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There is so much room to grow in India: Jeff van der Eems, CEO, United Biscuits


There's so much room to grow in India: Jeff van der Eems, CEO, United Biscuits

By Ratna Bhushan, ET Bureau | 4 Nov, 2013

United Biscuits' international CEO says the company is in no hurry to enter India's rural markets or bring in other brands.United Biscuits' international CEO says the company is in no hurry to enter India's rural markets or bring in other brands.

United Biscuits, the world's fourth-largest biscuits maker, is focusing on revenue growth in India rather than chasing market share, the UK firm's international CEO Jeff van der Eems says. India is already the biggest market in Asia for the maker of McVitie's digestive biscuits, just three yeas after its entry. Eems, who is in the country on a market visit, however, says it's tough to stand up against rivals such as Parle, ITC and Britannia. ET caught up with the former investment banker who oversees the 1.2-billion-pound United Biscuits' operations in more than 100 countries for an interview. Edited excerpts:

Biscuit is becoming an increasingly crowded category. What are you doing to differentiate in the market?

We invented the digestive category. But now there are so many choices here that it's hard to stand up in the midst of them. We're competing with Parle, BritanniaBSE 1.20 %, ITC, confectionery...anything that's a sweet treat. Our job is to pull the right levers. Our team here has been working very hard at merchandising. We're slowly building consumer preference. Advertising has worked for us. Biscuit is more competitive than most food categories. But we're finding that consumers are accepting new products faster. Digestive is still less than 1% in India, but the good news is that the category exists in every single market.

There has been a slowdown in overall consumer demand. How much has it impacted your company?

Biscuit is a resilient category; it grows despite consumption slowing down. Companies are giving consumers better choices and more reasons to buy them. Biscuit sales in volumes consistently beat economic growth rate by 4-5%. It's the largest category in food. Even in slowdown, we've been growing 3-3.5% incrementally. People in Europe - and I'm sure in many countries including yours - start cutting higher-end FMCG spends in slowdown, but consumption of biscuits remains universal. We're growing in value and volume consistently. The focus is on revenue growth and we're growing in high double digits, well over 50%. If our revenue growth is strong enough, we have enough steam to accelerate growth.

Why does United Biscuits still have only one brand in the country despite being here for over three years?

McVitie's digestive biscuit remains the heart of our portfolio...there's so much room to grow here. But we have rolled out sub-brands under variants like digestive creams and bourbons and we're testing a 'no added sugar' variant. In many markets, we sell brands like Jacob's crackers and Twiglets snacks. Here, first, we need the scale to go into many more stores.

Despite being a core tobacco company, ITC is rapidly nibbling away share in food categories like biscuits. Your comments?

Looking at shelves, they've fared very well. Product innovation is a hit and miss, and ITC has probably had more hits than misses. They've done a very good job with Dark Fantasy (ITC's premium biscuit).

Do you have plans to expand into rural India?

Yours is a very large country and we're relatively new. We're going to stick to a dense urban population range till we're confident of penetrating distribution deeper. We can't go too far too fast. There's so much growth to go after in urban markets.

Has modern trade played a role in McVitie's India journey?

Very much so. We've observed that consumers spend more time in the biscuit aisle and that's where new brands like ours elbow our way in. Within digestives, in modern trade, McVitie's has 40% share and in general trade our share is 25%.

A lot of global food companies are talking of low-cost nutrition as a key focus area. What about UB?

We're already there - biscuits are inherently low-priced and can be nutritious. We are fortifying products from country to country...we believe it's a market-specific thing. In Nigeria, we have a product called Happy Faces - an enriched biscuit for kids. In India, our core product is already a cereal-based, whole-wheat biscuit. We're not doing bottom-of-pyramid kind of fortification here yet. That's in line with the stage of our business in the country.

Is your India arm profitable?

We're still in investment mode. Our sales have crossed 100 crore within three-and-half years. I think that's very good. We're not highly leveraged...we have a good balance sheet. India is a strategic market, our largest in Asia.

Are you considering acquisitions?

We've reached a scale when we can look at acquisitions. If buyouts can accelerate key market growth, we're open.

What do you think governments can do to spur consumption?

Driving low inflation, building infrastructure and speedy approval of projects can drive consistent economic growth and facilitate fresh investments.

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