Reliance Industries' strategy in India's fast-moving consumer goods sector is to focus on the "600 million consumers at the mass end and work closely with neighbourhood stores by giving them margins at today's cost", said T Krishnakumar, director of Reliance Consumer Products (RCPL), the group's FMCG division."India has a 1.4 billion population, plus or minus. Then, we have a core middle class. And then about 600 million consumers. We want to make quality products for these consumers," Krishnakumar said in an exclusive interview with ET. "Nobody has tried to enter this space nationally with a clear approach; regional and local players have tried but they have not been able to sustain."In contrast, most consumer companies, such as HUL, ITC, Nestle and Dabur, have been focusing on premiumisation for higher margins.Reliance's consumer business, which started operations in 2022 as a wholly owned subsidiary of Reliance Retail Ventures, has acquired more than 15 brands since then-Campa Soft Drinks being among the first ones. Apart from Campa, its portfolio includes Sil jam and spreads, confectionery brands Lotus Chocolate, Toffeman and Ravalgaon, Alan's Bugles snacks, Velvette shampoo and self-created brands such as Independence staples.The portfolio will be scaled up nationally by March 2027, said Krishnakumar, who was previously president for Coca-Cola's India and Southwest Asia regions."When I say we are scaling up, it does not mean tomorrow. For any product to be scaled in an intense manner, you need 24-30 months, because anything less than that, you can't do a decent job," he said.In FY25, RCPL reported '11,500 crore revenue, with over 60% of it coming from general trade, and Campa and Independence crossing '1,000 crore each in sales and overall reach at 1 million stores, the company announced."We need to build a supply chain. We were about 20% of the market in beverages and staples as we ended last year... We need to take it to 60-70% by March 2026. The rest of the categories too we will start systematically," Krishnakumar said, in what is his first interview since taking charge of Reliance's consumer business.In categories such as soft drinks, chocolates and detergents, the company has priced all products 20-40% lower than rivals such as Coca-Cola, Mondelez and HUL.The scale-up plan comes amid an urban slowdown, with the last five quarters seeing consumers in cities cutting down on discretionary spending amid surging food and fuel inflation."I am confident of an overall positive demand outlook and the India story. As long as you can give consumers quality products at affordable prices, I don't see demand under too much stress," Krishnakumar, who joined Reliance in mid-2021 to set up its consumer business, said. "At such prices, I don't see any big headwinds and we can recruit consumers."On whether the company would stay in the affordable space for the next 2-3 years, he said, "We already have a go-to-market and have crossed the 1-million distribution milestone. Once that is crossed, one has the ability to put out premium products; it will be an evolution of categories we are in, in addition to always being affordable.""We will continue to pursue a mix of organic growth and acquisitions. But we are not going to acquire at a massive cost; we will do acquisitions where we get a good chance of turning around and evolving heritage businesses," he said.
- News Source Indiatimes (Click to view full news): CLICK HERE
0 Comments:
Leave a Reply