Britannia biscuits will be expensiveImage Credit source: ai generated
If starting your morning is incomplete without tea and biscuits, then now you may have to increase your budget. The impact of the ongoing tension in West Asia (Middle East) is no longer limited to international level concerns only, but its heat has reached your kitchen. The country's largest biscuit manufacturing company, Britannia Industries, has taken an important decision to increase the prices of its products and reduce the weight of the packets.
Britannia Managing Director and CEO Rakshit Hargway has clarified in the earnings call with investors that the company is going to gradually increase the prices from this quarter. This simply means that packets of biscuits costing more than Rs 10 will now become more expensive. At the same time, without increasing the prices of small priced packets, the quantity (grammage) of biscuits available in them will be reduced. Actually, the decision has come after the recent financial results of the company. Britannia's net profit increased by 21 percent in the fourth quarter, but the revenue (Rs 4,686 crore) did not meet the expectations of market experts. Due to this, a decline of more than 4 percent was recorded in the company's shares in the stock market and the shares came to Rs 5,571.
It is natural to raise the question that why the prices of biscuits are increasing in India due to the ongoing war across the seven seas. In fact, the cost of palm oil used in making biscuits, laminates for packaging, fuel and freight has increased rapidly. Due to tensions in West Asia, the international supply chain has been disrupted, due to which the cost of transportation and raw materials has increased. Although wheat prices have softened slightly, the heavy pressure on total costs is challenging the company's profits. According to CEO Hargrave, the company has already finalized palm oil deals for the next five months, protecting them from any sudden financial shock. But to protect their margins in the long run, they have to take this drastic step.
The negative impact of war is not limited to India only. Britannia's international business was also affected due to the halt in movement of ships in the Strait of Hormuz in the month of March. Due to shortage of cargo ships, the company was not able to send its products abroad, which hurt its foreign revenue and profits. To deal with this challenge, Britannia is also going to increase prices in international markets from the first quarter of financial year 2027. Apart from this, the manufacturing which was shifted to Oman due to tariffs to meet the demand of North America, is now gradually being brought back to Mundra Port (Gujarat) in India so that the supply chain can be improved.
About 60-65 percent of Britannia's total sales come from affordable packets of Rs 5 and Rs 10. Recently, during the GST transition, a strange situation was created in the market. Some competing companies started selling their products at Rs 4.50 and Rs 9 instead of Rs 5 and Rs 10. Due to this, shopkeepers in wholesale and rural markets (which constitute 25 percent of the total business) in the greed of higher margins stocked more goods of other companies.
The result was that the pace of sales of Britannia slowed down a bit. However, the company kept its prices stable. The management is confident that Britannia's rural sales will pick up again as soon as other companies return to their normal Rs 5 and Rs 10 prices. The company's e-commerce and urban retail businesses are still registering impressive growth.
