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 into venture.
The deal will bolster and unlock further synergies in Britannia’s go-to-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, such as bread and dahi fall into another. The company’s distribution was fragmented till some time back, with all the business units approaching the trade separately. The mainstay biscuits, non-biscuit bakery (breads, cakes & rusks) and dairy constitute three strategic business units within the Rs 3,000 crore company.
The distribution has been streamlined into two verticals, with the fresh consumption products like bread and curd forming one and remaining products going to the market under a separate vertical. Britannia has also tweaked its brand strategy to accommodate the fresh consumption products under a newly-scripted Britannia Daily Fresh umbrella. Dairy JV was reporting a turnover of Rs 200 crore and an annualized growth of 15-18%. The JV, which had turned profitable in recent years, has accumulated losses of around Rs 38 crore.