Britannia`s Rural Market Push

Case Code: CLMM154 Case Length: 5 Pages Period: 1997-2020 Pub Date: 2021 Teaching Note: Available

Price: Rs.150 Organization: Britannia Industries Limited Industry: Food & Beverage Countries: India Themes: Rural Markets, Channel Strategy & Development, Product Strategy & Design, Pricing

Abstract

The case study 'Britannia's Rural Market Push' describes the product distribution strategies of Britannia Industries Limited (Britannia) to strengthen its presence in rural India. This helped Britannia achieve a 21.5%year-on-year revenue growth even as other FMCG companies were registering sluggish growth during the COVID-19 pandemic. Britannia's growth was attributed to its strong presence in the rural markets, which were not as adversely impacted as the urban markets by the COVID-19 pandemic.

The case begins with the origins of Britannia's rural push followed by the product strategy applied by its Managing Director, Varun Berry (Varun), for the rural marketsin which appropriately priced and packaged Lower Unit Packs (LUPs) of both basic and premium products were offered. Next, the case focuses on the distribution strategies applied by Britannia including the direct distribution and zero-day inventorymodels that ensured efficient and cost-effective delivery of its products. The case ends with a note on the future investmentplans of Britannia to further deepen its distribution network in rural areas,launch vitamin rich and immunity boosting products, expand its dairy offerings and establish new production units.

Issues

• Become aware of the growing importance of rural marketing
• Understand the nature and characteristics of the Indian rural markets
• Learn about the importance of an efficient distribution system in rural markets
• Understand the benefits of aptly priced and packaged products for rural markets
• Become aware of high-end technologies like census mapping and geo-spatial analytics in optimizing distribution reach in rural markets

Introduction

Britannia Industries Limited (Britannia), one of the leading Fast Moving Consumer Goods (FMCG) companies in India, posted a 26.7% growth in revenue, 105.4% growth in PAT , and 81.7% growth in EBITDA in the first quarter of FY2020-21. The revenues increased by 21.5% year-on-year. Britannia’s stupendous growth amidst unprecedented economic and social disruptions caused by the COVID-19 pandemic during which many other FMCG companies had registered sluggish growth, was primarily driven by its rural market presence. The company reported that its rural business had grown three times faster than its urban business in Q1FY2020-21 (rural revenue rose to 38-39 per cent while urban business grew at a modest 12 per cent)..

Keywords

Rural Markets; Rural Marketing Strategies; Product Strategy; Distribution Strategy; Channel Management; Direct distribution; Zero-day inventory Model; Rural Sales Channel; Supply Chain Management; Rural Consumers; Retail Point-of-Sales Solutions;Census Mapping;Geo-spatial Analytics

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