DISTRIBUTION AND SUPPLY CHAIN MANAGEMENT CIA-1

FMCG Industry – Britannia Industries Ltd.

SUBMITTED BY

Aishwarya Raj 2027844

Rukmani Singaram 2027857

Albert Davis 2027916

Ashitha Thankam Benson 2027950

Navneeth Nair 2027819

Akashdeep Batham 2027903

Roselyn James 2027951

UNDER THE GUIDANCE OF

Prof. Suresh A. S

School of Business and Management

CHRIST (Deemed to be University)
July 2021
TABLE OF CONTENTS
No. Description Page No.

1 Introduction to FMCG industry 3

2 Porter’s five forces analysis 4
3 Players in the industry 5
4 Industry ecosystem 10
5 Introduction to Britannia Industries ltd. 11
6 Britannia marketing mix – 4Ps 13
7 STP analysis of Britannia 18
8 Market share 19
9 SWOT analysis 20
10 Financial position and standing of the firm 21
11 Type of market structure 22
12 Levels of channels 24
13 Flows in marketing channels 26
14 Value chain of Britannia 32
15 Width and depth of distribution 35
16 Strategic partners/allaiances/integration 36
17 Multichannel, Omnichannel, Channel cost as a percentage of sales 38
18 Beat analysis 39
19 Market coverage (Territories/route plans/mapping) 40
20 Credit availability 43
21 ROI of channel partners 46
22 Channel management 48
23 Storage requirements for Britannia 50
24 Special merchandising requirements of Britannia 51
25 Visual merchandising Point of Sale 51
26 Channel promotions ATL and BTL 52
27 Evaluation of channel effectiveness 58
28 Best practices in the FMCG industry 58
29 References 61

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Introduction to FMCG industry
The fast-moving consumer goods (FMCG) industry is India's fourth largest, with domestic and
personal care products accounting for half of all FMCG sales. The sector's main growth drivers
are increased awareness, easier access, and changing lifestyles. The urban segment, which
accounts for about 55 percent of the total income generated by the FMCG sector in India - is the
most important contributor to the overall revenue earned by the sector. However, in recent years,
rural India's FMCG sector has developed at a quicker rate than urban India's. Semi-urban and rural
areas are rapidly expanding, with FMCG products accounting for half of all rural spending.

Market Size
The Indian retail sector is predicted to rise to US$ 1.1 trillion by 2020, up from US$ 840 billion in
2017, with contemporary trade expected to increase at 20-25 percent per year, boosting revenue of
FMCG companies. In FY18, the FMCG sector generated Rs. 3.4 lakh crore (US$ 52.75 billion) in
revenue, which is expected to grow to US$ 103.7 billion by 2020.

The Indian FMCG industry expanded 9.4% in the January-March quarter of 2021, according to
Nielsen, owing to consumption-driven growth and value expansion from higher product prices,
notably for staples. In the same quarter, the rural market grew by 14.6 percent, while metro markets
grew for the first time in two quarters.

The FMCG market will be driven by an increase in rural consumption. It accounts for around 36%
of total FMCG spending. Due to several government programs (such as packaged staples and
hygiene categories); high agricultural produce, reverse migration, and a lower unemployment rate,
rural India saw a double-digit growth recovery of 10.6 percent in the third quarter of FY20.

From US$ 263 billion in 2019-20, the Indian processed food market is expected to grow to US$
470 billion by 2025.

Investments / Developments
The government has approved 100 percent FDI in food processing and single-brand retail, as well
as 51 percent FDI in multi-brand retail. This will boost FMCG brand employment, supply chain

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visibility, and high visibility throughout organized retail markets, boosting consumer spending and
driving new product launches. From April 2000 to December 2020, the sector had healthy FDI
inflows of US$ 18.03 billion.

Figure 1 FMCG industry overview

Porter’s Five Force Analysis

Figure 2 Porter's five forces analysis for Britannia

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Figure 3 Detailed Porter's five forces analysis for Britannia

Players in the Industry

Britannia has a strong position in the market across the different product categories they are
offering. But still, they face stiff competition from other major brands like Parle, Nestle etc. In the
case of the biscuit category, Britannia has surpassed Parle-G with a 3% higher market share
(according to Nielsen, a market research firm). ITC is also a major competitor for Britannia in this
category with their premium quality biscuit ‘Sunfeast’ which has been doing well both in rural and
urban areas because of the strong distribution network. In the case of Dairy and Bread there are
various regional competitors for Britannia.

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Figure 4 Perceptual map

Following is a brief analysis of the major competitors and where they stand in recent times relative
to Britannia.

1. Parle

Figure 5 Parle logo

Figure 6 Parle products

The Parle-Britannia rivalry is decades old. The duo had consistently tried to maintain one-
upmanship against each other until FY13 when Britannia Industries suddenly surged past Parle

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Products on the back of its premiumization strategy and a deeper distribution network. Though
both the biscuit majors had a successful run through the COVID-19 lockdown in FY21, it has been
more advantageous for Parle Products. According to a recent report by Edelweiss Research, Parle
has significantly narrowed the market share gap and is now neck-to-neck with Britannia.
Parle-G was the sought-after brand of several Government agencies and NGOs which bought in
bulk to distribute to migrant workers. Apart from its pocket-friendly pricing, the preference for
trusted brands during the pandemic also gave Parle-G a distinct advantage. In FY18, Britannia had
a 30.8 percent share, and Parle was neck-to-neck at 29.1 percent. Britannia widened this gap by 5
percent in FY20.
Parle is still way stronger in rural areas of many parts of North India versus Britannia,” says the
Edelweiss report. Britannia Industries leaves no stone unturned to maintain its winning run in the
Rs 40,000 crore Indian biscuit industry. Not only has it deepened its rural distribution, which has
traditionally been a stronghold of Parle, but Britannia has also been mainly targeting North India,
where Parle is strong. “Britannia has launched Milk Bikis atta biscuits with the tagline of ‘Doodh
Roti ki Shakti’ in Hindi, aiming to appeal to the Hindi belt and northern rural areas.

2. Nestle

Figure 7 Nestle logo

Figure 8 Nestle products

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Nestlé is a multinational manufacturer of packaged foods and beverages. It is considered to be the
world’s largest food manufacturer having its operations in 197 countries and with more than 2000
product brands. On December 31, 2015, Nestlé reported revenues of $99.09 billion, having had
estimated sales of $92 billion. Out of its varying brands, 29 of them have an annual sale of over
$1.1 billion.
The rise in demand for packaged food was a covid-induced opportunity. Nestle India Ltd missed
the boat in this regard, but Britannia Industries Ltd could profit from it. Nestle’s year-over-year
revenue growth of roughly 2% in the June quarter fell short of analysts’ expectations. Britannia’s
26.4 percent sales increase, on the other hand, was somewhat better than Wall Street’s bullish
projections after the company’s last hints that the quarter was shaping up well.
Nestle maintains that its sales were adversely impacted due to the lockdown, leading to production
disruption across factories. Further, demand in the “out-of-home” channel saw a considerable
decline. Nestle derived 4.4% of its operating revenues from exports, which fell by 9%. Domestic
sales contributed 95.6% of revenues and increased by 2.6% over the same period last year.

3. ITC Limited

Figure 9 ITC logo and products

ITC is a multi-industry conglomerate with interest in fast moving consumer goods (FMCG), hotels,
paperboards and specialty papers, packaging, agriculture, and information technology. Britannia
sued ITC for trademark infringement over the packaging of its NutriChoice Digestive biscuits late

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last year. It alleged that ITC's Sunfeast Farmlite 5-Seed Digestives packaging is "deceptively
similar" to that of its own Nutri Choice brand. A single judge bench of the Delhi High Court held
in April that the packaging of the two products could not be described as deceptively similar as
the brand names are abundantly clear.

