Reliance AGM 2022: Reliance Retail To Launch FMCG Business This Year, Says Isha Ambani

Reliance Retail Ventures Ltd. is set to foray into the fast-moving consumer goods segment in a bid to challenge giants like Hindustan Unilever Ltd.

"The objective of this business is to develop and deliver high quality, affordable products which solve every Indian's daily needs," the company’s director Isha Ambani announced at the 45th annual general meeting, on Monday.

Reliance, run by Indian billionaire Mukesh Ambani, is seeking to challenge some of the world's biggest consumer groups like Unilever, Nestle, Coca Cola Co. and PepsiCo, which have been operating for decades in India, with its new business plan. It will also take on homegrown companies like Dabur, Marico, Patanjali, Emami as well as Gautam Adani-owned Adani Wilmar, which recently emerged as India's largest FMCG company in terms of revenue, with its entry into the country's $110 billion FMCG market.

The consumer goods push, under the vertical named Reliance Retail Consumer Brands, is on top of its existing network of 2,500 grocery outlets and ongoing expansion of JioMart e-commerce operations in India's nearly $900 billion retail market—one of the world's biggest. Forrester Research pegs the market to grow to $1.3 trillion by 2024.

The country's largest retailer has built a portfolio of brands such as Good Life, Desi Kitchen, Snac Tac, Bubbles, Yeah!, and Aw So Yum in the food and beverages space, according to its website. The personal care portfolio includes brands like Get Real, Safe Lite, Petals, Mothercare, and Jive, among others. These brands are currently sold across its supermarkets and hypermarkets—Reliance Fresh and Reliance Smart. "They are also in talks to hire more distributors to take these products to mom-and-pop stores," a New Delhi-based distributor told BQ Prime, on the condition of anonymity.

Analysts, however, are not overly worried about the Reliance foray in FMCG and its consequent impact on revenues of existing players like HUL, Adani Wilmar, Britannia Industries among others, at least for the next 2-3 years.

"FMCG is a daily treadmill with need for continuous innovations, direct reach, robust feet on ground, analytics etc., unlike say a wireless telecom business," said Abneesh Roy, executive director, Edelweiss Financial Services. "Also, most of the FMCG players are already present across the price value equation," he said, so white spaces are limited. "It's very early days to pencil an impact as it needs to be seen when launches happen and how much is the aggression.”

Another reason why Reliance's foray into FMCG is not seen as a major disruptor is because of the company's mixed track record in the business-to-consumer segment.

"They aren’t doing that well in jewellery, footwear, etc. versus initial expectations of the market," Roy said. "Existing players like Titan Company Ltd., Metro Brands Ltd., Bata India Ltd., among others, continue to co-exist and do quite well in spite of years of Reliance’s presence and decent aggression in advertisement and promotions," he said. "Similarly, getting shelf space in kirana by new players is very tough. Earlier also few retailers tried to enter FMCG but did not see success," he said.

According to All-India Consumer Products Distributors Federation, an apex body that represents about 4 lakh dealers and distributors, however, the entire economics of the general trade will change with the entry of Reliance.

"The Indian FMCG trade is expected to see steep competition with the entry of such a gigantic player," said AICPDF national president Dhairyashil Patil.

Edelweiss' Roy expects Reliance to initially target the more commoditised parts of FMCG like pulses and grains, edible oils, flour, sweets, dry fruits, idli dosa batter, detergents etc. "They would also target 20-30% of regional players and acquire D2C brands in most of the segments, piggy riding its improving distribution, cash and carry infra and sourcing abilities," he said.

Ambani also said that Reliance will "soon" start marketing goods produced by tribals and other marginalised communities across the country.

Reliance Retail Ventures has seen 2.3 times jump in its revenue from operations to Rs 4,505 crore in FY22. Net profit of the country's largest retailer nearly doubled to Rs 2,354 crore during the year under review.

As of June 30, 2022, Reliance Retail was operating 15,866 stores with an area of 45.5 million square feet across the country. Parent Reliance Industries invested Rs 30,000 crore in its retail business and added about 2,500 stores in FY22.

"During the year, we strengthened our own brands' presence by launching several new products across the categories of staples, home, personal care, and general merchandise," said Ambani while addressing shareholders.

Own brands contribute to 65% of the overall revenue of Reliance Retail.

On Monday, Reliance also announced that it has collaborated with WhatsApp, owned by Meta Platforms Inc., to launch JioMart on its platform. This would enable WhatsApp users to browse and purchase groceries and other household products directly through the popular messaging app.

"I am confident that Reliance Retail and its leadership team, led by Isha, will deliver exponential growth and become the largest segment within the group," said chairman Mukesh Ambani during his speech at the AGM.