Reliance, India’s largest retailer, will acquire dozens of smaller grocery and non-food brands as it aims to build its own $ 6.5 billion consumer goods business to challenge foreign giants like Unilever, two sources familiar with the plan told Reuters.
Reliance, led by Indian billionaire Mukesh Ambani, plans to build a portfolio of 50 to 60 grocery, household and personal care brands in six months and is hiring a team of distributors to take them to mother-and-pop stores and large retail outlets. Race, added the source.
The push for consumer goods under a vertical called Reliance Retail Consumer Brands will top Ambani’s network of more than 2,000 grocery stores’ brick-and-mortar stores and the ongoing expansion of “JioMart” e-commerce operations, one of the largest in the world, in India’s nearly $ 900 billion retail market.
Reliance is in the final stages of negotiating with about 30 popular niche local consumer brands to acquire them in full or to form joint venture partnerships for sale, the first source familiar with its business plan said.
The total investment cost planned by the company for the acquisition of the brands is not clear, but a second source said that Reliance has set a target of earning Rs 500 billion ($ 6.5 billion) in annual sales from the business in five years.
“Reliance will be the home of the brand. It’s an inorganic game,” the man said.
Reliance did not respond to a request for comment.
Through the new business plan, Reliance seeks to challenge some of the world’s largest consumer groups, such as Nestle, Unilever, PepsiCo Inc. and Coca-Cola, which have been operating in India for decades, sources said.
However, India has its own manufacturing unit and with thousands of distributors carrying world-famous products like Ponds Cream or Maggi Noodles across a huge country of 1.4 billion people, it is a daunting task to beat such well-established foreign companies.
Unilever’s India unit reported sales of $ 6.5 billion for the fiscal year ended March 2022, and said that nine out of 10 Indian households use at least one brand.
Alok Shah, a consumer analyst at Ambit Capital in India, said, “Brands associated with established names have a fair bit of value and it is very difficult to compete with them.”
“If there is an inorganic path for Reliance, they will be able to scale faster. But in order to compete with the big competitors, they have to get the right pricing and distribution.”
Recruitment, Products Division
As a retailer leader, Reliance still collects most consumer goods revenue by selling or distributing products to its own supermarkets and other competitors to ma-end-pop outlet partners.
Reliance has created several so-called private labels where it hires contract makers to make cola drinks and noodle packs for sale on its own retail network, but that business earns only 35 35 billion ($ 450 million) from annual sales, the second source said. .
Foreign companies were already uneasy about Reliance’s supermarket strategy, with its individual labels competing for shelf space with competing brands worldwide, Reuters reported last year.
Reliance’s new consumer products target deals with popular Indian brands
Among the brands with which it is in talks for acquisition or possible joint venture, according to a source, Socio Hall, a nearly 100-year-old Indian company, is a soft-drink brand of Hazuri, located in the western state of Gujarat and popular for its flavored drinks.
The company’s director, Aliasgar Abbas Huzuri, said in a statement: “We do not comment on the speculation.”
LinkedIn profiles reveal how Reliance is slowly making efforts to expand its consumer business. In recent weeks, it has hired senior executives from companies such as Danone (DANO.PA) and Kellogg Co (KN) for quality control and sales.
A LinkedIn job ad for Reliance states that it has shortlisted staples, personal care, drinks and chocolates as part of its initial launch and is hiring mid-level sales managers for businesses in more than 100 cities and towns.
The main tasks of such executives will be to hire distributors and manage traders, the advertisement said.
Also read: Reliance is now the top Indian company in the Forbes Global 2000 list