Important Brands Pitched Against Each Other

Category BRITANNIA PARLE ITC LIMITED

Glucose Tiger Parle-G SunFeast Glucose

Marie Marie Gold Parle Marie Sunfeast Marie Light

Salty snacks 50-50 Krack Jack Sunfeast Snacky

Choco chips Good day Hide n seek Sunfeast Dark Fantasy Choco Chip

Milk Milk Bikis Milk Sakhti Sunfeast Milk Biscuits

Bourbon Bourbon Hide n Seek Sunfeast Dark Fantasy Bourbon

Multi grain Nutri choice ----- -------

Cream Cream Treat Kreams Sunfeast Bounce

Cookie Good day 20-20 Sunfeast Mom’s Magic

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Industry Ecosystem
• Wholesalers- If FMCG pays more attention to the indirect channels of trade, they can
significantly expand sales, reach and brand footprint. A better wholesale strategy can
sharply push up the contribution that this channel makes to overall sales, a figure that
currently stands anywhere between 40 to 60 per cent. While a post-demonetized world has
seen most of the country’s top firms push direct distribution rather than indirect distribution
• Suppliers - Raw materials are the largest item of expenditure for FMCG companies eating
up 40-50% of their revenues. Modern retailers in India have been trying to extract higher
margins from FMCG companies so as to offer better deals to their customers. In India, the
FMCG sector finds it difficult to offer the kind of deep discounts that modern retailers have
been demanding. On one hand, FMCG companies will have to bypass their existing
stockists and distributors, so there is a likelihood of channel conflict. On the other hand,
they also have to examine the impact of higher discounts to modern retailing on the overall
distribution system.
• Distributors - FMCG companies have been grappling with supply chain and logistical
challenges due to the countrywide lockdown imposed last month. In order to ease last-mile
connectivity and distribution challenges, some of the FMCG majors have tied up with food
delivery and hyper-local delivery apps. Marico, Godrej Consumer Products Limited and
Britannia have tied up with Swiggy, Zomato and Dunzo, respectively; ITC Foods has
partnered with Domino’s Pizza, while Tata Consumer Products has joined hands with
Flipkart.
• Government - The Government of India has approved 100% FDI in the cash and carry
segment and in single-brand retail along with 51% FDI in multi-brand retail. Developments
in the packaged food sector will contribute to increased prices for farmers and reduce the
high levels of waste. In order to provide support through the PLI scheme, unique product
lines—with high-growth potential and capabilities to generate medium- to large-scale
jobs—have been established.
• Online Retailers - The value of FMCG bought online was 5% of the total e-commerce
sales which is similar to last year’s levels. However, in terms of units sold, the FMCG
category was at 35% of all purchases made online, compared with 30% in 2019, led by a
surge in demand for many FMCG products. Staples and snacks saw growth during covid,

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 with 35.3% and 14% value contributions respectively. The Internet has contributed in a big
way, facilitating a cheaper and more convenient mode to increase a company’s reach. The
number of internet users in India is likely to reach 1 billion by 2025. It is estimated that
40% of all FMCG consumption in India will be made online by 2020. The online FMCG
market is forecast to reach US$ 45 billion in 2020 from US$ 20 billion in 2017.
• Customers - The fast-moving-consumer-goods industry has a long history of generating
reliable growth through mass brands. But the model that fueled industry success now faces
great pressure as consumer behaviors shift and the channel landscape changes. To win in
the coming decades, FMCGs need to reduce their reliance on mass brands and offline mass
channels and embrace an agile operating model focused on brand relevance rather than
synergies.

Introduction to Britannia Industries Ltd.

About Britannia Industries Ltd.

Britannia Industries Limited, part of Wadia Group is an Indian food products company with a 100-
year legacy and annual revenue in excess of Rs.10000 Cr. The company is headquartered in
Kolkata and has its presence throughout India and in more than 60 countries across the world.

Food industries comprises companies that are involved in manufacture, produce, package, retail
and distribution of food products from raw ingredients in various forms. This industry has seen
rapid evolution over the past two decades due to technological advances and growing demand for
convenience foods. The challenges, food industry faces are to lengthen the shelf life of food
products while adhering to health and hygiene standards. But the advantage is that, since food is a
basic necessity, the food products industry is not tied to economic cycles.

The primary business of Britannia is manufacture and sales of biscuits, bread, rusk, cakes, and
dairy products. And the adjacent business is manufacture and sales of wafers and croissants. Apart
from these, the company is also involved in international business, like export of products to North
America, Europe, Africa, South East Asia; and local manufacturing in Middle East in UAE, Oman

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and Nepal. The company’s distribution reach and differentiated branding have endeared its
products to a wide cross-section of population.

The brand Britannia is one of India’s most trusted brands listed in “The Brands Trust Report”.

History of the Britannia

Britannia was established in 1892 in Kolkata by a group of British businessmen with an investment
of Rs.295. Initially, biscuits were manufactured in a small house in central Kolkata. In the year
1910, company’s operations were mechanized with the advent of electricity. A decade later,
industrial gas ovens were imported to increase production. In 1918, C.H. Holmes, an English
Businessman based in Kolkata, was taken on as a partner and the Britannia Biscuit Company
Limited (BBCo) was launched. In 1924, the Mumbai factory was et up and Peek Freans UK,
acquired a controlling interest in BBCo. Biscuits were in high demand during World War II, which
gave a boost to the company’s sales. In 1954, Britannia became a pioneer in the development of
high-quality sliced and wrapped bread in India. A year later, it launched the now popular Bourbon.

Biscuits. Britannia cakes hit the markets in 1963. In 1975, the company set up its own distribution
network. (Britannia Industries Limited, 2018)

On October 3rd, 1979, the company name was changed to the current Britannia Industries Limited.
And in less than a decade, its sales cross Rs.100 Crores. The company moved its executive office
to Bangalore in 1989.

In 1993, Wadia Group, one of the India’s oldest conglomerates acquired stake in Britannia. In
1997, Britannia incorporated the ‘Eat Healthy, Think Better’ corporate identity. 3 years later,
Britannia was voted in top 300 small companies by Forbes Global.

Britannia’s first ever overseas manufacturing through acquisition of SFIC and Al Salan in Dubai
and Oman happened in 2007. In 2016, Britannia launched its state-of-the-art R&D centre facility
in Bidadi, Karnataka. Then in 2017, the company entered a joint venture agreement with Chipita
S.A., a Greek company for the manufacture and sale of ready-to-eat, delicious croissants. In 2018,
the company set up an integrated mega food park in Maharashtra. In the same year, the company

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unveiled a new logo. Currently, Britannia Industries Ltd. is headed by the Chairman, Mr. Nusli N
Wadia and Managing Director, Mr. Varun Berry. (Britannia Industries Limited, 2018)

Vision: “To provide affordable nutrition to all.”

Mission: “To be a total foods company.”

Corporate Strategy:

● Expansion Plan: “One new market a year.”

The company is investing in state-of-the-art facility in Mundra SEZ, Gujarat and Nepal to
service export markets. It is also planning to set up local manufacturing in Africa and South
East Asia in the future.

● Growth in urban markets: “Split Route strategy.”

● Cost Efficiency Program: through scaling operations, waste reduction in value chain,
technological interventions, optimized advertising spends and fixed costs leverage.
● The company plans to scale up its operations in North India, and especially focussing on
rural distribution networks. Milk Bikis atta cookies are being promoted by the company in
the Hindi belt, where Parle has a stronghold. Milk Bikis are priced similar to Parle-G.
However, because this is a premium brand, the grams are smaller. To reach budget-
sensitive customers, the organization has introduced SKUs at low price points.
● Britannia's e-commerce activities have also improved over time. E-commerce revenues are
now 4.1 times what they were in FY19, accounting for almost 5% of total sales.

Britannia Marketing Mix - 4Ps

Product

For a food products company, using the best, high quality ingredients are the key to a successful
final product. And Britannia has mastered it. The company uses high-quality ingredients, its
products are designed through deep insight and innovation to deliver a complete organoleptic
experience.

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Figure 10 Britannia products

Price

Britannia has adopted a competitive pricing strategy. In a competitive pricing strategy, the prices
are set after analyzing and evaluating competitors prices. Parle is a strong competitor in the
biscuits category, Amul is a strong competitor in the dairy products category, and there are local
competitors for its bakery products. Since food products are a mature market, competitive pricing
is an effective pricing strategy.

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15
Place

Britannia uses the FMCG distribution channel, which entails appointing distributors in specific
places. Following that, these distributors are in charge of dealing with dealers and retail
showrooms. The company handles modern commerce channels such as Big bazaar and D mart, as

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well as others, directly. The company adopted the direct distribution model in 2014. In this model,
employees form the company visit the retail stores to analyze demand patterns and to forecast
demand. By removing wholesalers from the supply chain, the company is able to streamline the
supply chain and reduce order completion time. This is achieved through accurate positioning of
distributors to match the requirements of retailers.

In 2018, only 22% of Britannia’s sales came from rural markets, while the industry average was
33%. Hence the company has partnered with local startups in fields like geo-spatial analytics,
census mapping and retail point-of-sales solutions in order to penetrate the rural markets (WARC,
2018).

