Exclusive: India’s Reliance to Acquire Dozens of Brands in $6.5 Billion Consumer Goods Game

Exclusive: India’s Reliance to Acquire Dozens of Brands in $6.5 Billion Consumer Goods Game

Exclusive: India's Reliance to Acquire Dozens of Brands in $6.5 Billion Consumer Goods Game

Customers buy groceries at a Reliance Industries Ltd supermarket in Mumbai, India October 7, 2020. REUTERS/Niharika Kulkarni/File Photo

Join now for FREE unlimited access to Reuters.com

  • Indian retail giant predicts big push in consumer goods sector
  • Dependence in end-stage talks with 30 brands for deal source
  • Indian company recruits distributors and executives for new vertical
  • Reliance will face challenges as it battles global brand analysts

MUMBAI, May 15 (Reuters) – India’s biggest retailer Reliance (RELI.NS) is to acquire dozens of smaller grocery and non-food brands as it aims to build its own 6-year-old consumer goods business. $.5 billion 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 50-60 grocery, household and personal care brands within six months and is hiring an army of distributors to take them to mom-and-pop stores. et-pop and the biggest outlets across the nation, the sources added.

The consumer goods push under a vertical named Reliance Retail Consumer Brands will add to Ambani’s brick-and-mortar store network of more than 2,000 grocery stores and the continued expansion of “JioMart” e-commerce operations in the market. nearly $900 billion Indian retailer, one of the largest in the world.

Join now for FREE unlimited access to Reuters.com

Reliance is in the final stages of negotiations with about 30 popular niche local consumer brands to acquire them entirely or form joint venture partnerships for sales, the first source familiar with its business planning said.

The company’s planned total investment to acquire brands is unclear, but the second source said Reliance has set a target of reaching 500 billion rupees ($6.5 billion) in annual sales. of the company 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 the new business plan, Reliance seeks to challenge some of the biggest consumer groups in the world, such as Nestlé (NESN.S), Unilever (ULVR.L), PepsiCo Inc (PEP.O) and Coca-Cola (KO .N), who have been operating in India for decades, the sources said.

It is a daunting task, however, to beat such well-established foreign companies which have their own manufacturing units in India and thousands of distributors who sell their world famous products like Pond’s creams or Maggi noodles across the vast country of 1.4 billion people.

Unilever’s India unit recorded sales of $6.5 billion in the fiscal year ending March 2022 and says nine out of 10 Indian households use at least one of its brands.

“There is good brand value that is attached to established names and it becomes very difficult to compete with them,” said Alok Shah, consumer analyst at Ambit Capital in India.

“If inorganic is the way for Reliance, they will be able to scale much faster. But they will need to get the right pricing and distribution to compete with bigger rivals.”

HIRING, PRODUCT CATEGORIES

As a retail leader, Reliance still generates most consumer goods revenue by selling or distributing other rivals’ products through its own supermarkets and mom-and-pop outlet partners.

Reliance has developed a few so-called private labels where it hired contract manufacturers to make cola drinks and noodle packs to sell in its own retail network, but this business only generates Rs 35 billion ( $450 million) in annual sales, the second source said. .

Foreign companies were already wary of Reliance’s supermarket strategy, where its private labels competed for storage space with brands from global rivals, Reuters reported last year. Read more

Reliance’s new consumer goods target deals with popular Indian brands.

Among the brands it is in talks with for a potential acquisition or joint venture, according to one of the sources, is Sosyo, a soft drink brand from a nearly century-old Indian company, Hajoori, based in the western state of Gujarat. 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 ramped up its efforts to grow its consumer business. In recent weeks, he has hired senior executives from companies like Danone (DANO.PA) and Kellogg Co (KN) for quality control and sales.

A job posting on LinkedIn by Reliance said it had shortlisted staples, personal care, beverages and chocolates as categories for initial launches, and was hiring mid-level sales managers for the company. in over 100 cities and towns.

Among the main tasks of these executives will be the appointment of distributors and the management of traders, the announcement said.

Join now for FREE unlimited access to Reuters.com

Reporting by Abhirup Roy and Aditya Kalra in Mumbai; Additional reporting by Sumit Khanna; Editing by Kim Coghill

Our standards: The Thomson Reuters Trust Principles.

#Exclusive #Indias #Reliance #Acquire #Dozens #Brands #Billion #Consumer #Goods #Game

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Leave a Reply

Your email address will not be published.