Reliance's mega $6.5 billion push to challenge Unilever, others - Report
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- 16 May 2022
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Mukesh Ambani-led Reliance is planning to acquire dozens of small grocery and non-food brands as it targets building its own $6.5 billion consumer goods business to challenge foreign giants like Unilever, Reuters reported quoting sources familiar with the plan.
Reliance is eyeing building a portfolio of 50 to 60 grocery, household and personal care brands within six months and is hiring an army of distributors to take them to mom-and-pop stores and bigger retail outlets across the nation, the report said.
RELIANCE RETAIL CONSUMER BRANDS
The consumer goods push under a vertical named Reliance Retail Consumer Brands will come on top of Ambani's brick-and-mortar store network of more than 2,000 grocery outlets and ongoing expansion of "JioMart" e-commerce operations in India's nearly $900 billion retail market which is one of the biggest in the world.
Reliance is in final stages of negotiations with around 30 popular niche local consumer brands to fully acquire them or form joint venture partnerships for sales, said the first source familiar with its business planning.
Reliance had set a goal to achieve 500 billion rupees ($6.5 billion) of annual sales from the business within five years.
RELIANCE VS UNILEVER
With the new business plan, Reliance is seeking to challenge some of the world's biggest consumer groups, like Nestle, Unilever, PepsiCo Inc and Coca-Cola, which have been operating for decades in India, according to the report.
Unilever's India unit reported sales of $6.5 billion in the fiscal year ending March 2022, and says that nine out of 10 Indian households use at least one of its brands.
"There is a fair bit of brand value which is attached to the established names and it becomes very difficult to compete with them," said Alok Shah, a consumer analyst at India's Ambit Capital. "If inorganic is the route for Reliance, they will be able to scale up much faster. But they'll need to get the pricing and distribution right to compete with bigger rivals," he said.
HIRING, PRODUCT CATEGORIES
Reliance did develop a few so-called private labels where it hired contract manufacturers to make cola drinks and noodle packs for sale in its own retail network, but that business generates only 35 billion rupees ($450 million) in annual sales, said the second source.
Foreign firms had been already uneasy about Reliance's supermarket strategy, where its private labels were competing for shelf space with brands of global rivals, Reuters reported last year.
Reliance's new consumer goods push targets deals with popular Indian brands.
Among the brands it is in talks with for acquisition or potential joint venture, according to one of the sources, is Sosyo, a soft-drink brand of a near 100-year old Indian company, Hajoori, based in the western state of Gujarat and popular for its flavoured drinks.
LinkedIn profiles reveal how Reliance has been slowly ramping up efforts to expand its consumer business. In recent weeks, it has hired senior executives from companies like Danone and Kellogg for quality control and sales.
One LinkedIn job ad by Reliance stated it had short-listed staples, personal care, beverages, and chocolates as categories for initial launches, and was hiring mid-level sales managers for the business in more than 100 cities and small towns. Read More...