Promotion

The company does promotions through advertising including billboards, magazines, newspapers,
TV ads, and point of purchase advertising. The advertising spend for Good Day and Bourbon is
high. Marketing spend for dairy products is less since expenses have to be spent for distribution.
The companies marketing strategy is as follows (Britannia Industries Limited, 2020)

● Experiential activation of Britannia mother brand through Britannia Khao World Cup Jao
● Strengthening core brands with activation and advertising
○ Good Day Brand campaign starring a leading Bollywood actor
○ Marie Gold Brand launched ‘Britannia Marie Gold My Startup’ initiative which
provides financial assistance to homemakers with entrepreneurial ideas.
● Relaunches aiming at Brand Recall strategy
○ NutriChoice brand was re-launched with an improved visual product differentiation
and packaging, and product mix.
● Using disruptive digital content to woo millennials and digital consumers
○ Little Hearts, a digital brand launched a differentiated campaign with rap battle, a
new song release.

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STP Analysis of Britannia

Segmentation

● Demographic Segmentation
● Age - Kids- fruit rolls, tiger and treat; Matured people-Good day. Cream cracker; Youth
- Little hearts, cream biscuits
● Income - Lower Income group-Tiger, Marie; Higher income group- Good day, nutri
choice
● Gender - Both male and female
● Behavioural Segmentation
● Benefits - For health benefits-All nutri products, Tea time snack biscuits and Sujie toast
● Occasions - Snack biscuits and fruit rolls for occasions
● Geographic Segmentation
● All the provinces of the country
● Metropolitans, small cities and towns
● Psychographic Segmentation
● Sunfeast Marie and Orange Marie Light is directed as light and crispy biscuits targeting
housewives
● Sunfeast Snacky is a light and crispy biscuit targeted for family members especially for
having snacks.

Targeting

Britannia as a whole inculcates ‘Selective Market Specialization’ strategy

Target group middle and upper middle class families, especially kids

P1- Good day M1-High income

P2-Pure magic and Digestive M2- middle income

P3-Tiger, 50-50, milk treat M3- low income

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 Criterias M1 M2 M3

P1 ghjjcadygjhfkjdsfhkhj thjdjdjjkkjkjdjjdjkjjd ghjd,fdsfds,bdssdwR

P2 GDZJFHFSDKAKJJ

P3 GSHG SAAF KJKK JAHJGFHDFGJKFD

Positioning

With eating healthy think better Britannia positions itself as a healthy and nutritious alternative.

1. Tiger-Positioning is done for modern mothers

2. Little hearts- Positioning is to be a snacks
3. Good day- Positioning is as everyday biscuits which brings happiness in everyone's lives
4. Marie Gold- Positioning as a tea time biscuit with proteins

Market share

India’s biscuit industry is worth Rs.40000cr in 2020 accounting for 5% of the global market.

Britannia takes the lead with 28% of the milk biscuit market but it is determined to grow its market
share in the milk with glucose category, where it currently has only 4%. Parle-G comes in second
with 27%. ITC is rapidly expanding, with a market share of 11% currently. Smaller brands and
unorganized businesses compete for the rest of the market.

Over the previous few decades, Britannia and Parle have dominated the Indian biscuit market.
From FY13 to FY20, Britannia had been increasing market share over Parle. However, in FY21,
Parle won considerable market share from smaller players, allowing it to narrow the market share
gap with Britannia.

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It's due to a massive influx of workers returning to their hometowns in North India. In comparison
to Britannia, Parle has a strong distribution network in the interior parts of North India. People are
opting for low-cost, high-value consumer products as a result of income-related concerns, which
has aided Parle's cause.

Figure 12 Britannia - revenue of last 5 FY Figure 11 Britannia - market capitalization of last 5 FY

Figure 13 Britannia - segment revenue breakdown of FY 2018

SWOT analysis

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Figure 14 SWOT analysis of Britannia

Financial Position & Standing of the firm

Table of financial position and standing of the firm - last 4 years

The total revenue for Britannia has been steadily increasing and in the last year it increased by
13% from Rs.115 billion to Rs.136.36 billion while at the same time a similar trend was observed
with Net income increasing from Rs.14 billion to Rs. 18 billion. Similarly, the gross profit rose to
Rs. 55 billion from Rs. 46 billion.

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The total assets have increased over the last 4 years and a significant chunk of equity has gone
down while the liabilities have increased by almost the same amount.

Impact of COVID
Britannia has placed a premium on product development, putting ambitions to expand its croissant
and salted snack offerings on hold. As a result, the corporation's progress toward becoming a total
foods company has slowed.
Britannia has been following an 80:20 strategy for the past two months, focusing on 20% of the
products that generate 80% of the volume.
• Britannia has had some really strong volume increases, according to Covid. The way
people shop is changing tremendously. Consumption is a constant in human life. In normal
conditions, people eat street food, go to restaurants, travel to malls and dine there, and so
on. It is largely home consumption at the moment, which is obviously beneficial to Britain.
• The second phenomenon that occurred during the crisis was that people returned to their
most trusted brands, with Britannia being the most trusted food brand in India being one
of the reasons for this.
• The third point is that Britannia did an excellent job of getting their stock and ensuring that
all of their backend issues were resolved, their factories were operational, and stocks were
available in the marketplaces. During the crisis, the team's coordination and operation were
outstanding. It was critical to keep people informed about what they were doing and where
they were headed, so teamwork, connectivity, and communication were key.

Type of market structure

Biscuits are heterogeneous products. The market structure of the biscuit industry is oligopolistic,
with Parle-G and Britannia dominating the market. Parle-G and Britannia together own 90 percent
of the Indian biscuit market. The biscuit industry's price setters are Parle-G and Britannia. Because
of the large capital investment and economies of scale required to enter the biscuit industry, there

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is a significant barrier to entry. Price and output decisions in the biscuit market are unpredictably
made. In the Indian biscuit market both Parle-G and Britannia own a 40% market share.

The Federation of Biscuit Manufacturers of India (FBMI) is a trade association that represents
India's biscuit sector. Britannia 50-50 is a sweet and salty biscuit from Britannia, whereas
Krackjack is a sweet and salty biscuit from Parle-G. Britannia 50-50 can be used in place of
Krackjack because it fulfills the similar purpose.

Consumers' desire for necessary commodities such as biscuits is continuous, and their budgets for
those essential goods are usually set. Krackjack (65 gms) and Britannia 50 50 (65 gms) pack prices
remain unchanged. This allows the customer to choose between the two biscuits for the same price
and quantity. In most cases, the government sets the price of essential items. The price of biscuits
is controlled by the industry group FMBI.

Because biscuits have a low profit margin, biscuit manufacturers can increase profits by selling
more biscuits. Customers are sold a greater quantity of biscuits through various channels such as
entire sellers, distribution networks, retail establishments, and malls. Biscuit makers offer bulk
discounts to malls in order to encourage them to sell more biscuits, resulting in increased revenues
for the malls. Britannia was largely seen as a leader in the urban market whereas Parle-G with its
budget biscuits ruled over rural palettes.

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Advantages of an oligopoly market
• An oligopoly can adopt a competitive strategy-Consumers can even benefit from lower
prices and better quality goods and services in this situation. The market itself will still lack
competition, but the behavior of the organizations can still be highly competitive.
• It can bring price stability to the market-This advantage allows consumers to start planning
ahead for needed expenses so that there is less debt for them to manage. It allows workers
to stabilize their expenditure habits, eventually working toward a stabilized trade cycle that
takes advantage of the conditions of the global economy.

Disadvantages
• Higher concentration levels reduce consumer choice-When there are only a handful of
organizations that are active in a specific industry, then the higher concentration levels in
society can reduce the amount of choice that consumers receive.
• It can lead to decision-making bias and irrational behavior-Because an oligopoly removes
the threat of competition from the market, those who practice it are sometimes free to
manipulate the consumer decision-making process.
• An oligopoly does not require efficiencies to be useful- Many industries that function
through an oligopoly tend to be inefficient with their production and allocation. There is
no need for them to try to make their products or services cheaper because consumers must
purchase them if they have a need. It allows them to fix prices artificially high in a manner
similar to a monopoly, but with the presence of other companies in the marketplace.

Levels of Channels

A distribution channel is the method or route that a firm chooses to offer its product or service to
customers. The direct channel and the indirect channel are two types of distribution channels.
Based on the number of intermediaries between manufacturers and customers, indirect channels
are further categorized into one-level, two-level, and three-level channels. Britannia has
strategically handled its Distribution channels to maintain product and pricing control. It is
possible that it has reached every corner of the country because of its extensive distribution

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network. While wholesalers and retailers seek to maximize their profits from a company's various
SKUs, the most effective distribution network is required. Britannia is also responsible for the
forward and backward flow of product and information activity. The order quantity, waiting and
delivery time and product differentiation are factors that are considered when making a channel
design decision. The system then divides the market into groups based on predefined parameters
and distributes the appropriate channel to each sector, lowering total channel costs while still
achieving the intended results.

