Exclusive: India’s Reliance Acquires Dozens of Brands in $6.5 Billion FMCG Market

Customers buy groceries inside a supermarket of Reliance Industries Ltd, in Mumbai, India, October 7, 2020. REUTERS/Niharika Kulkarni/File Photo

Register now to get free unlimited access to Reuters.com

  • The Indian retail giant is planning a big push in the FMCG trade
  • Reliance is in late-stage conversations with 30 brands to source deals
  • An Indian company is hiring distributors and CEOs for a new sector
  • Reliance will face challenges in the fight against global brand analysts

MUMBAI (Reuters) – India’s largest retailer Reliance (RELI.NS) It will acquire dozens of small grocery and non-food brands as it aims to build its $6.5 billion consumer goods business to challenge foreign giants such as Unilever, two sources familiar with the plan told Reuters.

Reliance, which is 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 an army of distributors to take them to smaller stores and larger retail outlets across the country, the sources added.

The push for consumer goods under a vertical name Reliance Retail Consumer Brands will come on top of Ambani’s traditional network of more than 2,000 grocery outlets and the continued expansion of “JioMart” e-commerce operations into the nearly $900 billion Indian retail market, one of the world’s largest. .

Register now to get free unlimited access to Reuters.com

The first source familiar with its business planning said Reliance is in the final stages of negotiations with about 30 well-known local specialty brands to acquire them completely or to form joint sales partnerships.

See also  The Chinese company Country Garden sells its inventory to pay off its debts

The total investment spending the company has planned to acquire the brands is not clear, but the second source said that Reliance has set a target of achieving 500 billion rupees ($6.5 billion) in annual sales from the company within five years.

“Reliance is going to be the home of brands,” the person said. “This is an inorganic play.”

Reliance did not respond to a request for comment.

With the new business plan, Reliance seeks to challenge some of the world’s largest consumer groups, such as Nestle (NESN.S)Unilever (ULVR.L)PepsiCo (PEP.O) And Coca-Cola (KO.N)Which has been operating for decades in India, according to the sources.

It is a daunting task, though, to beat such well-established foreign companies with their own manufacturing units in India and the thousands of distributors who take their world-famous products like Pond creams or Maggi noodles across the vast country of 1.4 billion people.

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

“There is a fair amount of brand value attached to well-established names and it becomes very difficult to compete with them,” said Alok Shah, consumer analyst at India’s Ambit Capital.

“If inorganic materials are the way for Reliance, they will be able to scale faster. But they will need to get the right pricing and distribution to compete with bigger competitors.”

Product Categories and Employment

As a leading retailer, Reliance continues to generate the majority of consumer goods revenue by selling or distributing other competitors’ products in its own supermarkets and outlet partners.

See also  Keystone cleanup turns a remote Kansas Valley into a small town

The second source said Reliance has already developed a few purported private labels where it has hired contract manufacturers to make cola drinks and cans of pasta for sale in its retail network, but the business only generates 35 billion rupees ($450 million) in annual sales. .

Reuters reported last year that foreign companies were already uneasy about the Reliance supermarket strategy, with their own brands vying for shelves with those of global competitors. Read more

Reliance’s new consumer goods target deals with popular Indian brands.

Among the brands in talks for acquisition or a potential joint venture, according to one source, is Sosyo, a soft drink brand of nearly 100-year-old Indian company Hajoori, based in the western state of Gujarat. Famous for its flavored drinks.

“We do not comment on speculation,” company director Ali Asghar Abbas Hajjouri said in a statement.

LinkedIn profiles reveal how Reliance has been slowly ramping up its efforts to expand its consumer business. In recent weeks, it has hired CEOs from companies like Danone (DANO.PA) The Kellogg Company (Be) For quality control and sales.

One job posting on LinkedIn by Reliance stated that it shortlisted staples, personal care, beverages, and chocolate as categories for initial launches, and was hiring mid-level sales managers for businesses in more than 100 cities and small towns.

The announcement stated that among the key tasks of these executives was to appoint distributors and manage dealers.

Register now to get free unlimited access to Reuters.com

Additional reporting by Abhirop Roy and Aditya Kalra in Mumbai; Additional reporting by Sumit Khanna. Editing by Kim Coogle

See also  Walmart's Black Friday deals are still going strong

Our criteria: Thomson Reuters Trust Principles.

Leave a Reply

Your email address will not be published. Required fields are marked *