Fortunately for Bali, the head of one of India's largest food companies, Britannia Industries, the two are rarely in direct competition. But her point is, she says, that in a financial crisis consumers will dial back on luxuries in favour of necessities. "Research has shown that when the economy is in a recession, consumers change their habits."Luckily for Britannia then, it derives some 90 percent of its revenue from biscuits; a food-stuff that - thanks to its modest price-tag - has proved remarkably recession-proof."Given the low unit price of products that we sell, especially things like cakes and cream biscuits, which are seen to be a little more indulgent, consumers often say; ‘I am cutting on everything I don't need to cut down on the cream biscuit or cookie they used to buy'."With a market cap of $840.2m (38.8bn rupees), Britannia is one of India's most prominent food companies, with ambitions of replicating that success around the world. As a result, while rival companies have rushed to trim their overheads in the downturn, Britannia has spread its wings. Bali, who has held the reins since January 2005, is here in Dubai to push the firm's local interests.For the Britannia CEO - who recently took the top spot in a Business Today's list of ‘The 25 Most Powerful Women in Indian Business' - the Middle East, with its giant expat Indian population, is a natural fit."In 2007 when we were looking at markets to extend and expand in, the Middle East was quite an attractive proposition because of all the demographic and socio-graphics associated with it," she says."This is an area with a young population, lots of money - or so everybody believed. A lot of the products we were doing in India were relevant to this market."And Britannia has been quick to back its faith with cash."Our investment of over AED75m in the region in the two years since we've expanded here shows our commitment and dedication," she says. "The UAE is particularly significant for us given the progress it has enjoyed over the last decade."According to Bali, the UAE's biscuit market is worth an estimated AED500m a year.
Around a fifth of all biscuits bought in the GCC are eaten in the UAE and its residents gorge through an average of 6kg of biscuits and wafers per capita each year.In a bid to tap into this demographic, Britannia in 2007 acquired a stake in two GCC biscuit and wafer companies, UAE-based Strategic Food International Co (SFIC) and Oman-based Al Sallan Food Industries Co.SFIC's annual revenue tops AED2.57bn and the firm boasts an approximately 14.5 percent share of the UAE market. Britannia has said it plans to more than double that in the next few years - no easy task in the context of the current global recession and the drop in consumer spending.For Bali, the chief challenges are two-fold: namely, decreasing demand and the rising price of commodities. The price of sugar, for example, has risen more than 90 percent in the last year alone."
This is a challenging time for us; there is no doubt about that," she admits. "The whole global economy has an impact everywhere - especially in the UAE and specifically in Dubai, where a lot of people have simply vanished because the jobs have vanished."Still, Bali remains bullish on the region's potential, investing AED4m to revamp and relaunch SFIC's flagship Nutro label, which sells a variety of biscuit and wafer products.In total, 50 products under the Nutro label have had their recipes updated. Internationally-acclaimed designer Jane Thorn, who has previously worked with Sainsbury's and Heinz, was brought in to give the packaging and branding a facelift."We have done a lot of promotional activity," says Bali. "At a time like this everybody is looking at what is the best offering. Several of our large brands have seen a combination of sampling and promotions and are driving better value from a consumer point of view, as opposed to other available alternatives."In-store product sampling and advertising has also produced a good return for the company. Following more than 125 sampling sessions over seven weekends in major outlets in the UAE this summer, sales of Britannia's products in these outlets grew by nearly 300 percent. It may be a recession but it seems the fundamental laws of marketing haven't changed.
more on
Rule Britannia - Travel & Hospitality - ArabianBusiness.com
