Britannia to buy stake in Snacko Bisc

Mumbai: Britannia Industries, the biscuits and dairy products company, has agreed in principle to acquire a 49 per cent stake in Snacko Bisc (with the Nutrine trademark) and several other trademarks along with copyrights and designs. Reportedly, the acquisition, which will be completed by 2001 end, would cost the company around Rs 8-10 crore, but the amount is yet to be confirmed.

Britannia Industries has also reached an agreement with the New Zealand Dairy Board (NZDB) to set up a joint venture in India with its New Zealand Milk Division (Fonterra Cooperative Group's consumer products division), in which both the entities will hold 49 per cent stake each while the balance 2 per cent stake will be held by business associates.

This essentially means that the dairy business of Britannia, which accounts for around 13 per cent of its Rs 1,332-crore turnover, will be hived off into the joint venture. According to Britannia officials, the venture will use Britannia's current “co-packers, distribution and marketing network.“

Britannia has chosen NZDB as its strategic partner because it will provide the necessary research and development support as well as international experience to Britannia in the dairy field. The sources said NZDB has a strategic tie-up with several global FMCG companies.

Britannia had diversified into dairy products in 1997 and is present in the cheese, dairy whitener, butter, ghee, liquid milk and flavoured milk segments under the Britannia Milkman brand name. The dairy business of Britannia now accounts for about Rs 165 crore.

During the year 2000-01, the company had acquired the Kwality trademark and other trademarks owned by Kwality Biscuits along with copyrights and designs in labels and packaging materials for Rs 30 crore. The company had also agreed “in-principle“ to acquire a 49 per cent stake of Kwality Biscuits. This transaction may be completed in 2001-02.

Britannia has, in recent years, revamped its corporate image and marketing strategy and introduced a number of new biscuits brands to cater to various segments. Its main brands include: Tiger, 50:50, Mariegold, Bourbon, Pure Magic, Nice, Milk Bikis, Little Hearts, Glucose D and Circus.

Analysts say Britannia's proposed acquisition of Snacko Bisc comes in the wake of the competition posed by the multinational Hindustan Lever, which has also forayed into  the biscuit market. The acquisition will also help Britannia gain a major toehold in the southern market where it does not have a major presence. Snacko's distribution network in the south will thus be utilised to sell Britannia's products. Britannia is a leader in the Rs 4,000-crore biscuits market with a share of about 15 per cent.