With its pan-Indian retail chain and a dedicated communication network through Jio, Reliance Retail’s Fast-Moving Consumer Goods (FMCG) brand - Independence- could have an edge over other major FMCG companies, according to experts.
“The difference between other companies and Reliance in FMCG is that Reliance has a sizeable control over retail and a communication channel -- Jio that will reach a wider audience,” said Lloyd Mathias, business strategist & independent director.
Experts in the FMCG industry said that Reliance has a strong network of supply chains across the country which would help in penetrating the rural market.
“Reliance went from a B2B company to establishing trust among millions of people through their network Jio in the country. Profit in the FMCG space is made only through the supply chain which will not be a problem for the company. With trust and a good supply chain network the penetration will be quicker,” said an FMCG expert who did not want to be named.
Traditional FMCG business
While Reliance Retail has a larger reach through its stores, FMCG companies believe that the acceptance of local kirana stores will be a challenge for the company.
“India’s major market is dependent on small kirana and local shops while Reliance has its stores. There will be a challenge that local kirana and shopkeepers might not accept their brands as their brands will be a direct competition with Reliance,” said Shammi Agarwal, Director of Pansari Group
The acquisition of FMCG companies will help in building its overall brand.
“We do see them using a hybrid brand-building process of launching new packaged food brands like Independence along with acquiring other well-known brands like Campa Cola, among others, could be a good strategy to build a portfolio that can be effectively placed on kirana shelves and to build faster consumer acceptance and consumption towards its brands. However, given the consumption dynamics of India, it will be important for them to win in general trade,” said Akshay D’Souza, Chief of Growth & Insights, Bizom, a retail intelligence platform that tracks consumer product sales across 7.5 million outlets.
The company will have to ensure a continuous supply of products to get attention from Indian consumers.
“The key is to be able to build strong brands in consumers’ minds, which can be a time-consuming process. Also ensuring continuous product availability and wide reach with the use of technology to build a winning formula for their FMCG business,” added D’Souza.