Memo to Reliance: Think beyond prices to disrupt FMCG

The advice comes as the retail-to-refining conglomerate gears up to disrupt the Indian economy’s fourth-largest sector that is expected to grow to $220 billion by 2025
Last Updated 10 October 2022, 02:32 IST

Mukesh Ambani’s Reliance Industries will need to do much more than offer cheaper alternatives if it is serious about thwarting well-trenched rivals in the fast-moving consumer goods space that it plans to enter this year, industry insiders and experts told DH.

The advice comes as the retail-to-refining conglomerate gears up to disrupt the Indian economy’s fourth-largest sector that is expected to grow to $220 billion by 2025. It is currently dominated by the likes of Hindustan Lever, ITC, Nestle and Amul.

“It will not be easy for Reliance to convert their private label to general trade. It’s going to be a long-haul game, at least four to five years. They are entering into a market that’s led by big companies. Price game is not enough to win this battle,” a seasoned distributor of consumer goods in South India told DH on condition of anonymity.

“They need to have strong brand building, good quality of products, and give better margins to their retailers, channel partners and trade partners,” the person said. “It will be an interesting battle.”

Experts agreed.

“For Reliance to succeed, availability and reach are very important. They need to get shelf space,” Akshay D’Souza, chief of growth & insights at retail intelligence firm Bizom, told DH. “Price and quality will be the other factors.”

“They are aggressive about distribution and have a strong handle on supply. However, as they mentioned that they want to grow to 40,000 crore turnover in the next 5 years, that means what Hindustan Unilever is in 2022, Reliance will be in 2027,” D’Souza said.

Mukesh Ambani’s daughter Isha, the chair of Reliance’s retail arm, will spearhead its FMCG entry. Reliance did not respond to DH’s queries tied to this story. Tata Consumer Products, Adani Wilmar, Patanjali and Britannia declined comment, while many others did not respond to DH’s queries seeking comment on Reliance’s entry into the FMCG space.

“It will be a tough challenge with long standing consumer goods giants like Hindustan Unilever, ITC, Nestle India and emerging FMCG startups like us,” said Amarnath Halember, Executive Director and CEO, NextG Apex India. “We can assure one thing that here consumers will rule the market.”

“Big names carry big trust hence in the initial stage, we may find a shift in the way consumer purchases or a change in consumer behaviour based on the launch offers,” Halember said, adding that it was too soon to comment on longer-term impact.

Reliance’s entry would mean other companies have to work harder to develop and deliver high-quality affordable products.

“Today’s consumers are knowledgeable and know which are the right products to buy from where. Pricing strategy along with better retail network and logistics will be key to focus in the coming days as it will keep you one step ahead of the competitors,” the FMCG startup said.

Reliance, which has been expanding its retail footprint and letting shoppers order from JioMart via Whatsapp, is already in talks to acquire many regional FMCG brands, according to media reports.

“The two major advantages that Reliance has are: It has its own retail stores for distribution, and there is JioMart as a platform which will help them distribute directly to consumers,” said Ankur Bisen, senior partner and head of retail, consumer products and food products and services at consulting firm Technopak.

(Published 09 October 2022, 14:16 IST)

Follow us on