Britannia braces for slow-burn recovery as MD Varun Berry rules out ‘hockey stick’ demand rebound

Even as Britannia Industries clocked a modest 9% year-on-year revenue growth in the March quarter of FY25, the company isn’t expecting a dramatic rebound in demand. The outlook for FY26 remains one of cautious optimism, with the company anticipating a slow and steady recovery in both revenue and volume, rather than a sharp acceleration.

While the demand revival will be a steady journey up, “It's not going to be a hockey stick, we have seen gradual recovery, and I do think that this trend is going to continue through financial year 2025-26 (FY26) as well,” said Varun Berry, executive vice-chairman and MD, Britannia Industries during a post-results analysts’ call. He said that while some signs of revival are visible, any sharp uptick remains unlikely given the macroeconomic environment and volatility in input costs.

Britannia’s Q4FY25 net profit rose 4% year-on-year, even as the company continued to deal with inflation in key commodities like wheat, cocoa, palm oil and milk. Berry said the company undertook 5-6% price hikes in recent months to absorb some of the inflationary pressure. “We are hoping that we will be able to grow revenue and volumes. Obviously, there will be a delta because we have taken a pretty high price increase in the last quarter,” he said. Some additional hikes are also expected in the first two months of Q1FY26, but further revisions will be assessed based on how trends evolve during the quarter.

“There will be some remnants of the price increase, which will move into the first two months of Q1, but thereafter, I think the way the commodity situation looks, it might not be necessary to take pricing beyond that,” Berry said. However, he cautioned that erratic weather—already visible in parts of the country with unseasonal rains—could once again push up commodity prices. The Indian Meteorological Department has forecast an early onset of monsoons this year.

Wheat, one of Britannia’s key raw materials, has remained elevated despite better yields. “Wheat prices have gone up because the minimum support price has been increased by 7% this year,” Berry said. Prices of other inputs such as cocoa, palm oil and milk have also surged 83%, 54% and 21%, respectively, over the previous year.

Despite these pressures, the company remains focused on margin protection and growth, both organic and through adjacencies. “We will be necessitated to take slightly more price increases to make sure that we deal with the inflation which comes in to protect margins,” Berry added.

Britannia’s product diversification appears to be paying off, with non-biscuit categories such as cakes, croissants, milkshakes, and cheese becoming key revenue drivers. Each of these categories has now crossed Rs 200 crore in revenue. The relaunch of cheese, in particular, has been a strong contributor, with traditional trade sales growing over 40%.

Looking ahead, Berry said the company will continue to focus on expanding its distribution reach, especially in rural areas. Currently, Britannia directly reaches 3 million outlets out of a total of 6.5 million, and aims to grow both the depth and width of its rural presence. Rural areas account for about one-third of the company’s total sales.

Quick commerce is another fast-growing channel for the company. “It’s growing rapidly, and we expect the share of quick commerce in our overall sales to double from 4% to 8% in the next three years,” Berry said.

The company is also wary of smaller players potentially cutting prices to capture market share. “We are watching the competitive intensity carefully. There’s always a possibility of pricing action by smaller rivals,” said Berry.

On the leadership front, the MD—who recently took over as interim CEO after Rajneet Kohli’s exit in March—said the company will soon make a new appointment to fill the statutory CEO position. “Succession planning is under process. It will be clear to you in 3-4 months with regard to the new appointment,” he told investors.

Meanwhile, Britannia continues to leverage its decade-long cost-efficiency programme, which Berry said has delivered nine times return since its base year in FY14. These savings are expected to be a key lever to navigate the inflationary environment in the near term.