Kishore Biyani sees bright future in own brands

Future Group, India’s largest listed retailer, plans to cut shelf space of Hindustan Unilever (HUL) and Procter & Gamble (P&G) by nearly a third in the laundry segment to make space for its own line of detergent liquid and powder products.

To begin with, Future Consumer, the retailer’s consumer goods arm, has launched liquid detergent and will add powder format in next two weeks. The new brand will take disproportionate space to help build visibility at the cost of rival brands, said two officials at Future Group.

The retailer has about 1,500 stores across supermarket chains such as Big Bazaar, HyperCity, Easyday and Nilgiris, and accounts for nearly 4-5%, or about Rs 4,000 crore, of HUL and P&G's annual sales.

Laundry is the biggest category for both these firms, and Future Group’s latest move could directly hurt their business, especially at the premium end. “While their (HUL, P&G) detergent brands have a strong pull, we have to build our portfolio since we aim to get 70% of our sales from own brands in the next few years,” said Kishore Biyani, founder of Future Group. “Consumers will finally decide which brands to pick but we have to push our own brands on shelves too,” he said, declining to comment on shelf space reduction for the rival brands.

HUL and P&G declined to comment. Globally, consumer companies share a love-hate relationship with retailers, who use their bargaining power to beat down prices or introduce their own cut-price versions or private labels.

Future Consumer’s products started as own brands or private labels nearly a decade ago before Biyani restructured the portfolio into a separate fast-moving consumer goods company.

Within home and personal care space, laundry is the biggest segment, and HUL and P&G together controls more than half the market with brands such as Surf, Rin, Ariel and Tide. Analysts feel it is difficult for newer entrants to enter this highly penetrated category worth about Rs 24,000 crore.

Kishore Biyani sees bright future in own brands

“There may be a short term impact on laundry makers due to such disruption in shelf allocation and pricing. But companies have been investing heavily on research and development and marketing to build their products and it is not easy to influence purchase decision of such well entrenched brands overnight,” said Abhijeet Kundu, analyst with Antique Stock Broking Ltd.

While FCL was largely restricted to staples and packaged food to cash on to the under branded category, it has been launching products in mainstream segments. Within their stores, FCL’s Tasty Treat has 20% share and is the third largest player after Britannia and Parle in biscuit segments. The company is also the biggest in the body wash segment and has over a quarter share in snacks in their outlets.

“The fabric wash category has to evolve from whiteness and stain removal proposition to caring for clothes. We are also the country's largest garments maker selling about 300 million pieces each year that gives us data and insight to democratise the segment with better pricing and positioning,” said Ashni Biyani, managing director of FCL, adding that the laundry brand Voom will also be sold across fashion stores such as FBB, Brand Factory and Central.

In 2018-19, the company launched more than 400 new products and stock keeping units and reported revenue of Rs 3,880 crore. Three-fourth of its sales comes from Future Group’s retail outlets. The company has also outsourced production of key products to national consumer goods companies. For instance, Jyothy Labs that sells Henko detergent, will make the new laundry product for FCL while their biscuits are being manufactured by United Biscuits, which owns McVitie’s.

Source:-https://retail.economictimes.indiatimes.com/news/food-entertainment/grocery/kishore-biyani-sees-bright-future-in-own-brands/70167100