soulfull's expansion into Rusk?
Nielsen has done a complete panel change so they are waiting for stability, but market share is roughly in the same ballpark. Britannia is growing fastest in its category, in the top 10% of growth across categories. D2C players, including Tata Soulfull in Rusk, have not been a major issue, but it is a space to watch given modern trade and quick-commerce growth.
What is the level of volume growth that you expect to be reasonable, especially keeping in mind cycling a higher volume growth base from 1Q onwards?
Volume growth has been reasonably good relative to revenue growth even in the last 2 years; whenever inflation hits and pricing is taken, the delta between revenue and volume increases. Hoping to grow both revenue and volumes this year, with some delta given the high price increase taken in last quarter and possibly slightly more pricing required.
On other expenses, they have been lower for the past 2 quarters - is that largely lower ad spend? With volumes recovering, can this number start inching up? And what level of operating margin will you be comfortable with?
Britannia does not give forward-looking statements on margins. The company is comfortable in its current zone and aims to ensure profit growth is higher than revenue growth going forward.
On succession planning - are you not looking to hire a CEO anymore now that you have been appointed as CEO, or is this an interim arrangement?
It is a statutory requirement that the CEO position has to be filled. Succession planning is in play and will be clearer in the next 3-4 months.
On focus states performance relative to rest of India in Q4, and on cost saving initiatives across 6 verticals - which vertical stood out in Q4? What is sustainable rate and your FY26 target for cost savings as percentage of sales?
Cost efficiency framework is largely the same but went deeper. Key benefits in FY25 came from fiscal incentives - Maharashtra ultra-mega project recognition and UP Greenfield unit incentive approval. R&D-led value engineering on packaging and wastages, manufacturing efficiencies, buying efficiencies, and distribution were all key levers. FY25 was 9x the 2013-14 base, and FY26 is planned for over 2.5% of top line.
Could you add disclosures on biscuits/adjacencies even on a 6-month or annual basis as the 75-25 split has been there for a few years? And on inorganic strategy - peers have been more open to acquisitions, is there group-level resistance?
Britannia is conscious of returns - whenever big transactions happen they are evaluated but Britannia has not been able to figure out how to get returns given valuations in the country. Happy to be corrected if there are big transactions Britannia could have missed.
On the demand side, was there a significant impact of Kumbh Mela given the 7-quarter high sales growth this quarter? And given many false starts in FMCG over the last 2 years, what is the confidence level on recovery in FY26?
Britannia is so widespread that one event like Kumbh does not materially impact overall sales for the country and globe. The recovery is real and gradual but not a hockey stick - this trend should continue into next year.
On adjacencies and the whole foods company strategy, especially cheese which has been re-launched - are you happy with the performance versus expectations when the JV was announced? And is urban slowdown impacting it given aggressive pricing by newer players?
Some new players without distribution heavily discounted in modern trade and e-com, creating channel disparity that hit Britannia's traditional trade. The re-launch has equalized pricing across channels, resulting in 40-plus percent growth in traditional trade. Some areas still need sorting out but early trends in traditional trade and e-com are very good.
How should one think about pricing from here? Key raw materials have started correcting, so should we expect no further price increases? And do you foresee competition from smaller players taking price cuts sooner than expected?
Britannia does not see smaller players cutting prices because there has been a lot of inflation this year and pricing started late. There may be no need for more price increases going forward, but they are watching closely to act as needed.
Could you help us with the split of volume and price growth this quarter? And how much of price growth do you expect for FY26?
The delta between pricing and volume is about 5.5%. There will be some remnants of price increase flowing into the first 2 months of the next quarter, but no further pricing increases may be needed depending on the commodity situation.
On input costs - palm oil and crude have corrected, but how is your expectation on wheat prices? Could input cost deflation improve gross margins or might there be price reductions if spot prices hold?
Wheat prices have been higher than last year despite a higher crop because the minimum support price offered by government is about 7% higher. Britannia does not expect a deflation in wheat prices.
