Indian businesses optimistic amid global recession concerns: Britannia

Indian Businesses are optimistic about demand conditions despite apprehensions about a global recession, though challenges from a shortfall in monsoon due to 'El Nino' conditions still persist, according to Britannia Industries.

The trajectory of inflation during FY24 would depend on a host of domestic and global factors, said Britannia Industries in its latest annual report. It said, "The outlook for food prices and rural growth would depend significantly on climatic factors and the adequacy of monsoon rainfall". A shortfall in monsoon due to 'El Nino' conditions will impact rural consumption and the Indian economy as a whole.

"Availability and prices of input materials like wheat, sugar, milk, and edible oil could be affected, thereby posing severe risks to business growth," it said.

As per the company, the maker of Good Day, Tiger, NutriChoice, Milk Bikis, and Marie Gold, the price of milk is expected to remain high amid high input costs and robust demand.

"Prices of other essential inputs like wheat, sugar, edible oil, and fuel continue to be subject to high uncertainty. However, it is expected that a good crop would help keep prices in check and strengthen rural demand," the company said.

The government's thrust on capital expenditure, manufacturing in the private sector, and service activity should also support income generation and boost economic activities.

"Despite the challenges of inflation, commodity volatility, and intense competition, your company expects to continue its good performance on the strength of its resourceful and hardworking employees, strong brands, innovative products, cost efficiency programmes and large distribution network. These factors would continue to fuel further growth and expansion during these turbulent times," it said.

Challenges in the food industry 

In FY23, the major challenge confronting the food industry was managing inflation in the cost of key commodities like wheat, milk, sugar, palm oil and crude oil, all of which were trading at multi-year high prices, said Britannia.

However, it successfully navigated these challenging circumstances through focused efforts, cost-efficiency programmes, brand marketing, and timely price increases, it said.

Britannia said that for the biscuit sector's household penetration, the potential for growth in the category is huge.

"The per capita consumption of biscuits in India continues to lag behind the levels seen in developed countries. The possibilities for increasing consumption through innovative, healthy, and superior offerings in this category are numerous, which augurs well for your company in view of the established brands and capabilities," it added.

Similarly, for cake, which, like biscuits, is not well penetrated, there exists a significant opportunity to expand, but high commodity inflation and the concentration of innovation at entry-level price points remain a primary challenge for the category.

In bread, there are significant opportunities in newer geographies, but increasing competition and continued inflation in key commodities pose challenges to the company's business said Britannia Industries. 

(With PTI inputs)