Britannia Admits Price Hikes Backfired, Especially In Cake Category

Britannia Industries Ltd.'s strategic price-point increase in the cake category has backfired, leading to volume losses, according to Varun Berry, Executive Vice-Chairman and Managing Director at Britannia Industries.

The company is now reconsidering this strategy, which could impact future category growth and profitability, Berry said during earnings analysts call on Aug.6.

Britannia Industries hiked prices in February to counter a surge in the cost of key ingredients, palm oil and cocoa. The company reported a 3% increase in its Q1 FY26 net profit, while revenue of the FMCG company has gone up 8.8%. The biscuit maker has reported a consolidated bottom line of Rs 520.72 crore, according to an exchange filing on Tuesday. It has missed Bloomberg analysts' consensus estimate of Rs 568.95 crore.

The company shared that their bread segment is doing really well, the growths and even the margins have been pretty good. While, the cake segment has not been a great story as the growths are single-digit.

"The reason for, it is that we had a margin issue on Cake and we tried to move price point from Rs 10 to Rs 15, and we sustained a certain volume and revenue losses when we did that. That was a strategic move from our side," said Berry.

Berry highlighted that, with UPI and digital payments, the company thought price points are not as critical today, but it seems that they are. "So we are reassessing that strategy. Once we get this right, the margin and the volume and revenue growth, I think, we will be in a good place as far as cake is concerned as well," he added.

The company highlighted that they had a very good response to their cake segment relaunches. Some categories within Cake like Brownie have been doing really well.

"Overall, we have covered most of our inflation in—through our price increases. We are done with that, and we are in a good position today to be able to take this forward in a stable and way," said Berry.

According to Berry, the company has also been able to create a war chest for themselves to be able to spend in specific territories, specific states, against specific players. "We are going to fight many battles in smaller territories and we are doing a specific analysis on each one of these competitors," he said.

"Basic supply-demand construct of the commodities have been factored in, and that's why we feel that price outlook should be quite stable in terms of commodities," said Manoj Balgi, Chief Manufacturing and Procurement Officer at Britannia.