Reliance, led by Indian billionaire Mukesh Ambani, plans to build a portfolio of 50 to 60 food, home and personal care brands within six months and is hiring an army of distributors to bring them to family stores and department stores. country, the sources added.
The consumer goods push under a vertical called Reliance Retail Consumer Brands will complement Ambani’s physical network of more than 2,000 grocery stores and the continued expansion of “JioMart” e-commerce operations in India’s nearly $900 billion retail market, one of the biggest in the world.
Reliance is in the final stages of negotiations with about 30 popular niche local consumer brands to either acquire them entirely or form joint venture partnerships for sales, said the person familiar with its business plan.
The total value of the company’s planned investment to acquire brands is unclear, but the second source said that Reliance has set a goal of achieving annual turnover of 500 billion rupees ($6.5 billion) in this area within five years.
“Reliance is going to become a brand house. It’s an inorganic game,” the person said.
Reliance did not respond to a request for comment.
With this new business plan, Reliance seeks to challenge some of the world’s biggest consumer groups, such as Nestl, Unilever, PepsiCo Inc and Coca-Cola, which have been operating in India for decades, the sources say.
It is a daunting task, however, to beat foreign companies so well established that they have their own manufacturing facilities in India and thousands of distributors who bring their world-famous products like Pond Creams or Maggi Noodles across the vast nation of 1.4 billion. of people.
Unilever’s India unit reported sales of $6.5 billion in the fiscal year ending March 2022 and says nine out of ten Indian households use at least one of its brands.
“There’s a lot of brand equity associated with established names and it’s very difficult to compete with them,” said Alok Shah, consumer analyst at Ambit Capital in India.
“If Reliance goes the inorganic route, it can grow much faster. But they’ll need to get the pricing and distribution right to compete with bigger rivals.”
CONTRACTING, PRODUCT CATEGORIES
As a leading retailer, Reliance still derives most of its revenue from the consumer goods sector by selling or distributing products from other rivals in its own supermarkets and in partner family stores.
Reliance has developed some so-called “private” brands by hiring contract manufacturers to manufacture cola-based soft drinks and noodle packets for sale in its own retail network, but this activity generates only 35 billion rupees ($450 million) in annual sales. , the second said source.
Foreign companies were already uncomfortable with Reliance’s strategy in supermarkets, where its own brands competed for shelf space with brands from global rivals, Reuters reported last year.
Reliance’s new consumer goods offensive aims to strike deals with popular Indian brands.
Among the brands with which it is in talks for an acquisition or possible joint venture, according to one of the sources, is Sosyo, the soft drink brand of an Indian company that is almost century old, Hajoori, based in India. and popular for its flavored drinks.
Company director Aliasgar Abbas Hajoori said in a statement: “We do not comment on speculation.”
LinkedIn profiles reveal how Reliance has slowly increased its efforts to grow its consumer business. In recent weeks, she has hired senior executives from companies such as Danone and Kellogg Co for quality control and sales.
A Reliance job posting on LinkedIn says it has selected staples, personal care, beverages and chocolates as categories for early launches and is recruiting mid-level sales managers for the business in more than 100 cities and towns.
Among the key tasks of these executives will be appointing distributors and managing traders, the announcement said.