Britannia has almost 1800 wholesalers who directly or indirectly serve 501000 retail outlets. It
also has a solid and dedicated sales force service of roughly 200 people. There are also 48 depots
that deliver commodities to the company's extensive distribution network.

Britannia has three distribution channel levels: level 1, level 2, and level 3.

Level 1: Britannia biscuits are available in all department stores across the country. For that,
instead of selling through agents or distributors, Britannia biscuits manufacturer sells directly to
the retailer. Thus through the level 1 distribution channel, Britannia makes sure its products are
available in all retail stores across the country. Supermarkets, hypermarkets, retail chains, and
department stores all use one-level distribution.

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Level 2: Because Britannia is an FMCG product, this channel is available to customers all over
India. In Level 2, a wholesaler and a retailer make up a two-level channel. A wholesaler often
purchases and stores enormous quantities of merchandise from Britannia producers, then splits up
the bulk order to supply smaller quantities to other retailers. This way, the advantage of a level 2
distribution channel is the speed at which Britannia can distribute its products in large geographic
areas.

Level 3: For mass consumption and coverage both domestically and internationally Britannia
introduced level 3 of distribution channel in the form of an agent, a new group is introduced to the
Two-Level Channel. The distance between the manufacturer and the distributor might be reduced
with the help of an agent. Britannia uses agents/jobbers to contact wholesalers because they are
unable to contact them directly. Thus Britannia company hired agents in each region and marketed
their products through them.

Goodday, bourbon, tiger, Marie gold, nutrichoice, 50-50, milk bikis, and other Britannia biscuits
can be found in any grocery store, retail store, or supermarket. Britannia makes its well-known
biscuits available for everyone to enjoy with their tea or simply as a snack because of its extensive
distribution with the help of stockists, wholesalers, and retailers. In terms of storing and selling,
the merchants, wholesalers, and retailers play the most critical roles. Because biscuits are now
non-perishable because of their packaging and long shelf life, they are simple to distribute and
available to customers whenever they want.

Flows in marketing channels

As previously stated, the Britannia distribution channel consists of a manufacturer, a wholesaler,
a retailer, and the final consumer. All of these marketing entities are not represented in all of the
channels. When a marketing channel is created, it creates a series of flows. These flows serve as
the connecting threads that connect channel members and other agencies in the delivery of goods
and services. The five most essential flows are as follows:
1. Product flow
2. Negotiation flow
3. Ownership flow

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 4. Information flow
5. Promotion flow

1. Product flow:
The term "product flow" refers to the actual physical movement of a product from its
manufacturers to all parties who take physical possession of it from the point of manufacture to
the final consumer. The factory is where physical distribution begins for Britannia. Managers at
Britannia choose warehouses and transportation providers that will get the items to their final
destination on schedule time at the lowest cost possible.

27
The above diagram shows the product flow of Britannia for both rural and urban parts of India. As
mentioned before, the factory is where physical distribution begins for Britannia, then the agent
who plays a role in delivering it to distributor and Super stockist and ultimately to wholesalers and
retailers.

2. Negotiation Flow
Britannia's negotiation flow illustrates the buying and selling functions involved in the transfer of
products. Because the transportation firm does not participate in the negotiation function, it is not
included in this flow. Negotiations at all levels of the channel entail a mutual exchange between
buyers and sellers, therefore this flow is two-directional.

3. Ownership Flow
The movement of the product's title from one stage of the process to the next is known as ownership
flow. Britannia ownership flow also does not involve transportation rather its being delivered
directly to wholesalers and retailers and then ultimately to the customers.

4.Information Flow
Britannia may enquire about its shipping schedules and rates from the transportation company. In
contrast, the transportation company may question when and in what quantities it plans to ship its
products. When the information does not involve the transportation business, it may be passed
directly to the wholesaler or retailer. Also, the transportation companies do not require this
information if there is an offer or a price reduction.

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5.Promotion flow
Persuasive communication in the form of personal selling, advertising, and publicity is referred to
as promotion flow. Britannia is well-known for its out-of-home ads and traditional marketing
methods. Because it is a long-established corporation, it relies significantly on radio and television
commercials to attract customers. For example, the Good day biscuit brand guarantees that its
presence is felt in print, television ads, and the press. Good day biscuit uses taglines like "Naam to
suna hi hoga'' to evoke emotions in its customers. Good day biscuits also emphasizes the
importance of striking a chord with children.
Britannia owns and operates many major production or manufacturing outlets in Mumbai, Kolkata,
Chennai, Bihar, Orissa, Gujarat, Delhi, Calcutta, Chennai, Rudrapur, Uttaranchal, and Gwalior,
employing around 4400 people. Britannia also uses the help and facility of more than 60 contract
points for biscuits, breads, cakes, and other products, where the labour utilised for manufacture is
not owned by Britannia but Britannia itself provides the technology and raw materials. But during
the manufacture of the product not all the raw materials are from India rather certain materials are
imported from abroad.

Supply chain of
Britannia
products

Imported products Domestic products

Crude Palm oil is obtained from Suppliers (Wheat, Sugar,

Indonesia and Malaysia - Butter) -> Company/CP
>Shipped to Kandla Port -> -> Agent ->
Refining of Crude Oil -> Traders Distributors ->
supply refined palm oil to Wholesaler -> Retailers -
Britannia. > Customers

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Material flow diagram of Britannia

Vendor/Suppliers of
Raw materials

Receiving & Factory stores Production/Manufac

Inspection turing

Logistics

Warehousing

It all starts of with the Back End Supply Chain Vendors that are Raw Material Suppliers

● Wheat Flour from Krishna Flour Mill, BTS roller flour mill, Bansal, BTS, Geetha
● Sugar (white) crystal from KP sugar mill, JB traders sugar mill
● Full Cream condensed milk: Nestle
● Soya lecithin: Baking Soda, Butter Nandini, Edible Vegetable Oil Ruchi , AWL Skim milk
powder, Salt, Essence And flavor(food grade).

Once all these raw materials are received, they are being inspected and checked by the quality
reviewing officers of Britannia. Later it is being stored in the factory and then being used for the
manufacturing of the products. Thus Britannia makes sure all the necessary Plant Machinery are
available with them:

1. Dough Mixers(Prima New,Robinson,APV,3SK)

2. Dough Truck
3. Force Molding Rollers & cutters- Stanzy food tech
4. Laminator Machine - Stanzy food tech
5. Disc Sprayers
6. Baking Oven(MK II,APV,RP)-AR Enterprises Mumbai
7. Cooling conveyor, stacking Machine

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 8. Packing Machines(VFC,FP7,FP2 Multipack M/C )

Then comes the Packaging Material Suppliers, where the Primary packing is with the Laminated
Rolls and Mycoplasma then the Secondary Packaging with the CBBs (Cardboard Boxes) of the J
Tech Pack and Unikube kartons. Once all the packaging is completed it's stored in the warehouse.

Also apart from the above suppliers and distributors the Britannia itself have created a form in
their website wherein each supplier and distributor has to fill their information in it. For example
in suppliers form:

Company Information

● Company name
● Annual Turnover In Rs. Crores For Last Financial Year
● Collaboration, Joint Venture, Licensing Etc. Supplier Name, Location And Other Details.

Employee Details

● Management
● Operational
● Companies worked with before
● Have you ever worked with Britannia before If Yes, Kindly provide us the details

General Information

● Contact Person
● Phone, Fax, Mobile
● Email
● Website
● Business Type
● Year of start of business

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In the case of distributors form all the above same information has been asked except one
additional question that is : the state where this distributor is located in India. Therefore by creating
such a form in their website, Britannia gets to know various suppliers and distributors that have
applied and later on check if there are other distributors in that particular location or check the
overall growth of the suppliers that have applied and see if they are good for the growth of the
company. Thus through this platform, Britannia will be able to get a broader choice in deciding
their suppliers and distributors. Also Britaania can compare their current suppliers and distributors
with the new suppliers and distributors that have applied. Supplier diversification programs
increase the chances of companies entering new markets and gaining new clients. We will also
gain access to each of their business networks and certification networks as you reach out to more
suppliers.

Value chain of Britannia

The value chain of Britannia Biscuits is part of a more extensive industry value system that
includes companies that are either upstream (suppliers) or downstream (distribution channels), or
both. Each action must be seen as part of the value system by the manager of Britannia Industries
Ltd and how increasing or reducing each activity affects the value chain of Britannia Industries
Ltd. The decision is where to place oneself in the value system. Primary Activities and Supporting
Activities are the two generic categories of activities in the Value Chain model.

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Britannia Biscuits has five broad types of primary activities, as shown in the above Value Chain
diagram.

