Reliance to acquire dozens of brands in consumer goods worth $6.5 billion

Reliance is in the final stages of talks to either outright acquire around 30 popular niche local consumer brands or form joint venture partnerships

Reliance is in the final stages of talks to either outright acquire around 30 popular niche local consumer brands or form joint venture partnerships

India’s biggest retailer Reliance will acquire dozens of smaller grocery and non-food brands as it aims to build its own $6.5 billion consumer goods business to challenge foreign giants like Unilever, two familiar with the plan said. sources told Reuters.

Reliance, run by billionaire Mukesh Ambani, plans to build a portfolio of 50 to 60 grocery, home and personal care brands within six months and build a line of distributors to take them to mom-and-pop stores and larger retail outlets. Hiring the army. nation, sources said.

The consumer goods push under a vertical named Reliance Retail Consumer Brands follows Mr. Ambani’s brick-and-mortar store network of over 2,000 kirana outlets and the ongoing expansion of “JioMart” e-commerce operations into India’s nearly $900 billion retail store. will come on top. Market, one of the largest in the world.

Reliance is in the final stages of talks with around 30 popular niche local consumer brands to either outright acquire them or form joint venture partnerships for sales, said a first source familiar with its business plan.

The total investment outlay planned by the company to acquire the brand is unclear, but another source said Reliance aims to achieve annual sales of ₹500 billion ($6.5 billion) from the business within five years.

“Reliance will become the home of brands. It is an inorganic drama,” said the person.

Reliance did not respond to a request for comment.

With the new business plan, Reliance is looking to challenge some of the world’s largest consumer groups, such as Nestle, Unilever, PepsiCo Inc and Coca-Cola, which have been operating in India for decades, sources said.

However, it is a tough task to beat such well-established foreign companies that have their manufacturing units in India and thousands of distributors who carry their world-famous products like cream of pond or Maggi noodles to the vast country of 1.4 billion people .

Unilever’s Indian arm reported 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 a fair bit of brand value that is associated with established names and it becomes very difficult to compete with them,” said Alok Shah, a consumer analyst at Ambit Capital, India.

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

Recruitment, Product Categories

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

Reliance developed some so-called private labels, where it hired contract manufacturers to produce cola drinks and noodle packs for sale in its retail network, but that business generated only ₹35 billion ($450 million) in annual sales. , said another source.

Foreign companies were already uneasy about Reliance’s supermarket strategy, where its private labels were competing for shelf space with brands from global rivals, as Reuters reported last year.

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

According to one of the sources, the brands that are in talks for an acquisition or possible joint venture are Sosyo, the soft-drink brand of the nearly 100-year-old Indian company Hajoori, which is based in the western state of Gujarat and Popular for its flavored drink.

“We do not comment on speculation,” the company’s director, Aliasgar Abbas Hazoori, said in a statement.

The LinkedIn profile shows how Reliance is gradually ramping up efforts to expand its consumer business. In recent weeks, it has hired senior executives from companies such as Danone and Kellogg Co for quality control and sales.

A LinkedIn job ad from Reliance said it had staples, personal care, beverages and chocolates short-listed as categories for initial launch, and mid- to business in more than 100 cities and smaller towns. Hiring level sales managers.

The main functions of such officers would be to appoint distributors and manage traders, the advertisement said.

16 May, 2022, 11:09 am