Reliance is in the final stages of negotiations with approximately 30 popular local niche consumer brands to acquire them outright or to enter into joint venture partnerships
Reliance is in the final stages of negotiations with approximately 30 popular local niche consumer brands to acquire them outright or to enter into joint venture partnerships
India’s biggest retailer Reliance will acquire dozens of small food and non-food brands to build its own $6.5 billion consumer goods business to challenge foreign giants like Unilever, two sources familiar with the plan said Reuters.
Reliance, led by 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 corner shops and larger retail outlets around the world nation, the sources added.
The consumer products push under a vertical brand called Reliance Retail Consumer Brands will join Mr. Ambani’s brick-and-mortar network of more than 2,000 grocery stores and the ongoing expansion of “JioMart” e-commerce stores in India’s nearly $900 billion retail outlets added market, one of the largest in the world.
Reliance is in the final stages of negotiations with about 30 popular local niche consumer brands to acquire them outright or enter into joint-venture partnerships for sales, the first source familiar with its business plan said.
The total investment planned by the company to acquire brands is not clear, but the second source said Reliance aims to have £500 billion ($6.5 billion) in annual sales from the deal within five years achieve.
“Reliance is becoming a brand house. It’s an inorganic game,” the person said.
Reliance did not respond to a request for comment.
With the new business plan, Reliance is trying to challenge some of the world’s largest consumer groups such as Nestle, Unilever, PepsiCo Inc and Coca-Cola, which have operated in India for decades, the sources said.
However, it’s a daunting task to beat such well-established foreign companies that have their own manufacturing plants in India and thousands of distributors who bring their world-famous products like Pond’s creams or Maggi noodles to the vast nation of 1.4 billion people .
Unilever’s Indian unit reported sales of $6.5 billion for the fiscal year ended March 2022 and says nine out of ten Indian households use at least one of its brands.
“There’s quite a bit of brand equity associated with the established names and they’re becoming very difficult to compete with,” said Alok Shah, a consumer analyst at Ambit Capital in India.
“If Reliance is the route to inorganics, they can scale much faster. But they need to get pricing and distribution right to compete with larger competitors.”
Setting, product categories
As a leading retail company, Reliance still derives most of its consumer goods revenue by selling or distributing other competitors’ products in its own supermarkets and corner store partners.
While Reliance has developed some so-called private labels, where it hired contract manufacturers to make colas and pasta packs for sale in its own retail network, this company only generates £35 billion ($450 million) in annual sales, the second source said.
Foreign firms were already concerned about Reliance’s supermarket strategy, which saw its private labels compete for shelf space with brands from global competitors, Reuters reported last year.
Reliance’s new consumer goods push targets deals with popular Indian brands.
Among the brands it is in talks about an acquisition or potential joint venture with, one source says is Sosyo, a soft drink brand owned by a nearly 100-year-old Indian company, Hajoori, based in the western state of Gujarat and popular for its flavored drinks.
The company’s director, Aliasgar Abbas Hajoori, said in a statement: “We do not comment on speculation.”
LinkedIn profiles show how Reliance has slowly increased its efforts to expand its consumer business. In recent weeks, executives from companies such as Danone and Kellogg Co have been hired for quality control and sales.
A Reliance LinkedIn job posting said it had shortlisted staples, personal care, beverages and chocolate as categories for early launches and was hiring mid-level sales managers for the company in more than 100 cities and towns.
The primary duties of such executives will include appointing distributors and managing dealers, the ad said.