• Inbound Logistics: These Britannia Biscuits activities are concerned with receiving,
storing, and disseminating product inputs. It also includes material handling, physical
product warehousing, and architecture to receive and store customer information for a
digital media corporation are all feasible. Britannia Biscuits currently outsources the
majority of its inbound logistics.
• Operations: Activities that assist in the transformation of raw materials into final goods.
For example, the term plastic molding refers to the process of molding plastic to create
items and the use of customer data to offer adverts to clients based on their usage patterns.
In the case of the Britannia Branch, operations and assembling take place in the operating
activity.
• Outbound Logistics: Britannia Biscuits carry out these actions in order to deliver finished
products to channel partners and final buyers. Warehousing, distribution networks,
wholesalers, and retailers order fulfillment, processing, and scheduling are all examples of
outbound logistics activities.

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 • Sales and marketing: Britannia Biscuits engages in these operations in order to provide a
platform for customers to purchase the company's goods. Channel selection, marketing,
advertising and promotion, pricing, sales force management, and so forth are examples of
these tasks.
• Services: For the product to be used successfully, Britannia Biscuits must provide after-
sales services and maintenance. Britannia Biscuits' service activities may include post-sale
maintenance, product forward and backend software alignment, installation services, part
supply, and training. Britannia Biscuits' Support Activities are those that help the
company's Primary Activities. Support Activities are divided into four broad categories by
Porter. Each category is subdivided into a number of specialised value activities specific
to the industry in which Britannia Biscuits works.

The following are the four generic support activities:

• Firm Infrastructure: General management, finance and accounting, planning, legal

services, and quality management are examples of firm infrastructure support activities at
Britannia Biscuits. Britannia Biscuit firm infrastructure activities support the full value
chain, though the scope varies because Britannia Biscuits is a diverse organization even
within the industry. For example, Finance and planning are managed at the corporate level
at Britannia Biscuits, whereas quality management, accounting, and legal issues are
managed at the business unit level.
• Human Resources Management: Human Resources Management is critical to any
organization's performance in an environment where every organization strives to become
a learning organization. At both Britannia's business unit and corporate levels, HRM
support operations include Recruiting, Selection, Training & Development, People
Planning, Hiring, Skill Assessment, and Compensation.
• Technology Development: Almost every activity in a modern corporation is supported by
technology. Technology development has become a source of competitive advantage in the
technology business. Feature design, field testing, component design, technology selection,
and process engineering are all examples of technology development at Britannia Biscuits.

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 • Procurement Activities at Britannia Biscuits: Procurement activities at Britannia Biscuits
comprise activities that are carried out to purchase inputs that are used in the value chain
of Britannia Biscuits. It excludes the cost of purchasing inputs. Raw materials, supplies,
machinery, laboratory equipment, office equipment, and buildings are examples of
purchased inputs.

Width and depth of distribution

In FMCG, distribution strength is measured and evaluated by its Depth & Width. The first
parameter for assessing the distribution will be its Width. Width generally means how many outlets
Britannia products are present. In this situation we have taken only the number of outlets in India
and we have taken the insights of the year 2020.

Width of distribution for Britannia

Number of FMCG retail outlets in India (2020) = 12890000

Number of FMCG retail outlets in India that have Britannia products (2020) = 5000000

So the Width is 5000000/12890000 = 38.78%

Width will be counted if any product of the Britannia brand is present. Here Britannia brand
presence is 38.78%

Depth is the next level of distribution strength evaluation. Depth refers to how many packs of a
specific Britannia SKU are present on average at each of India's 5000000 stores. For example, a
Britannia Good Day Cashew Cookies, 200 g, 35Rs produced item is available in outlets with an
average of how many packs each outlet. If it's 3, yet the benchmark is 6, the distribution's depth
is low. There is room for improvement. It can be done for all SKUs, for example, if all outlets have
100 Britannia SKUs, how many packs of each of the hundred SKUs are present at each outlet? It
might be 5, 10, 20, or more. There are techniques to compute the depth by counting how many

35
packets of a certain SKU are billed to an outlet in a week/month. The more packs of a SKU there
are in a store, the better and stronger the depth.

Strategic Partners/Alliances/Integration

• Strategic alliance with Cafe Coffee Day

Britannia Industries and Bangalore-based Cafe Coffee Day Daily Bread Pvt Ltd formed a
strategic alliance on July 11, 2006, to manufacture and distribute premium bread, cakes,
and high-end ready-to-eat foods and snacks. Britannia Industries, a Rs 1,800cr biscuit
company, has purchased Café Coffee Day's (CCD) 50% share in Daily Bread. Daily Bread
is a high-end bakery maker and store situated in Bangalore that offers a variety of European
breads, pastries, and savories. It is a 50-50 joint venture between CCD and Arjun Sekri, a
former investment banker, that operates in the institutional and retail markets. It currently
has three branches in Bangalore and two in Mumbai. Managing director Vinita Bali said
Britannia's investment represented its strategic intent to diversify its product portfolio into
the fast-growing, high-end, branded freshly-baked gourmet foods, and marked its entry
into the premium 'out of home' and 'in home' consumption, while stating that the market
for premium products was evolving in the country and had growth potential. Daily Bread
will be used as a vehicle to boost the company's main business with a fast-growing, high-
margin line of products, and the company will aim to establish a national footprint for it.
This is a new growth potential for Britannia, and you can expect to see many additional
offers and expansion in other locations in the coming months, said Vinita Bali.

• Chunkies Tie-up with Amazon

Britannia Industries, a 100-year-old biscuit company, had tested the waters of India's
growing e-commerce market. In 2014 Britannia Industries, a bakery and dairy company,
partnered with e-tailer Amazon India for a 15-day experimental launch of their new
chocolate chip cookie, Good Day Chunkies. Britannia is the country's first biscuit
manufacturer to use e-commerce for brand promotion, pushing off competitors like Parle
Products and Mondelez. Also, it was informed that Good Day Chunkies, the company's
most expensive product at Rs 50 for six cookies, would be available only on Amazon

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 website for the first few weeks of November 2014 and the product will be part of Amazon's
gourmet & specialty foods store and will not have a delivery charge.

• Enriching our portfolio - Britannia-Chipita Joint Venture

Britannia Industries, a leading FMCG company, said on March 28, 2017, that it had formed
a joint venture with Greek firm Chipita SA to produce and distribute ready-to-eat croissants
in India.In Phase I, the joint venture company Britchip Foods Ltd is expected to invest Rs
100 crore. The Britannia company has signed a joint venture agreement with Chipita SA,
a Greek firm, for the purpose of developing, producing, and distributing ready-to-eat
croissants and any other product as the parties may agree through a joint venture company,
Britchip Foods Ltd, the FMCG major stated in a BSE filing. According to the deal,
Britannia Industries would own 60% of the joint venture company's total share capital,
while Chipita SA will own the rest. In their agreed equity allocation, both parties will have
the ability to nominate the Directors. According to the application, the Joint Ventures board
of directors will have a minimum of five and a maximum of ten members. Britannia has
the right of first refusal under the Joint Venture agreement if Chipita wants to sell its part
after the ten-year lock-in period expires. On the BSE, Britannia Industries' shares closed
1.33 percent higher at Rs 3345.00. Also Britannia will hold 60% and Chipita will hold 40%
of share capital of Britchip Foods Limited.

• Britannia Industries Limited acquired a stake in Sunandaram Foods Private.

On March 9, 2017, Britannia Industries Limited paid INR 150 million for a 26% stake in
Sunandaram Foods Private Limited. Britannia Industries Limited purchased 0.46 million
shares of Sunandaram Foods Private Limited under the terms of the agreement.
Sunandaram Foods Private Limited declared a net profit of INR 4.2 million for the fiscal
year ending March 31, 2017, and net assets of INR 28.2 million as of March 3, 2017. On
March 9, 2017, Britannia Industries Limited completed the acquisition of a 26% share in
Sunandaram Foods Private Limited.

• Britannia to scale up the dairy business to take on ITC, Amul

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 Britannia Industries, in November 2015, planned to turn its dairy products business into a
full-fledged unit, aiming for a fivefold rise in sales and relaunching its Tiger biscuits line
to enhance market share. To compete with newcomer ITC and established rival Amul, the
company plans to create a separate division for its fledgling milk product industry.
According to managing director Varun Berry, the new division will complement the
existing dairy division, which accounts for less than 5% of Britannia's sales. "We're putting
together a new team in the hopes of achieving our goal of becoming a Rs 2,000 crore
company," said Varun Berry. Britannia's current dairy operation comprises co-packing and
marketing butter, cheese, and curd. The dairy division accounts for less than 5% of the
Bengaluru-based company's total revenue, at Rs 400 crore.

