India’s robust consumption story has prompted several firms to target a larger share of the consumer’s wallet. As people put demonetisation behind them and the economy gears up for the Goods & Services Tax (GST) regime, companies from retail to electricals to manufacturing are looking at a bigger foray into consumer goods.
The RP-Sanjiv Goenka Group, which operates nearly 121 stores under Spencer’s Retail, plans to launch an entire range of fast-moving consumer goods (FMCG) in the next few months. The foray will include products in personal care, health care and food & beverages at an investment of Rs 10,000 crore. The aim, according to group Chairman Sanjiv Goenka, is to derive a third of its revenue from FMCG in the next few years.
ITC has already said that it proposes to touch Rs 1 lakh crore in turnover by 2030, much of which will come from newer businesses it has invested in the last decade and a half, which include food and FMCG.
Food, in particular, is expected to contribute a lion’s share of the 2030 target as ITC invests heavily in it. This business is already estimated to be Rs 7,200 crore in size and is eying the Rs 10,000-crore-mark in the near term.
Speaking to Business Standard, Hemant Malik, divisional chief executive, foods division, ITC, said, “We are constantly evaluating newer categories where we can enter. At this moment, my team is looking at seven to eight new categories.”
ITC has already stepped into luxury chocolates and gourmet coffee in the past few months and is expected to strengthen its presence in juices and dairy segments in the future. The company is also refocusing its attention on categories such as potato chips and cookies to grow share, besides working on segments such as noodles, where share has grown to 23 per cent now from 17 per cent earlier, Malik said. Forays into tea and other food and beverage categories are also likely in the future, company sources said.
The country’s largest retailer, Future Group, is eyeing a tenfold growth in its food and FMCG business in the next five years, driven largely by listed firm Future Consumer Ltd, whose turnover is nearly Rs 2,000 crore.
The plan, according to Future Group Chief Executive Officer Kishore Biyani, is to manufacture, market and distribute not only its own products, but also those that are part of its portfolio through joint ventures and alliances. In the past two years, Biyani has been quietly stitching up such deals, introducing international brands such as Sunkist (in beverages) and Swiss Tempelle in personal care. Parallely, the group has been growing its in-house FMCG and food brands and is also expanding its small-store network from 4,000 to 10,000 in a bid to improve distribution.
Besides these, firms such as Havells and Syska, popular in the electricals and lighting segments, have already forayed into areas such as personal grooming and durables and are looking at a well-rounded presence in consumer electronics. Havells acquired the consumer durables business of Lloyd Electric and Engineering for Rs 1,600 crore in February, adding to its existing portfolio of small appliances. Havells’ Chairman and Managing Director Anil Rai Gupta said the company was keen to leverage its distribution network as it expanded into new areas.
Another company looking to leverage its distribution strength is Eveready Industries, which is eyeing joint ventures with Southeast Asian FMCG companies in the food and personal care categories, MD Amritanshu Khaitan said. While categories such as batteries, flashlights, lighting and appliances are expected to be core to the company in the near term, tie-ups in FMCG will be the company’s future building blocks, Khaitan said.
Seeking a bigger bite
RP-Sanjiv Goenka Group
Aims to derive a third of its revenue from FMCG in the next few years
ITC
Proposes to touch Rs 1 lakh crore in turnover by 2030, much of which will come from newer businesses
Future Group
Eyeing a 10-fold growth in its food and FMCG business in the next five years