Britannia pads up for surge in demand post GST reset

BENGALURU: Britannia Industries is gearing up for a "lull before the storm", as described by executive vice chairman and MD Varun Berry, ahead of a renewed push for volume-led growth amid stabilising GST rates and improving demand.

The company expects growth to accelerate from the Dec quarter, with Berry indicating that organised players like Britannia are poised to gain market share as smaller regional rivals lose pricing leverage under the new tax regime. Berry quantified that the GST transition in late Sept dented revenue by 2%-2.5% in the second quarter, with the impact concentrated in the final month, as 85% of Britannia's portfolio moved to lower GST slabs.

"By mid-Nov, the impact will fully normalise," he told analysts on Friday. The company is banking on grammage increases in Rs 5 and Rs 10 packs, rural-led consumption, and sharper regional pricing strategies to drive recovery.

Berry said the shift in GST from 18% to 5% reduced the arbitrage that allowed smaller local players to evade compliance and compete on price. "Market share gains will move toward organised players," he said, calling GST 2.0 a "structural change for the food industry."

Berry added that the company is prepared to trade some margin to drive consumption. "If we have to get aggressive top-line growth, then we might have to look at a slight haircut as far as margins are concerned," he said. Gross margins stabilised as input prices for wheat, sugar, and palm oil remained within manageable ranges.Berry also confirmed that newly-appointed CEO Rakshit Hargave, who joins in Dec, will take full operational charge.

"He will handle the entire business. My job will be to help him wherever he needs any help, to run him in and make sure he settles down well," Berry said, clarifying there will be no split portfolios between them during the transition. He added that demand is expected to improve and reach double-digit growth "in due course," helped by the GST-led grammage increase and better consumer sentiment in foods. Pricing growth in Q2 stood at 7-8%, but pricing will moderate as the company shifts focus to driving volumes. Rural consumption continues to outpace urban demand, and Britannia plans to deepen its direct distribution in villages.The company is also rolling out region-specific products and recipes.