Multi-channel, Omni channel. Channel cost as a percentage of sales

Omnichannel distribution is a multichannel method in which the customers get to purchase and
receive orders from several sales channels with one-touch seamless integration. Omnichannel
distribution strategy should consider both a customer purchase and a possible customer return,
often known as forward and backward distribution services.

Multichannel distribution focuses on providing ways for customers to purchase online and brick
and mortar locations.

The difference between the two is, omnichannel has a “one-touch” integration, which allows for
customers to buy in-store, online, or both, from a single point.

The goal of omnichannel logistics strategy is to cut costs, enhance transit, and satisfy customers.
Customers are more likely to spend more online than in brick-and-mortar locations, so
implementing an omnichannel distribution strategy generally leads to revenue growth.

The growth rate for urban traditional trade and rural traditional trade is 1:1.4, and the growth rate
for total urban markets, which includes e-commerce and modern trade – it is 1:1.6.

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In 2020. Britannia had 5.5 million outlets. During the lockdown, e-commerce sales increased by
300 percent, or around a proportion of total sales. It is predicted to rise from 1% to 2% to 5% in
the coming years. Despite the fact that e-commerce is rapidly expanding, there is a large base of
the supply chain pyramid that must continue to be served. As a result, the company does not expect
distribution techniques to change quickly. So, the company will continue to have direct distribution
to 2.5 million retailers. Modern trade, e-commerce, and alternative channels will receive
disproportionate attention and care, but the overall plan will remain unchanged. Distributor margin
and retailer margin is 5-6%.

During the pandemic, many freebies have been eliminated. Many expenditures associated with the
sales and marketing system including ad spend have been reduced.

In 2020, rural markets contributed to about 30% of total sales. Britannia expects the number to
grow to 33-35% in the next two years and the company is building the infrastructure to achieve it.
Pre-covid, the company had 19,000 distributors and in 2020, the number increased to 22,000 as
the company added rural distributors for increased rural coverage.

Beat Analysis
Beat Plan is a day level route plan made for field sales/marketing personnel to make visits to a
number of stores at a predefined frequency. A Beat Plan defines whom to visit, when to visit, based
on the company's priorities on stores category/segment. These visits can be made for the purpose
of sales order collection, visual merchandising, etc. Beat Plans are planned in advance, mostly for
a month, to ensure no deviation is there and each store gets required visits from company
representatives.

1. Under-utilised salesmen/marketing executives  – They could be much more productive

within the same working hours
2. Long and cumbersome Beats  – A Salesman walks for a significant time in his beat hence
its unfair to expect high productivity at all times

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 3. Overlap in salesmen routes  – With overlapped routes, salesmen were walking more than
they had to. The time spent in transacting at every outlet was taking a hit resulting in
potential revenue loss.

Market Coverage (Territories/route plans/mapping)

Territories mapping and pricing policy

● Territories division and route ● Based on customer value

planning ● 2 main geographical territories
● Product viability wise
● Britannia chooses to assign territories
on the basis of how well they will be
able to utilize that specific market.
● Evidently most FMCGs try to create
efficiency in the sales process by
making route maps that are cost
effective and also one which provides
maximum intrinsic value.
● Categorical expansion is what they are
going for. Exploring the “unknown” is
the idea they hope to push for.

● Mapping instructions ● The sales force is mapped with the core

intention of covering more of the
markets for easier growth.
● Less involvement and more spread is
the key
● Britannia likes to make mapping
decisions on the basis off cost of travel
and cost of selling. With a huge base of

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 brands and a versatile customer base it
is extremely important for them to
provide routes which reduces clutter
and streamlines the overall selling
process

● Pricing Policy ● Britannia prices their products region

wise for all non uniform retail products
for instance region wise printing and
packaging etc.
● Retail margin changes but end
consumer price remains same across
the Country.
● As for B2B pricing FMCG norms are
what they follow because otherwise
disruptions within the industry could
cause losses and tension between
competitors.
● Majority of their goods are sold via 3rd
party suppliers and distributors who
want to push products which are
cheaper for them to bring in and also
which customers are willing to pay for.
So to maintain a competitive balance
Britannia focuses on stability and bases
it off “competitive rates”

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Commission, Incentive

Approach to market (Image attached below) B2B customer centric

● Incentives and commission ● Commissions usually return 0.25%-1%

of the yearly asset value to the
distribution firm or salesperson that
initially attracted the investor to the
fund
● The asset manager must track this
commission for each distributor and
possibly also the associated salesperson
separately – accurately monitoring
distributor referrals, investment
amounts, and dates of investment
purchase and sale. The distributors then
receive commissions based on the
quantity of their clients’ investments in
the fund over the previous period based
on certain criteria and pre-agreed rates.

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Source: Britannia marketing blog

Credit Availability

Distributors get stock on credit from consumer products businesses, while distributors get stock
on credit from retailers. And, despite the fact that some sections of the payment supply chain have
been digitized, most transactions still take place in cash.

A trade credit is an agreement or understanding between business partners that permits the
exchange of products and services without the need for immediate payment. The supplier of goods
or services is said to extend credit to the customer when he or she allows the buyer to pay for the
products or services at a later date.

Credit Period

Trade credit is often extended for 7, 30, 60, 90, or 120 days, while some industries, such as
goldsmiths and jewellers, may extend credit for longer. The time for which credit is granted, as

43
well as any cash discount and the type of credit instrument used, are all listed in the conditions of
sale.

A consumer, for example, is given credit with terms of 4/10, net 30. This means that the client has
30 days to pay the seller after receiving the invoice. In addition, if payment is made within 10 days
after invoicing, the customer will receive a cash discount of 4% off the indicated sales price.

In general, while determining a credit period, Britannia considers the following factors:

● The likelihood that the client will not pay – (companies whose customers are in high-risk
industries may have to give credit terms that are restricted).
● The size of the account - A small account will have a shorter credit period. Managing small
accounts is more expensive.
● The perishability of the commodities – If the collateral values of the goods are poor and
cannot be sustained for lengthy periods of time, credit will be limited.
● Lengthening the credit duration effectively lowers the customer's payment. This, in
general, boosts sales.

Typically, some, but not all, consumer goods corporations offer distributors stock on credit, and
distributors, in turn, offer the same to retailers. And, despite the fact that some sections of the
payment supply chain have been digitized, most transactions still take place in cash. When a
distributor sends a salesman to a merchant to gather restocking orders, for example, the salesperson
also settles earlier debts. This provides the store a week or two between when the items are
delivered and when payment is due.

Sales employees have either returned to their hometowns or are unable to attend the stores owing
to the lockdown, according to distributors. Instead, businesses must send employees to warehouses
to retrieve items and pay in advance.

Retailers said that they only picked up products from distributors after paying a deposit. Due to
lower sales and a lack of financing, numerous shops, particularly smaller kirana stores, have been
compelled to stock fewer SKUs or commodities.

44
Britannia with its limited manufacturing due to COVID has been receiving orders from distributors
in advance with full payment to block the order for them.

Trade-offs and Benefits

From the standpoint of the borrower, credit can permit expansion or development that would
otherwise be impossible if the company had to pay for things right away. One key disadvantage is
that interest payments can quickly accrue and overwhelm borrowers (resulting in significant
obligations which may compound).

Credit allows the borrower to be more convenient (leading in more transaction activity) while also
providing the lender with recurrent interest income. Providing credit to a borrower carries the risk
of default, as the borrower may be unable to meet his or her debt obligations.

Industry Trends

• Marico Ltd. is also selectively issuing loans, according to a conference call with investors
following the January-March earnings. Dabur India Ltd. offers a seven-day credit facility.
• Hindustan Unilever Ltd. does not normally offer items on credit, but it has done so during
this era of transition.
• FMCG companies are also working to ensure that distributors can deliver products to
retailers. HUL is encouraging retailers to use its Humarashop and Shikar apps to place
orders, as well as ensuring that deliveries are managed during the lockdown.
• Retailers have only been able to obtain stock from distributors after paying a deposit. Due
to lower sales and a lack of financing, numerous shops, particularly smaller kirana stores,
have been compelled to stock fewer SKUs or commodities.
• Some consumer products companies are stepping in to help cover the trade finance gaps.
Hindustan Unilever Ltd., for example, does not normally offer items on credit, but has done
so during this period of transition.

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ROI of Channel Partners

The quantity and rate (%) of anticipated or earned profit, if any, from an investment is determined
by a ROI study. During the planning stages of a project, a pro forma analysis is performed using
cost and benefit estimates. The objective is to use well-reasoned assumptions to determine an
expected or projected return. After a project has been implemented, ROI analysis is done to
evaluate the actual return and determine whether or not the investment fulfilled financial
expectations.

ROI = (Revenue – Expenses) / Investment

Net Income = Revenue – Expenses.