On revenue growth outlook - is the volume growth in tonnage or packs? And do you see arriving at a double-digit revenue growth trend for FY26?
Volume growth is always measured in tonnages, not packets - if it were packets there would be little delta to revenue. The endeavor is to get back to double-digit growth as a developing economy like India should support that in their categories.
On distribution - what is the scope to expand from 2.9 million direct outlets and what is total reach? And on innovation, is there a push toward premiumizing the portfolio with metrics on the premium portion?
The route-to-market project is targeting depth in large outlets and width at village/rural levels, balanced against volume per outlet to maintain profitability. Vipin added that direct reach is 3 million of a 9 million outlet base, total reach (direct plus indirect) is 6.5 million, and route-to-market addresses 25 sub-brands across categories. On premiumization, Pure Magic Frames is an example, with Siddharth noting a clear premiumization framework across critical categories.
It has been about 10 years since you laid out the total foods company vision but I haven't seen new categories introduced apart from Croissant and milkshakes. Are you happy growing current adjacencies for the next 1-2 years rather than launching new categories?
The strategy was to start with categories close to biscuits and move further out gradually - Croissant nearing INR 200 crores, milkshakes crossed INR 200 crores, wafers crossing INR 100 crores. The plan is to stay with current adjacencies and double down to grow them rapidly rather than violently going wide, while testing and launching where big opportunities emerge.
Over the next 5 years, what would be the growth differential between biscuits and non-biscuits portfolio?
The growth differential should be approximately 1:1.5 - if biscuits grows at one rate, non-biscuits grows at one-and-a-half times that rate.
On Q4 cost savings - was buying efficiency a major part of the incremental savings?
Cost savings were across all areas, but buying efficiency was indeed higher in Q4.
Is it possible to share the proportion of adjacencies for FY25 with a ballpark split among the adjacency portfolio?
The big adjacencies - cake, rusk, dairy, bread - are roughly the same size, about 100 million dollars each give or take. Smaller ones launched in last 4-5 years like Croissant, milkshakes, and wafers are between INR 100-250 crores. Venkat confirmed the biscuits-to-adjacencies split is about 75%-25%.
Can you give a similar breakup of raw materials - how much is wheat, palm oil, white sugar, cocoa for FY25?
On a percentage basis, wheat and oil are roughly about 30% each, sugar is about 20%, and there are many smaller commodities making up the rest.
On quick-commerce - what is the contribution, what packs sell, are you seeing additional competition, and does it result in loss of impulse purchases as consumers reduce visits to Kirana?
Quick-commerce plus e-commerce is approximately 4% of sales, mostly quick-commerce. Britannia sees this moving from 4% to 8% in next 3 years but not beyond. Vipin added that 4% e-com salience is reasonable for packaged foods (vs double-digit in personal care), Britannia is gaining share in quick-commerce, and digital-first brands like Choco Frames help defend the core. On impulse, Vipin said quick-commerce only adds to impulse via instant gratification and Britannia has a large out-of-home business too.
On other operating income - you had a big increase from incentives at INR 4 billion. Where does it go from here, and for how many years does this continue at current levels?
It should stabilize as no new units are being set up - existing units in TN, UP, Orissa, Bihar, and Pune are all eligible for incentives. Each incentive period varies, with the Ranjangaon Maharashtra unit being the big one continuing till 2037/38.
On decade-long cost saving discipline - at some point do efficiency gains start to taper off, and is there a risk of cutting into growth-linked spends in pursuit of savings?
There is no risk of tapering - in countries like Japan or US with 0.5-1% growth, the entire focus is cost efficiency, and Britannia has learned from them. The process starts in November to identify projects for April, with cross-functional teams, and there are enough projects to take Britannia through the next 10 years with similar savings.
On quick-commerce as a channel - how do you see it in terms of margin accretion and working capital discipline?
Britannia ensures every channel maintains profitability equal to or greater than the company's overall profitability. Quick-commerce and e-commerce profitability is in the same ballpark as overall, not necessarily accretive but maintained, and Britannia has been gaining share within these channels including on working capital.