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INDIA BUSINESS WORLD - 16th April To 30th April - 2009
BRITANNIA BUYS OUT NEW ZEALAND’S FONTERRA FROM AN EXISTING DAIRY JOINT VENTURE, BRITANNIA NEW ZEALAND FOODS
NUSLI Wadia-controlled Britannia Industries has agreed to buy out New Zealand’s Fonterra from an existing dairy joint venture, Britannia New Zealand Foods. Both Britannia and Fonterra, one of the world’s biggest milk co-operatives, agreed to call off the 51:49 JV with the acquirer assuming the cumulative losses and the exiting foreign partner writing down the investments made in the venture.
The deal will bolster and unlock further synergies in Britannia’s goto-market strategy. The company in recent months brought biscuits, cakes & rusks and dairy products like cheese, butter, ghee and dairy whitener under one distribution vertical, while the ‘daily fresh’ products like bread and dahi fall into another. The company’s distribution, till recently, was fragmented with all the business units approaching the trade separately.
The mainstay biscuits, nonbiscuit bakery (breads, cakes & rusks) and dairy form three strategic business units within the Rs 3,000-crore company.
“We have a single go-to-market strategy for Britannia as far as possible, which is helping us, especially with the modern trade. The distribution has been streamlined into two verticals with fresh consumption products like bread and dahi forming one, and rest of the products going to the market under a separate vertical,” Britannia Industries MD Vinita Bali said.
In fact, Britannia has tweaked its brand strategy to accommodate the fresh consumption products under a newly scripted Britannia Daily Fresh umbrella.
Ms Bali said the dairy JV was reporting a turnover of Rs 200 crore with 15-18% annualized growth. The JV, which had turned profitable in recent years, has accumulated losses of Rs 38 crore. “We will be taking over the P/L of the JV and so the losses,” she added. Britannia will ramp up its presence in the dairy space through new product offerings following the acquisition of the Fonterra stake, Ms Bali said.
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