Revenue: Anyone who works as a distributor for a corporation receives a fixed profit margin on
product sales. If the distributor margin is 5%, then a purchase of one CR will cost you 5 lacs for
the month.

Expenses: These are the monthly expenses incurred for the business.

• Salesmen, vehicle driver's, vehicle helper's, loaders', computer operators, and staff salaries
go down staff's salaries.
• Monthly vehicle running costs (if its owned vehicle then fuel cost will be part of expenses,
cost of the depreciated cost of vehicle will be part of investment, if its market hired vehicle
then fuel & hiring cost will be part of expenses).
• Rent for the godown, energy bills, stationery costs, phone bills, internet rates, and any other
administrative costs.
• Any interest paid on borrowed funds will be included in expenses, but such funds will not
be included in investment, nor will any cash discounts be granted to wholesalers.

Example of ROI for channel partners (monthly):

Sales = Rs 2000000
Margins = 8%
Net Profit = Rs 160000
Expenses (salaries, rent, bills, daily expenses) = Rs 125000

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 ROI = {(Net Profit - Expenses)/ Sales} * 100

= {(160000-125000)/ 2000000}

= 1.75%

Yearly ROI will be 21%.

Sales 2000000
Distribution margin on sales (8%) 160000
Gross Income 160000
Operating expenses
Salaries 50000
Warehouse rent 30000
Petty Cash expense 25000
Depreciation 15000
Operating expenses 120000
Net Income 40000

Stocks (Inventory)/current assets 500000

Credit notes due to the distributor from brand 500000
Debtors of the distributor as a result of credit given by him in the market 200000
Investments in vans/infrastructure 800000
Total Investment 2000000

ROI (Net Income / Investments) * 100 2.00

Investment: Stock held in warehouse (for example, stock holding equals 15 days of sales), credit
granted to retailers in the market (for example, 15 days credit equals 15 days of sales in the month),
and investment in claims that must be reimbursed by the company are all examples of investment
(it will be typically 2 percent of the monthly revenue). In this scenario, one month's worth of sales
equals one crore.

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If a monthly fixed investment of 100 lacs (1 cr) yields a net income of 2 lacs, the monthly return
is 2%, translating to a year-over-year return of 24%. (An annual return on investment is calculated
by multiplying monthly net income by 12). The investment will be fixed each month, resulting in
a fixed cost that will not fluctuate. In general, a good distributor who works hard and is fully
engaged in the business will make 2% per month. A 24-percent annual return is far superior to a
bank FD.

Anything above 20% is a very healthy ROI, especially because the bank's FD returns are unlikely
to be higher than 8%.

Channel Management

The process of coordinating the passage of Britannia's products from their producer to their final
client is known as distribution channel management. Britannia's distribution channel is the medium
or channel via which it distributes its products. It is an important aspect of business because it is
utilized to distribute products to retailers and customers in different areas.

Britannia produces a significant number of goods for consumers who are located all over the world.
While things are manufactured at a factory, it is vital to comprehend how they will be distributed
to warehouses, distributors, retailers, and eventually customers in various regions.

Direct Channel: In a direct channel, Britannia sells the goods to the client directly. They select
the medium, whether it is ecommerce or retail. It necessitates the hiring of a few salespeople or
the establishment of operations for an ecommerce website.

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Indirect Channel: In this type of channel, a specialist intermediary is used since they have the
necessary contacts, experience, and scale of operations. They are the distributors and retailers for
Britannia, assisting in the sale of the company's products.

Channel Optimization:

• Customer analysis: Britannia begins channel management by analyzing customers on two

levels: first, who the buyers and users are, and second, what the customer needs, where
they buy the items, and how often they buy.
• Setting objectives for channels: Based on the customer analysis the objectives are set to
make sure the customers needs are met. Britannia ensures this by setting the requirements
of each channel in terms of the customer requirements and the marketing strategy in order
to achieve them.
• Distribution task specification: Once the objectives are set it comes down to setting the
specifications for the tasks which are providing credit to the channel partners, ensuring and
setting the delivery timings, setting up reverse logistics and ensuring the timely
replenishment of products.
• Channel alternative evaluation: The evaluation and selection procedure requires
determining the specific channel tasks. For channel alternatives, there are four factors to
consider: the number of levels, the intensity at each level, the types of intermediaries at
each level, and the application of selection criteria to channel alternatives. It's also crucial
to decide who will be in charge of the various channels.

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 • Channel member performance: The requirement to analyze channel members'
effectiveness is equally as vital as the need to review other marketing responsibilities. The
marketing mix is clearly linked, and the failure of one component can result in the failure
of the entire system. However, because the channel member is dealing with independent
businesses rather than personnel and activities under its control, these businesses may be
hesitant to change their methods.

Storage Requirements for Britannia

Britannia products are largely baked goods which have a longer shelf life than other baked goods
due to their protection from the moisture of the air surrounding the end goods. The storage tests
that are done before Britannia sends out the products to the end consumers would be the stress test
in which the packaged product is tested out in different storing environments such as humidity,
temperature and air pressure. The baked products are highly hygroscopic and tend to absorb the
moisture during the period in which they are cooled before packing. This leads to the products
losing their crispness as they would become soggy and rubbery, losing their flavour and finally a
decrease in shelf life which the business worked so hard to achieve. The first step in terms of
storage that takes place would be the cooling of the hot products in an ambient temperature
followed by storing it in a controlled hot room before it is sent for packing, it is essential that the
humidity in the hot room is maintained as below 1 %. For rusks and biscuits the storage is done at
38 degrees and with a humidity of 90% whereas for cakes it is at 55%. After it is removed from
the hot room and packaged, it goes through two tests, one is the primary material packaging test
and the second is the secondary material packaging test. The primary material packaging test
checks for the following:

Barcode Scanning Printing Defects Water Vapour Color matching

(important for Content cabinet - dart impact
exporting)

Leakage & Crushing Lamination Heat Sealing Stiffness/ Thickness

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The secondary material packaging tests are in terms of the drop test and the bulk test which is
extremely important to make sure that the product is able to withstand the moments that take place
during the distribution process.

Special Merchandising Requirements of Britannia

In the various merchandising types present, Britannia belongs to the category of a convenience
good which means that the product is something that we cannot simply do without. Biscuits and
cakes are extensively available and bought with very little effort involved as they are low in prices
and do not have a huge opportunity cost for the consumers. There is no meticulous decision-
making process involved and the demand transfer is frequent as the consumer would shift to a
different brand if the brand that they are currently looking for is not available. Britannia focuses
its efforts on selling more products as they can only make a profit when a large number of products
are sold.

The products are largely displayed based on their product type, pack size and based on the
bestseller. Britannia has made use of block merchandising, to be more exact it has used brand
block merchandising where the brand products are kept together in a vertical manner which is also
known as vertical brand block. The advantages of using vertical blocks would be that customers
will only need to shift their eyes up and down to see all of the objects in the display, rather than
moving from one spot to another so once Britannia captures the customers visual attention they
can entice the customers with their products and it doesn't matter which product of Britannia’s that
the customer picks as long as it is their brand. In such cases the special merchandising requirements
would be for Britannia products to be placed

Visual Merchandising at Point of Sale

Britannia understands what a daunting task it is for children and teenagers to go shopping with
their parents but it is also aware of the fact that just displaying biscuits on the shelfs is not going
to attract the target audience to the product. Knowing all of this Britannia has used different visual
merchandising techniques to entice the target audience and build a purchase intention in them.

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To entertain the audience the brand launched a mobile application game called treatanuat which
could only be played if they purchased three packets of treat cookies. They used the tagline called
fun in the middle. The game was set up in high visibility areas with an LED TV and XBOX with
the use of Kinetic energy. There is an individual set up to assist the children in signing up after
which the children get to engage in a game using motion sensing technology.

Britannia's new activation has been utilised to increase game downloads, increase brand recall,
stimulate product trials, and make the entire activity viral online. The activation took place across
Delhi-National Capital Region, Kochi, Hyderabad, Kolkata, Mumbai, Bangalore, Chennai and
Ahmedabad. Every weekend, Britannia Treats activates more outlets, including Star Bazaar, Spar,
Reliance Retail, Spencer's, and regional businesses. Experience zones in stores (such as
Treatanaut) help to increase brand equity (or “fun” equity, in Treat's case) with its core
demographic by keeping their attention for longer and thus having a better chance of influencing
their purchase choice. Although scalability is a hurdle with these activations, it may be overcome
by focusing on high throughput stores in the correct catchment region to achieve the desired results.

