Britannia to raise prices, cut packaging amid rising input costs
What's the story
Britannia Industries, India's leading biscuit manufacturer, has announced plans for selective price hikes and grammage cuts this quarter. The move comes as a response to the rising costs of palm oil, laminates, fuel, and freight due to the ongoing West Asia conflict. The company's Managing Director and CEO, Rakshit Hargave, revealed these details during an earnings call with analysts on May 8.
Financial results
Britannia reports 21% rise in consolidated net profit
Britannia reported a 21% increase in its consolidated net profit for the fourth quarter. However, the revenue growth of 7.1% to ₹4,686 crore fell short of analysts' expectations, affecting investor sentiment. The company's EBITDA margin stood at 18.2%, a decline of 20 basis points year-on-year (YoY) and 186 basis points sequentially. Following these disclosures, Britannia's shares fell by over 4% on the National Stock Exchange (NSE).
Price adjustments
Calibrated price increases initiated
Hargave said, "We obviously will need to take some mitigation measures, and we have initiated calibrated price increases starting from this quarter." He added that these measures include grammage adjustments and price hikes on certain packs above ₹10. Despite the minor price increase, he assured that demand would remain fairly strong.
Global impact
Price hikes planned for international markets
Britannia's international business revenue and profitability were affected in the last quarter due to vessel unavailability and a demand slowdown in those markets. Hargave said the company will hike prices in international markets from Q1 FY27. He also revealed plans to optimize sourcing between India and overseas manufacturing facilities, with full operations expected by mid-May.
Channel impact
Impact of dual pricing disruption on B2B wholesale channel
The "dual pricing" disruption during the GST transition mainly impacted Britannia's B2B wholesale and rural channels, contributing around 25% to the company's business. Hargave said, "We have a gatekeeper effect in the B2B wholesale segment, which is impacted by this entire GST transition and dual pricing." He added that while there was some pressure from this issue, consumer confidence in retail remains strong.