Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

India's Reliance to acquire dozens of brands in $6.5 billion consumer goods play-sources

Stock Markets May 15, 2022 09:31PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Customers buy grocery items inside a superstore of Reliance Industries Ltd, in Mumbai, India, October 7, 2020. REUTERS/Niharika Kulkarni/File Photo

By Abhirup Roy and Aditya Kalra

MUMBAI (Reuters) -India's biggest retailer Reliance will 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 (NYSE:UL), two sources familiar with the plan told Reuters.

Reliance, run by Indian billionaire Mukesh Ambani, plans to build 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 sources added.

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, one of world's biggest.

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.

The total investment outlay planned by the company to acquire brands isn't clear, but the second source said Reliance had set a goal to achieve 500 billion rupees ($6.5 billion) of annual sales from the business within five years.

"Reliance will become a house of brands. This is an inorganic play," said the person.

Reliance did not respond to a request for comment.

With the new business plan, Reliance is seeking to challenge some of the world's biggest consumer groups, like Nestle, Unilever, PepsiCo (NASDAQ:PEP) Inc and Coca-Cola (NYSE:KO), which have been operating for decades in India, the sources said.

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

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."

HIRING, PRODUCT CATEGORIES

As a retail leader, Reliance still garners most consumer goods revenues by selling or distributing products of other rivals at its own supermarkets and mom-and-pop outlet partners.

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.

The company's director, Aliasgar Abbas Hajoori, said in a statement, "We don't comment on speculations."

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 (NYSE:K) Co 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.

Among the main tasks of such executives will be to appoint distributors and manage merchants, the ad stated.

India's Reliance to acquire dozens of brands in $6.5 billion consumer goods play-sources
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email