RIL to buy dozens of brands in $6.5 bn consumer goods play
Reliance seeks to challenge some of the world’s biggest consumer groups
MUMBAI: 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, said two people familiar with the plan.
Reliance, run by 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 people mentioned above said.
The consumer goods push under a vertical named Reliance Retail Consumer Brands will come on top of Ambani’s brickand-mortar store network of more than 2,000 grocery outlets and the ongoing expansion of “JioMart” e-commerce operations in India’s nearly $900 biling lion retail market, one of the 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 one of the persons mentioned above.
The total investment outlay planned by the company to acquire brands isn’t clear, but the second person said Reliance had set a goal to achieve ₹50,000 ($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 seeks to challenge some of the world’s biggest consumer groups, such as Nestle, Unilever, PepsiCo Inc, and CocaCola, which have been operatfor decades in India, the people 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 worldfamous products such as 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 said 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.”
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 ₹3,500 crore ($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 show Reliance has been ramping up efforts to expand its consumer business. It has hired senior executives from companies like Danone and Kellogg Co for quality control and sales..