Channel Promotions ATL and BTL

ATL (Above The Line)

Above The Line Marketing includes macro level promotion. It appeals to a large audience by
sketching out national, regional, or territory-specific promotions. It is traditional in nature, and
used to build a brand image for the company and its goods. Promotional media include radio,
television, periodicals, outdoor advertising, and the press. The company promotes itself through
Above the Line promotion. It creates a brand image and positions the company's brand in the way
it wants consumers to perceive it. But it is difficult to measure such promotions. Some of the
methods Britannia uses are as follows:

1. T.V Campaigns

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 T.V Campaigns are used by the company to increase the brand recall. The penetration
levels are higher than any other sort of advertising since it combines audio and visual
elements. One of the most memorable Tv campaigns of Britannia was when they launched
an ad campaign to mark its 100 years. The TV commercials tell stories about how Britannia
has turned 100 only because they've always been there for their customers when they
needed them the most. Each video takes a simple scenario and emphasises the relationship
between the customer and the product. The symphony of Britannia is also built through the
campaign's product brands and the numerous roles that the brand plays in the lives of its
consumers.

2. Radio

In 2017, Britannia’s Good Day partnered up with MEC Wavemaker, to introduce India’s
first brand owned campus digital radio in an effort to make the young Indians to smile
more. Britannia Good Day's Campus Radio has been integrated into Gaana.com as a 24-
hour-a-day, seven-day-a-week web radio station, promising to be a constant supply of
differentiated content that the youth connects with and consumes. The tagline is "trending
music, trending smiles," and it will use that as the basis for playing music capsules, star
programmes, and other content that will inspire more smiles among the younger audience
who want to be on top of the newest lifestyle and music trends.

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BTL (Below The Line)

Below the Line promotions are unique in that they are carried out at a micro level and are a kind
of non-media communication. Direct mailing and flyer distribution, sponsorships, point of sale,
and telemarketing are examples of this measure. Brand reputation is gained through BTL
promotions. These can be measured in terms of sales and feedback. Britannia has been using the
following BTL measures:

1. Sales Promotion

The company has undertaken Sales Promotion activity for so many years. In 1997,
Britannia launched the "Eat Healthy, Think Better" campaign, with the goal of turning
every third Indian into a Britannia customer. The Britannia Khao World Cup Jao was first
introduced in 1999, and due to its success, it was reintroduced in 2003. Britannia created
the Britannia Lagaan Match in 2001, giving customers the opportunity to play the Lagaan
team XI. The activity turned out to be the most successful activity of the year.

2. Public Relations

Britannia has taken up sponsorships and public service activities to increase their reach.
They have associated with teams like Kings XI Punjab and Royal Challengers Bangalore
through their numerous brands. The records showed that the campaigns introduced by
Britannia during the sponsorship were so successful that Britannia was one of the top
sponsors in terms of front of mind recall and association with the IPL. They have also
established a Britannia Nutrition Foundation. It aims to help children and adolescents in
underprivileged communities overcome malnutrition and iron deficiency anaemia.

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 Through a multi-pronged strategy, the programme activities are aimed at improving the
health and nutrition status of children, mothers, and adolescents.

3. Billboards
Britannia uses a variety of outdoor advertising styles, including billboards, bus shelters,
FOB, metro wraps, and bus branding as major BTL tools. This helps the company to
increase the visibility of the different products. In 2019, they conducted a month-long
campaign to commemorate the brand's 100th anniversary and its long affinity with cricket.
The main goal was to build nostalgic excitement for the company's legendary "Britannia
Khao World Cup Jao" ad, which premiered in 1999.

4. Danglers

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 Danglers are a cost-effective way in which Britannia advertise their products.It is mainly
used to attract attention to new products or new offers in the stores. Britannia has used the
danglers in creative ways to instill a sense of curiosity and excitement among the
consumers. For instance, to promote their yogurt, they came up with a dangler that had the
product packaging suspended upside down from the ceiling. This served as a teaser for the
new product, which piqued the consumer’s interest.

TTL (Through The Line)

'Through the Line Marketing’ stands for 'Through the Line Marketing.' This type of marketing is
more of an integrated approach, in which a company uses both BTL and ATL marketing tactics to
reach their target audience and convert them. Digital marketing is a part of TTL. Britannia has
many social media posts and digital campaigns that can increase the brand recall, salience and
reach.

Britannia has been doing a great job in maintaining their social media presence with different
hashtags and campaigns. Some of their digital campaigns are as follows:
In order to promote Choco Chunkies, a premium cookie line, Britannia Good Day invited home
chefs to make something better out of their Choco Chunkies biscuits in 2016.For the same, the
brand teamed up with the Masterchef Australia judges, and the chefs of the top 10 dishes were
given the opportunity to meet and greet with culinary professionals. In a crowd-sourced campaign,

56
participants were required to submit their recipes, photograph their finished plate, and post it to
Facebook, Twitter, or Instagram with the hashtag #ChefsWithChunkies for the company to review.

In June 2020, a Twitter user pointed out the resemblance between Spotify’ s brand logo and
Britannia's Good Day Cashew Biscuits. Spotify changed their logo for the day and Britannia
thanked Spotify for putting them in the ‘Spot’light. This gave both companies millions of shares
and retweets within a day.

During the pandemic the company transformed its business digitally, with its biggest digital
campaign, Britannia Cheese StarChef, featuring Saif Ali Khan, bringing in the brand's highest

57
growth to date. From April to August, 300 percent of Britannia Cheese's revenue came from e-
commerce platforms. This was the company’s influencer strategy.

Evaluation of the Channel effectiveness

Channel effectiveness of a firm depends on the firm's ability to manage the distribution channels
by making sure that they are cost efficient to be able to boost up profits and drop in costs. To make
the distribution effective, firms tend to focus on picking the correct distribution channel and supply
chain while trying to bring together the various channels that lead to different target audiences.
Britannia is doing extremely well in terms of its channels as it has reached the nooks and corners
of India and is present in all tiers of shops starting from A tier shops to C tier shops. This has taken
place due to the great sales force teams in different locations that build relationships with retailers
and keep reminding the firm the importance of their roles as agents for the firm.

Best practices in the FMCG industry

The best practices in industries such as FMCG where products move fast and creating value is a
priority is far better if the value model is implemented. The 5 major aspects to implementing a
sustainable model for the FMCG industry are as follows.

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This achievement owed a lot to a broadly utilized five-part model for making esteem. Spearheaded
soon after India's economic boom, the model has seen little change from that point forward. FMCG
companies took the following actions:

● Idealized mass-market brand building and item development. This capacity accomplished
dependable development and gross edges that are normally 25% above non branded
players.
● Constructed associations with food merchants and other mass retailers that give advantaged
admittance to shoppers. By partnering on advancement and in-store execution and firmly
adjusting their stockpile chains, FMCG companies got wide circulation as their partners
developed. Little contenders needed such access.
● Entered creating markets early and effectively developed their classes as shoppers became
richer. This demonstrated an enormous wellspring of development—producing 75% of
income development in the area over the previous decade.
● Planned their working models for predictable execution and cost decrease. Most have
expanded centralization to keep pushing costs down. This cooperative energy based model
has kept general and authoritative costs at 4 to 6 percent of income.
● Utilized M&A to consolidate markets and make a reason for natural development post-
acquisition. In the wake of refreshing their portfolios with new brands and classes, these
companies applied their better dispersion and strategic policies than develop those brands
and classifications.

To create more intrinsic value a Two-Step Operating Mode adopted by many FMCG giants can be
adopted my other brands in the industry for better results:

Stage 1: Flow Mapping

Do a planning of actual streams and data streams, type VSM ("Value Stream Mapping") to have a
total perspective on the various tasks, from the issuance of the client's necessity to the conveyance
of the last mentioned, beginning from the overall case to then portray the points of interest and
particularities.

Stage 2: A Qualitative and Quantitative Analysis of Logistics Operations

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Examine and notice the stream lines exhaustively, in the field, to qualify and measure the
coordination activities related with every client. During these field reviews, it isn't remarkable to
see that the dissemination cost of a similar item can fluctuate from one to three contingent upon
client prerequisites … and, through this, essentially twist the pace of edge determined on an item
section.

Two primary classifications of expenses can create benefit contrasts:

Activities: bundling, control, retail picking, explicit stacking, markdown rate, and so on. The
association and the board interaction related with the client: estimates, after-deals administration,
liveliness of reaches and advancements, It is then an issue of redistributing functional and
managerial expenses as precisely as could really be expected, contingent upon the powerful
assembly of the companies relationship for every one of these clients.

Thus, it is important to consider what other competitors do and modify your performance. The best
practices in the industry are fundamental to improve. Relative comparison with another business
doing no better than Britannia will do no favours for the company. It is also worth noting that the
process involves both transitioning on the external front and improving processes that will create
a long lasting intrinsic value for all stakeholders of Britannia.

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