Relying on buying dozens of brands for $6.5 billion in consumer goods: report

Mumbai:

India’s largest retailer Reliance will acquire dozens of small grocery and non-food brands, two sources familiar with the plan told Reuters, with the goal of building its own $6.5 billion consumer goods business to challenge foreign giants such as Unilever.

Reliance, run by Indian billionaire Mukesh Ambani, plans to build a portfolio of 50 to 60 grocery, home and personal care brands within six months and is hiring a distribution team. Merchant teams, bringing them to mom-and-pop stores and larger retail stores everywhere. The source added that the state.

Consumer goods driven in a vertical called Reliance Retail Consumer Brands will be the largest in the world on top of Ambani’s brick-and-mortar network of more than 2,000 grocery stores and the continued expansion of the “JioMart” e-commerce business in India’s nearly $900 billion retail market one of the.

The first source familiar with its business plans said Reliance was in final talks with about 30 popular niche local consumer brands to buy them outright or form joint-venture sales partnerships.

The company’s planned total investment spending for the brands it plans to acquire is unclear, but a second source said Reliance has set a target of 500 billion rupees ($6.5 billion) in annual sales for the business within five years.

“Reliance will be the home of the brand. It’s an inorganic drama,” the person said.

Reliance did not respond to a request for comment.

With the new business plan, Reliance is looking to challenge some of the world’s largest consumer groups such as Nestlé, Unilever, Pepsi and Coca-Cola, which have been operating in India for decades, sources said.

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However, it’s a tall order to beat well-known foreign companies with their own manufacturing plants in India and thousands of distributors who sell their world-renowned products like Pond’s creams or Maggi noodles in a vast country of 1.4 billion people. Task.

Unilever’s India unit reported sales of $6.5 billion in the fiscal year ended March 2022 and said nine out of 10 Indian households use at least one of its brands.

“Well-known brands have quite a lot of brand value, so it’s hard to compete with them,” said Alok Shah, a consumer analyst at India’s Ambit Capital.

“If Reliance goes to inorganic, they will be able to scale faster. But they need to gain pricing and distribution rights to compete with bigger competitors.”

Hiring, Product Category

A leader in retail, Reliance still generates most of its consumer goods revenue by selling or distributing other competitors’ products at its own supermarket and mom-and-pop partners.

The second source said Reliance did develop some so-called private labels, hiring contract to produce cola drinks and noodle packs to sell in its own retail network, but the business had annual sales of only Rs 350 crore ( $450 million). .

Foreign companies are already uneasy about Reliance’s supermarket strategy, with its private competing for shelf space with brands from global rivals, Reuters reported last year.

Reliance’s new consumer product push targets deals with popular Indian brands.

Among the brands in talks for a takeover or potential joint venture is Sosyo, the soft drink brand of the nearly 100-year-old Indian company Hajoori in the western state of Gujarat, according to one of the sources. Popular for its flavored beverages.

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“We do not comment on speculation,” Aliasgar Abbas Hajoori, the company’s director, said in a statement.

The LinkedIn profile reveals how Reliance is slowly ramping up efforts to expand its consumer business. In recent weeks, it has hired executives from companies Danone and Kellogg for control and sales.

A LinkedIn job ad for Reliance said it has targeted staples, personal care, beverages and chocolate as initial launch categories and is hiring mid-level sales managers for more than 100 cities and small towns.

One of the executives’ main tasks is to appoint and manage merchants, the ad said.

(Apart from the title, this story was unedited by NDTV staff and was posted from a syndicated feed.)


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