In a strategic move to solidify its position in India’s fast-moving consumer goods (FMCG) market, Reliance Consumer Products, a subsidiary of Reliance Retail, is setting its sights on a substantial increase in its merchant base over the next five years. Currently boasting a merchant base of over 1 million, the company aims to expand this figure to a staggering 10 million, representing over 80% of the nation’s mom-and-pop or kirana store base, which stands at 12 million.
Growing Retail Footprint
Sources familiar with the matter revealed that Reliance Consumer Products has already made significant inroads in states such as Tamil Nadu, Andhra Pradesh, Telangana, Gujarat, and parts of northern India. Its flagship brands, Campa Cola and Independence, have garnered traction among consumers, with over 1 million retailers now offering these products to customers.
Competition in the FMCG Landscape
Reliance’s endeavor comes at a time when established players like Hindustan Unilever (HUL), Nestle, and Dabur dominate the FMCG sector. HUL, with a presence spanning over nine decades, currently reaches over 9 million outlets, while Nestle and Dabur maintain significant market penetration with 5.1 million and 7.7 million outlets respectively.
Strategic Approach
Reliance Consumer Products aims to bolster both its distribution and manufacturing capabilities for Campa and Independence brands, positioning itself as a formidable competitor in the consumer goods segment. Unlike its competitors, Reliance primarily relies on co-packers for manufacturing, offering a diversified approach to production.
Market Penetration and Pricing
The company’s competitive pricing strategy has played a pivotal role in securing shelf space across various FMCG markets. Offering distributor margins above the industry average, Reliance has priced its products attractively, enabling it to penetrate markets in Gujarat, Uttar Pradesh, Bihar, Punjab, Haryana, and Delhi-NCR. Campa, priced at 10 for a 200 ml bottle and 20 for a 500 ml bottle, along with other products like soaps, detergents, and shampoos, are priced 30-35% lower than competitors.
Strategic Vision
Speaking during Reliance Industries’ Q4 earnings call, Dinesh Taluja, CFO of Reliance Retail, emphasized the company’s commitment to scaling up its FMCG businesses. Isha Ambani, Executive Director of Reliance Retail Ventures, outlined the vision for the FMCG business during RIL’s 2022 and 2023 annual general meetings, highlighting the focus on delivering high-quality, affordable products to meet the daily needs of Indian consumers.
Expansion and Partnerships
Reliance Consumer Products has expanded its portfolio through acquisitions and strategic partnerships, including brands like Campa Cola, Sosyo, and Lotus. Collaborations with companies such as General Mills and Sri Lanka’s Maliban for snacks and biscuits further signify the company’s commitment to growth and innovation.
Reliance’s aggressive push into the FMCG sector underscores its ambition to capture a larger share of the market. With a strategic focus on expanding its retail footprint, enhancing manufacturing capabilities, and offering competitively priced products, Reliance Consumer Products aims to challenge industry incumbents and emerge as a dominant player in the FMCG space.
