Life changed on a dime in 2020 and the two years since then have been anything but normal. The impact of the Covid-19 pandemic prompted people to reassess and rethink priorities and pushed many brands and businesses to accelerate efforts to align with the new bottom-line - People, Planet, Profits. The global public health crisis has generated a deeper sense of urgency in ramping up efforts in areas like sustainability to tackle other major crises like climate change and the plastic menace. Today sustainability is an important piece for any responsible organisation striving for financial success.
In an interview with Storyboard18, Varun Berry, managing director, Britannia Industries Limited, sheds light on the foods major’s sustainability journey and strategy that’s based on four pillars - Growth (Economic), Resources (Environment), People (Social), and Governance, the challenges to putting it in action and the communication conundrum when it comes to purpose-driven advertising.
Edited for length and clarity.
As sustainability becomes a key consideration for any responsible business today, tell us what it means to you and to Britannia in the current context?
We've got a very clear framework that we look at for sustainability. It covers growth, governance, resources and people. Sustainability has been important for us for a long time, but we haven't put it in a framework. We haven't really published a report on sustainability till now. But we've been working very hard for many years on these parameters.
Sustainability is a driver of competitive advantage for most companies. It definitely opens up new areas of growth and improves operational efficiency and it strengthens the internal and external relationships of our organisation and our people. However, the problem with sustainability is that you want to get it very well set within the organisation, otherwise it becomes a bit of a challenge.
While sustainability is an essential operating principle for companies striving for financial success, what are the challenges to putting it in action, in your view?
We have to ensure that there is coherence in what we are going to do as far as sustainability is concerned. So there has to be long term metrics which are defined, versus your short term KPIs that you work on, in any case. The balance between the long and the short is certainly one challenge.
The other is that it has to be culturally very well ingrained into the organisation so that everyone wants to perform on the sustainability indexes. The third challenge is that it's a very dynamic area because there are things which are changing including the requirements from the government. So we have to keep on top of what is the latest on sustainability, what are the technologies, what are the regulations, and make sure that we continue to focus on those and get as far as possible within the organisation.
How have the impacts of the pandemic affected and informed Britannia’s sustainability strategy?
A key area that got accelerated during the pandemic is the focus that we have on community and nutrition. Child malnutrition is a chronic problem in India. One in every three children is affected due to malnutrition. 52% of pregnant women are anaemic. This crisis has created income issues that have exacerbated the problem. So we accelerated that agenda during this time and we tried to have as many beneficiaries out of that. Today, we have almost 100,000 beneficiaries across 1400 villages in the country.
How have you seen large corporations’ view on connections between bottom-lines and sustainability change over time?
It's not just about working towards the betterment of the world, but in the long term sustainability initiatives will give you benefits on the bottom line as well. Our renewable energy agenda has given us great benefits on the bottom line as well. We've got some cost efficiencies for our businesses. But it takes time. It means investments to be made and thereafter it takes time for them to be stabilised. So that's why the balance between the long term and the short term is very important.
The past decade has seen a spectacular rise of conscious consumers and purpose-driven brands. Keeping that in mind, is there an opportunity in taking your sustainability agenda and presenting it to the consumer in marketing communications?
We have a challenge on that front. We are in a part of food which is the cheapest form of food. If you look at Maslow's hierarchy of needs, we are at the lowest level. We are at the bhook-pyaas level.
Biscuits are less than Rs 100 a kilo. Glucose biscuits are as low as Rs 80 a kilo. So, it's important for us to balance between cost, taste and quality because it's not a superficial, just on the edges kind of a category either, right? People consume biscuits throughout the day. People across income levels consume biscuits.
So that balance is one part which we have to protect. We cannot take the prices up because then it doesn't meet our objectives of getting consumers to have nutrition at the lowest price possible. But at the same time, we have to make sure that we get the right efficiencies, we get the right sustainability happening for our products without challenging the structural safety of our packaging, etc. So, that's one challenge for us.
We haven't been front and centre of communicating that we are organic, gluten free, vegan, etc. We haven't been able to do that. But it's a matter of time, as things change. We will obviously have a very broad base at the base of the pyramid which will be very large. But we'll also build products which are at the top of the pyramid which are made from whatever the top end of consumers want and that's when our communication will change.
Now, the fact that we do renewable energy and are taking out plastics, we don't think that we need to communicate this. We’re doing it because it's right for the world and because that's something that we had gone wrong on and we are correcting that as we move forward.
But I'm seeing a lot of brands talking about what is necessary, what consumers need to do and what they do for the consumers in terms of sustainability. We are underplaying that at this point in time.
As far as whatever we do, we don't want to really tom-tom it at this point in time. It's worth doing. It's not worth advertising.
It’s also important to get consumers along on the journey toward a more sustainable future. How can brands do that?
The good news is that millennials and Gen Z consumers are highly focused on sustainability. And as Gen Z consumers become a larger part of the population, things will change. Mass awareness about sustainability is increasing. It's not just investors, it's even customers, employees and job seekers who are subjecting companies to a lens of sustainability.
Research indicates that 72% of Indian consumers in the age group of 25 to 35 prefer buying sustainably produced products and 77% of millennials prefer to work in companies with a sustainability focus. At Britannia, we have this group of young managers we created for the purpose of innovation. We wanted to look at what these young managers would like as products in the future. So we created this group and we keep getting similar feedback from them. They like what they see in Britannia, and because they are insiders they know exactly what we are doing. That helps them stay with us.
It's very important that we keep an eye on these young consumers because they are going to change the world.
What's your outlook for 2022? What are the big areas of concern and the key opportunities that you see?
I’m cautiously optimistic about the growth prospects in 2022. Clearly, economic activity is on a recovery path. The GDP growth of 8.4% in July - September, while it's on a low base, is a robust number. Consumption is improving for FMCG, especially food companies. The challenge really is inflationary trends.
The inflationary winds have been very strong. We've seen inflation in every raw material that we use and more so in oil. We do need to mitigate this as we go forward, otherwise, while the revenue growth will happen, it will certainly impact volume growths.
We've seen decent growth in the last two years as well. We are continuing to focus on improving our penetration down the pop strata and we are looking at expansion plans and new capacities.
I do think that the country has done what was necessary and the vaccination drive has been going well. However, new strains are looming large. But hopefully, that will also be in the past. So let's hope for the best.
(Edited by : Priyanka Deshpande)
First Published: Jan 5, 2022 7:25 PM IST
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