India’s top conglomerates -- Tata, Reliance Industries (RIL) and Adani -- have made a beeline to acquire small and medium-sized consumer goods companies and brands across the country to build their FMCG business, which can rival the likes of Hindustan Unilever (HUL), Nestle and P&G. According to sources, the groups will announce back-to-back deals in the coming months as part of their portfolio expansion.
Tata Consumer Products Ltd (TPCL) leads the plan of the $100 billion group and has reached out to potential acquisitions. Reliance Retail Ltd (RRL), the retail arm of RIL, on the other hand, looks to acquire dozens of small grocery and non-food brands to build a portfolio of 50-60 grocery, home and personal care brands in the next six months.
Reliance Retail is recruiting distributors to take their products to retail outlets across the country and help build a $6-7 billion FMCG portfolio. TCPL’s chief executive officer Sunil D'Souza has already stated the company’s plans to build a sizeable FMCG portfolio. TCPL is a food and beverages company with a presence in tea, coffee, salt, select food categories and liquid beverages. The company, which was formed in 2020, has expanded its portfolio by acquiring bottled-water business NourishCo Beverages and cereal brand Soulfull.
According to sources, RRL is in advanced negotiations with at least two dozen of niche local consumer brands. The FMCG business will be able to leverage RRL’s 2,000 odd grocery outlets and the e-commerce platform JioMart to reach customers. In addition, the Mukesh Ambani-led group is planning to launch its SuperApp to widen its consumer play.
Tata Digital, which launched SuperApp Tata Neu last month, is looking to expand its offerings with the inclusion of brands and products from outside the Tata stable. With this in mind, Tata Digital had acquired Big Basket, 1mg and CureFit much before its launch. TCPL will be able to enhance its FMCG sales with the widening Tata Neu customer base.
RRL has completed over 25 acquisitions in the last three years to add to its brand portfolio, products and services and network of physical stores. The retail arm acquired Hamleys, Justdial, Milkbasket, Zivame, Portico, Netmeds, Urban Ladder, Dunzo, Shri Kannan Departmental Store, Jaisuryas and Kalanikethan in these years. Recently, it partnered with 7-Eleven, the iconic global retail chain, to start its operations in India. RIL also plans to submit a bid, along with Apollo Capital, for British medical retail chain Boots UK.
Meanwhile, the Adani group is also in the fray to create a domestic FMCG giant. AWL is beefing up its portfolio through acquisitions. It recently acquired the 'Kohinoor' brand from McCormick Switzerland GMBH. 'Kohinoor' has basmati rice along with ready-to-cook, ready-to-eat curries and meals portfolio.
The FMCG market in India is expected to increase at a compounded annual growth rate (CAGR) of 14.9% to $220 billion by 2025, from $110 billion in 2020. FMCG is the country’s fourth-largest sector with household and personal care accounting for 50% of sales. Indian conglomerates see the expansion of the market as an opportunity to increase their footprint.
RIL group intends to build its retail arm as a 'Walmart plus Amazon' company in India. In the last annual general meeting (AGM), Ambani said the retailer would continue acquiring businesses to expand offerings and experience to customers, sharpen omnichannel capabilities and drive operating efficiencies. He added the company is on a hyper-growth trajectory to grow at least three times in the next 3-5 years.
Adani Wilmar Ltd (AWL) has trounced HUL in terms of revenues in the last financial year -- ₹54,214 crore for AWL and ₹51,468 crore for HUL. Adani company’s major chunk of revenue came from the edible oil business, which contributed around 84% towards the top line.