The Future Group's ambitious private label strategy has taken a different turn and turned into a co-branding strategy with Hindustan Unilever (HUL). HUL has decided to engage in a co-branding exercise with the Future group's private label (Freshly Baked) along with its Modern brand of bakery products.

Speaking to Business Line , Mr Devendra Chawla, President, FMCG and Foods, Future Group, said, “As we already have a private label for bakery under the Freshly Baked brand, we decided to partner with HUL's Modern brand for the bakery segment.'' In fact, the Future Group expects to keep this as an exclusive co-branding exercise between the two brands (Modern and Freshly Baked).

As Mr Chawla says, “Just like P&G and Wal-Mart have an exclusive arrangement worldwide, we too would like to keep this deal as an exclusive one.'' The Modern brand of bakery products will now have ‘Freshly Baked' as an added branding on the packs and will be available at all the Big Bazaar outlets.

Private Label Strategy

In 2008, the Future Group had announced an aggressive private label strategy whereby it had plans of competing with the big FMCG players, including HUL, on the strength of its own brands. Considering some of the FMCG biggies had been arm-twisting retailers demanding higher margins, this had led companies like the Future group to develop their own private labels.

The Future group had also brought on board professionals with experience of building brands and this included HUL veterans such as Mr S. Ravindranath (former Director, Foods, HUL) , Mr Damodar Mall and Mr Sadshiv Nayak (both ex-HUL employees) to build its private label business which was expected to reach a turnover of Rs 10,000 crore by 2012. Today, private labels of the Future group contribute nearly 25 per cent of its turnover with brands such as Tasty Treat, Care Mate and Fresh 'n Pure.

Joining Hands

So, instead of competing with the FMCG biggies, the Future group has now decided to join hands and develop categories by combining the strength of both their brands, beginning with HUL.

In fact, in the past, the Future group had a conflict over margins with big FMCG companies such as Kellogg's, Reckitt Benckiser and Cadbury whereby Big Bazaar outlets owned by the group had stopped stocking their products. However, most retailers have realised that it is better to partner the big brands with consumer pull rather than boycotting them and even FMCG companies have started creating special packs to cater to the modern trade.

Related Topics