Reliance eyes bigger piece of FMCG pie

Accelerating its push into the domestic FMCG market a year-and-a-half after launching operations, Reliance Consumer Products, a Reliance Retail subsidiary, is aiming to increase its merchant base from over 1 million currently to 10 million in the next five years. This is over 80% of the country’s mom-and-pop or kirana store base (12 million).Over 1 million retailers cumulatively are now selling the company’s Campa Cola and Independence brands in states such as Tamil Nadu, Andhra Pradesh, Telangana, Gujarat and parts of north India, persons in the know said.

An email sent to Reliance Consumer Products did not elicit a response till the time of going to press.Hindustan Unilever (HUL), the country’s largest consumer goods company and which has been present here for over nine decades, currently reaches over 9 million outlets. Nestle, which has been in the country for over a century, reaches around 5.1 million outlets. Dabur, which has a strong rural presence, reaches 7.7 million outlets in all, according to its FY23 annual report.

Sources in the know said Reliance Consumer Products’ (RCPL) plan is to widen both distribution and manufacturing capabilities of Campa and Independence as the firm looks to grow retail coverage across the country, aiming to take on the big boys in consumer goods with a wide array of affordable FMCG products. RCPL currently depends mainly on co-packers to manufacture its products, unlike rivals who have a mix of both in-house and contract manufacturing capabilities.

Campa, for instance, is widely distributed in states such as Tamil Nadu, Andhra Pradesh and Telangana at the moment, where distributor margins being offered by the firm are in the region of 6-8%, which is on a par with the industry average, trade sources said.

In the consumer staples segment, where Independence operates, RCPL is offering a distributor margin of 6%, ahead of the industry average of 4-5%, the sources said. This has helped the firm find crucial shelf space in cluttered FMCG markets such as Gujarat, Uttar Pradesh, Bihar, Punjab, Haryana and Delhi-NCR. RPCL has priced Campa at `10 for a 200 ml bottle and `20 for a 500 ml bottle. Soaps, detergents and shampoos have been priced 30-35% lower than competitors.

“We are building the supply chain for these products (Campa Cola and Independence), so that we can have localised infrastructure in different parts of the country, as we look to scale up these businesses,” Dinesh Taluja, chief financial officer, Reliance Retail, said during Reliance Industries’ Q4 earnings call last month.

During RIL’s 2022 annual general meeting (AGM), Reliance Retail Ventures’ executive director Isha Ambani had laid out her vision for the FMCG business, which was launched at the end of that year.

“The objective of this business is to develop and deliver high quality, affordable products which solves every Indian’s daily needs,” she said.

During the company’s 2023 AGM, Ambani provided an update on the business, saying RCPL had made a strong start by entering several FMCG categories through multiple brands and strategic partnerships.

“We have acquired and partnered with several such brands like Campa Cola, Sosyo, and Lotus. We have launched Campa Cola with the promise of Great Indian Taste, and consumers have embraced it wholeheartedly. We are scaling it up further in India,” she said, adding that partnerships with companies such as General Mills and Sri Lanka’s Maliban for snacks and biscuits each would aid growth.

While Campa, acquired by RCPL in August 2022, was relaunched in March last year, Independence, launched towards the end of 2022 in Gujarat, has expanded into states such as Uttar Pradesh, Bihar, Haryana, Delhi-NCR and Punjab, according to distributors.