Britannia has a ₹700-crore plan to keep 'Good Days' going after sales expanded by 25%

Bengaluru: Britannia Industries said it will invest ₹700 crore to open more factories as demand for packaged food, including biscuits, has exceeded production capacity with rural markets outpacing urban sales.
This is after the maker of Good Day and Tiger biscuits expanded sales by 25%, an 8-year high and doubled profit, helped by surge in at-home consumption of packaged foods during the lockdown and increased distribution.

“The manufacturing capacities that we have today are falling inadequate for our requirements. We operate very tight with a maximum headspace of 10%; growing 26% is way beyond what we had expected and we are looking at five more facilities for capacity expansion,” the company’s managing director, Varun Berry, told analysts on an investor call on Friday, adding that the investment will be staggered over two years.

It would include new plants in Bihar, Tamil Nadu, and Uttar Pradesh, which is now the second biggest market for the maker of Good Day and Treat biscuits. The company also saw its direct reach drop by onae lakh outlets since the March lockdown, but has since added 1.5 lakh shops in June, indicating increased network push especially in north India, where it has been traditionally weaker compared to rivals.

However, this jump in demand is not sustainable in the long term, Berry told ET. “This kind of growth is not sustainable and will come down. But there will be change in consumer behaviour that will stay for at least a year," he said, adding that in-home consumption will continue to grow. “The growth that we are seeing currently will taper off but will persist for the next eight-nine months," he added.



The Wadia-owned company saw zero stock write-off or distributor return during the quarter from a back-end standpoint, a first in the country's fast moving consumer goods market.

Berry also said growth from rural markets was much faster compared to urban areas, and that he expects rural markets to remain resilient riding on good monsoon and better agricultural income. Since the lockdown was announced in late March this year, Britannia's share price has risen 86% and is now trading at an all-time high of ₹3,983 on the BSE.

Analysts feel Britannia's June quarter revenue growth was also due to interim opportunities that became available - local bakeries were closed, and several of the other snacking options were also out of reach or being avoided by consumers due to hygiene-related fears.