Britannia Expects Half Of Its Sales From Rural Markets In Next 3-4 Years, Says MD Varun Berry

Britannia expects half of its domestic sales to come from rural markets in the next 3 to 4 years, as it is expanding its distribution network to increase its presence in those regions with aspirational buying preferences, said its Vice Chairman and Managing Director Varun Berry.

The rural market is 'very important' for Britannia, where the maker of Good Day, Marie Gold, and Tiger biscuits reported growth in double-digits in the latest April-June quarter, and is now amplifying reach through direct distribution to have a 'continuous stream' of products being available in those far-flung markets, he added.

Britannia, which was an urban-centric company, now gets around 40% of its sales from rural markets, Berry said, adding that rural is now growing ahead of urban markets, and this trend is expected to continue.

"Our split between urban and rural was something like 75% and 25%. Now, we have gotten to a 60-40 split. It is still in favour of urban, but slowly, steadily, we have grown the rural markets much faster than the urban markets, and this will continue," Berry told PTI.

Ideally, Britannia should be 'getting close to a 50-50 split' because there is 'potential for consumption, distribution', and it would like to make sure that it becomes strong in the rural markets as well.

When asked about the time frame, Berry said: 'Maybe 3 to 4 years'.

Britannia Industries Ltd's standalone revenue from operations, which consists of domestic revenue, was Rs 17,295.92 crore in FY25.

According to Berry, now the rural consumer has absolutely the same aspirations as an urban consumer.

"They also want smartphones. They want to consume the best biscuits. Now, they might not consume it all the time, but these biscuits are still a part of their repertoire," he said.

Britannia operates in a category that has 100% penetration, and its products must be within arm's reach of consumers.

Stressing the need for expansion of the distribution reach, he said the company gets into several small markets as villages with less than 3,000 population because of its brand strength and not because of being able to reach there.

"Now, the objective is that how do we look at a very viable way of getting to these villages through our own distribution, so that we do not have to depend on wholesalers or people in between who are taking our brands there, but we can have a continuous stream of our products being available in these outlets and that is why we have been expanding our rural distribution," he said.

Currently, Britannia directly reaches approximately three million retail outlets across India and is likely to expand that by about 1,00,000 outlets every year.

About the urban market, Berry said consumption has been impacted because of several factors, as the real estate prices are going through the roof, rentals are becoming more expensive, and with that, there has been a little bit of pinch on the pocket, and people have tried to conserve cash on some of the categories they consume.

However, he hoped 'these sweeping GST changes will give them some kind of relief, which will certainly help them in fulfilling whatever is the tightness in their pocket'.

Britannia had reported a 'very high single-digit' growth from the urban market, supported by general trade (traditional Kirana stores), modern trade (retail chains) and e-commerce platforms.

When asked about the competition between retail channels - quick commerce and general trade, Berry said there is a 'conflict for sure' in the urban markets, especially in the large cities. These hyper-local delivery apps are a 'great platform' to get products available.

However, he said, like small FMCG companies, Britannia is not dependent on e-com or Q-Com and has its own distribution muscle.

"We have to get to more and more outlets, and if we need to support Q-Com in terms of larger pack sizes, differentiated products, etc, we continue to do that. But that's not what is going to give us a leg up in the future because Q-Com and e-Com are still only 4% of our total revenue. 96% of our revenue is coming out of our distribution muscle," he said.