Britannia CEO says Reliance will struggle to disrupt India's biscuit pricing

what happened

Britannia Industries CEO Rakshit Hargave said Reliance Industries, controlled by Mukesh Ambani, will find it harder to disrupt the biscuit category than soft drinks. He noted that many existing products already sell for 5 to 10 rupees, or 5-10 US cents.

On Monday Reliance widened its biscuit range under the Independence brand in Tamil Nadu, with packs starting at 5 rupees. Days earlier it had named the segment a focus category of its consumer business. The company earlier relaunched the Campa soft drinks brand and started a price war with Coca-Cola and PepsiCo.

Hargave said Britannia is watching the competition closely, since Reliance's biscuits copy existing products. Tiger Consulting founder A. Manikandan agreed, saying there is little room for aggressive cuts at 5 and 10 rupees without hurting profitability. Britannia also plans further price increases and smaller packs to offset higher costs linked to the Middle East war. It raised prices 3.5% in the second quarter and reduced pack sizes in the first, according to Reuters.

why it matters

For investors the story signals margin pressure in India's consumer goods sector. Higher costs for wheat flour, palm oil and sugar push producers to raise prices and shrink packs, while price competition in the cheapest segment limits their room to manoeuvre.

market impact

Britannia and Reliance: price competition in biscuits weighs on producers' margins

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