Exclusive: India’s Reliance acquires dozens of brands in $6.5 billion consumer goods deal

Exclusive: India’s Reliance acquires dozens of brands in .5 billion consumer goods deal

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

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  • Indian retail giant plans big boost in consumer goods business
  • Trust Late Stage Talks With 30 Brands For Deals-Source
  • Indian company is hiring distributors and executives for a new industry
  • Reliance will face challenges when it comes to global brand analysts

MUMBAI, May 15 (Reuters) – India’s biggest retailer Reliance (RELI.NS) is set to acquire dozens of small food and non-food brands to build its own $6.5 billion consumer goods business to rival foreign giants like Unilever challenging, two sources familiar with the plan told Reuters.

Reliance, led by Indian billionaire Mukesh Ambani, plans to build a portfolio of 50 to 60 food, home and personal care brands in six months and is hiring an army of distributors to get them into corner shops and larger retail outlets the nation, the sources added.

The consumer products push under a vertical brand called Reliance Retail Consumer Brands will join Ambani’s brick-and-mortar network of more than 2,000 grocery stores and ongoing expansion of “JioMart” e-commerce stores in India’s nearly $900 billion retail market. one of the world’s largest.

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

The total investment planned by the company to acquire brands is not clear, but the second source said Reliance aims to reach annual sales of 500 billion rupees ($6.5 billion) within five years.

“Reliance is becoming 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 aims to challenge some of the world’s largest consumer groups such as Nestle (NESN.S), Unilever (ULVR.L), PepsiCo Inc (PEP.O) and Coca-Cola (KO.N). , which have been operating in India for decades, the sources said.

However, it is a daunting task to beat such well-established foreign companies that have their own manufacturing plants in India and thousands of distributors who bring their world-famous products like Pond’s creams or Maggi noodles to the vast nation of 1.4 billion people .

Unilever’s Indian unit reported sales of $6.5 billion for the fiscal year ended March 2022 and says nine out of ten Indian households use at least one of its brands.

“There’s quite a bit of brand equity associated with the established names and they’re becoming very difficult to compete with,” said Alok Shah, a consumer analyst at Ambit Capital in India.

“If Reliance is the route to inorganics, they can scale much faster. But they need to get pricing and distribution right to compete with larger competitors.”

SETTINGS, PRODUCT CATEGORIES

As a leading retail company, Reliance still derives most of its consumer goods revenue by selling or distributing other competitors’ products in its own supermarkets and corner store partners.

While Reliance has developed some so-called private labels, where it hired contract manufacturers to make colas and noodle packs for sale in its own retail network, this company only generates 35 billion rupees ($450 million) in annual sales, the second source said .

Foreign firms were already concerned about Reliance’s supermarket strategy, in which its own brands competed with brands from global competitors for shelf space, Reuters reported last year. Continue reading

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

Among the brands it is in talks about an acquisition or potential joint venture with, one source says is Sosyo, a soft drink brand owned by a nearly 100-year-old Indian company, Hajoori, based in the western state of Gujarat and popular for its flavored drinks.

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

LinkedIn profiles show how Reliance has slowly increased its efforts to expand its consumer business. In recent weeks, quality control and sales executives have been hired from companies such as Danone (DANO.PA) and Kellogg Co (KN).

A Reliance LinkedIn job posting said it had shortlisted staples, personal care, beverages and chocolate as categories for early launches and was hiring mid-level sales managers for the company in more than 100 cities and towns.

The primary duties of such executives will include appointing distributors and managing dealers, the ad said.

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

Our standards: The Thomson Reuters Trust Principles.

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