Reliance Launches Onslaught Against HUL, Nestle, and P&G

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Mukesh Ambani’s Reliance Group has begun selling food staples such as flour, lentils, and edible oil in Mumbai’s open market through a new company, testing the waters before venturing into the consumer products business. Reliance Home Products, a new company, has introduced wheat flour, cooking oil, and pulses under the brand name Healthy Life, as well as a mango drink under the brand name Good Life, a company spokesman said, adding that soaps, shampoo, tea, coffee, noodles, and ketchup will follow shortly.

The fast-moving consumer goods (FMCG) business in India is projected to be valued over Rs 1 lakh crore, with significant players such as Unilever, P&G, ITC, and Dabur dominating. Reliance Retail and Reliance Home Products are subsidiaries of Reliance Industries, India’s largest private-sector enterprise.
Reliance Home Products is in charge of sourcing, quality control, branding, distribution, and marketing of these products, which are sold at the same price to all retailers, including Reliance Retail. The Reliance name will not appear on products sold on the open market. We just launched it in Mumbai and will expand it to other markets based on the reception, according to the executive.

For the time being, the company is promoting its brand through shop activations in local stores. When its brands’ reach reaches a national level, it may decide to market them through advertising. Another top company executive stated that Reliance’s entry into FMCG is because the business is very solid and revenues do not suffer in a downturn. He further stated that the company is sure that its 900 retail outlet chain will serve as a solid foundation for Reliance to sell its FMCG items.

The FMCG sector has fared better than most others, rising by 18-20 percent over the last 5-6 quarters, owing primarily to price increases, greater consumer promotions, new product releases, and smaller packaging. This article reported last month that Reliance Retail had made offers to acquire two of Henkel India’s soap products, the male deodorant soap Aramusk and the Moloy sandalwood soap, indicating the company’s large ambitions in the FMCG sector.

According to Reliance, the FMCG sector is the next large development area, and the company plans to create up 2-3 subsidiaries to oversee the business. With over $100 billion in annual sales, the country’s largest firm is poised to compete with global multinationals in the consumer products sector. Reliance Industries, which currently controls India’s largest retail chain and has over a dozen private label brands, intends to swiftly grow its consumer essentials sector by acquiring over 50 brands.

According to sources, the conglomerate led by billionaire Mukesh Ambani is aiming for the vast consumer goods market, which has been dominated for nearly a century by American and European multinational corporations such as Procter & Gamble, Unilever, Nestle, Reckitt Benckiser, L’Oreal, and Colgate-Palmolive, among others. Reliance has put aside Rs 50,000 crore for the acquisition of a stake in the country’s over Rs 7,500,000 crore consumer goods and retail industry, the third largest in the world.

The company’s interest in consumer goods is not new. The group has expanded its position in the organised retail industry over the last decade through its two subsidiaries, Reliance Retail Ltd (RRL) and Reliance Strategic Business Ventures Ltd. (RSBVL). While RRL has grown its retail base to over 15,000 physical locations, created several digital properties such as Ajio, and increased omni-channel play, RSBVL has been the arm responsible for strategic investments and acquisitions.

The group has actively introduced new brands and grown its consumer goods portfolio in packaged foods and beverages, personal and home care and fashion, consumer durables and garments during the last few years. Its foray into the rapidly growing branded F&B space through in-house brands such as Snactac (a range of snacks, biscuits, instant noodles, and so on), Goodlike (pulses, rice, and edible oil), Yeah, and Desi Kitchen (instant mixed, flours, pickles, and blended masalas) has been aimed in this direction.

Netplay (formal office wear), Performax (specialised activewear), Fusion (fusion-wear for women), AVAASA (ethnic wear for women), and Rio (fashion wear for working women) have all contributed to the company’s success in the fashion and apparel industry. In recent years, it has also collaborated with at least 47 prominent global companies, including Armani Exchange, Diesel, Gas, Hamleys, Hugo Boss, Marks & Spencers, Steve Madden, and Tiffany & Co. Furthermore, a slew of acquisitions aided its rapid expansion. The group purchased or invested in fashion labels such as Abu Jani Sandeep Khosla, Abraham & Thakore, ak-ok, Rahul Mishra, and women’s intimate wear brand Clovia in FY2021-22 alone.

According to corporate management, the company is concentrating on establishing “its own brand portfolio in sectors such as health and immune boosting foods in supermarket, and productivity devices and appliances in consumer electronics.” In addition, the company is “building a portfolio of own brands for new commerce,” with an emphasis on “exclusive brand licences and own brand products through Reconnect, JioPhone, and LYF,” according to its annual report. In FY2021, Reliance Retail derived more than 75% of its sales from its ‘own brands’ through its fashion and apparel chain Reliance Trends. Private labels contributed more than 60% of the revenue at (Reliance) Trends Footwear.

Reliance constructed 75 new warehouses and fulfilment centres in FY2021-22 to support its expanding retail and consumer goods portfolio. The fashion and clothing segment increased revenue by 55%, established 750 labels, and expanded its presence in small towns. It not only owns one of the major retail chains in the consumer electronics and durables industry, Reliance Digital, but it is also promoting in-house products through private brands such as Reconnect, resQ, Kelvinator, and BPL. During the January-March fiscal year of FY22, it increased by 50% sequentially over the previous quarter. According to the firm, “merchant partners throughout the country, including small towns, offering a wide range of gadgets and home appliances across categories” were in full swing.

It has been preparing for an all-out invasion of the consumer products space for some time. Reliance Retail acquired more than 150,000 new employees during FY22 to bolster its workforce, bringing the overall headcount to 361,000. “In accordance with the company’s rapid growth, a large majority of these roles will be in non-metros, tier 2 and 3 towns, and beyond, where the company is rapidly expanding its physical store network as well as digital and new commerce platforms,” it stated.

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