Reliance To Build Its Consumer Goods Business Of USD 6.5 Billion

Abhishek Kumar Singh
Abhishek Kumar Singh May 17 2022 - 3 min read
Reliance To Build Its Consumer Goods Business Of USD 6.5 Billion
With the built up of the consumer goods business Reliance plans to challenge the consumer goods biggies such as Nestle, Unilever, PepsiCo and Coca-Cola.

India's biggest retailer, Mukesh Ambani owned Reliance Industries Limited is to acquire dozens of small non-food and grocery brands to build its own USD 6.5 billion consumer goods business. 

Reliance plans to build a portfolio of 50 to 60 grocery, household and personal care brands within six months. The company is also hiring an army of distributors to take them to mom-and-pop stores and bigger retail outlets across the nation.

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. Ongoing expansion of "JioMart" e-commerce operations in India's nearly USD 900 billion retail markets is another big step to be taken.

Reliance is in the final stages of negotiations with around 30 popular niche local consumer brands to fully acquire them or form joint venture partnerships for sales.

The total investment outlay planned by the company to acquire brands isn't clear, but Reuters input has mentioned that Reliance had set a goal to achieve INR 500 billion (USD 6.5 billion) of annual sales from the business within five years.

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.

It is 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 Maggie noodles across the vast nation of 1.4 billion people.

Unilever's India unit reported sales of USD 6.5 billion in the fiscal year ending March 2022, and nine out of 10 Indian households use at least one of its brands.
As of now the consumer food trends is as such if inorganic is the route for Reliance, it will be able to scale up much faster. But then it will 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 INR 35 billion (USD 450 million) only in annual sales.

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.

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, is Sosyo, a soft-drink brand of a near 100-year old Indian company. Another name on the list is 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 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.

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