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Reliance drive to buy small brands

The firm 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
Representational image.
Representational image.
File photo.

Reuters   |   Mumbai   |   Published 16.05.22, 01:49 AM

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

Reliance, run by 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 sources added.

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The consumer goods push under a vertical named Rxeliance Retail Consumer Brands will come on top of Ambani’s brick-and-mortar store network of more than 2,000 grocery outlets and ongoing expansion of JioMart ecommerce operations in India’s nearly $900 billion 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 the first source familiar with its business planning.

The total investment outlay planned by the company to acquire brands isn’t clear, but the second source said Reliance had set a goal to achieve 500 billion rupees ($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 is seeking to challenge some of the world’s biggest consumer groups, like Nestle, Unilever, PepsiCo Inc and CocaCola, which have been operating for decades in India, the sources 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 world-famous products like 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 says 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.



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