Kishore Biyani is planning a bigger push for private labels
Future Consumer Enterprise Ltd (FCEL), Future Group’s consumer packaged goods unit, plans to launch a new brand, category or product every two weeks as it aims to have its own labels account for 70% of the products sold in group retail chains such as Big Bazaar and Easyday.
“We have already launched 21 brands under FCEL,” Kishore Biyani, Future Group chief executive, said at a press conference to unveil the company’s oats brand Kosh.
The plan is part of the company’s stated objective of increasing revenue tenfold to Rs20,000 crore by 2021.
FCEL plans to invest Rs50-60 crore in marketing and distribution of the Kosh brand in the next three years. In the pipeline are brands of popcorn, confectionary and chocolates, which would take about a year to develop, Biyani said on the sidelines of the conference.
Brands like Kosh will also be available at other retailers including Trent Hypermarket Ltd’s Star Bazaar, Tata Group’s retail venture with UK’s Tesco Plc and in general (kirana) stores in 12 cities besides Future Group’s own network of retail chains, Biyani said.
FCEL has access to more than 3,800 stores, including 770 Future Group retail stores and those of peers such as Metro, HyperCity, Star Bazaar and Spar, besides more than 1,200 fair price stores in Rajasthan, the company said in an investor update for the June quarter. To be sure, large consumer packaged goods companies, such as PepsiCo Inc. and Unilever Plc., have in recent years announced consolidation of their portfolios, pruning some brands to promote and further develop the more successful ones.
For instance, PepsiCo’s India unit, PepsiCo India Holdings Pvt. Ltd, consolidated its snacking portfolio to two master brands—Lays and Kurkure—at the start of the calendar year, and phased out its Lehar brand.
Other companies, such as ITC Ltd, are expanding into new categories and launching new brands. In the last financial year, ITC entered the dairy and juices segment and in fiscal 2017, the coffee and chocolates segment with brands like Sunbean, Fabelle and B Natural. Patanjali Ayurved Ltd has expanded into several new categories from toothpaste and soaps to biscuits and juices. All its expansion, however, has been under the Patanjali mother brand.
“For consumer packaged goods companies, new launches are a good way of ensuring growth in the short term. However, in the longer term, to sustain and grow, there has to be something core,” said Abhishek Malhotra, co-head, consumer industries and retail products practice, India and Southeast Asia at A.T. Kearney. In fiscal 2016, FCEL’s consolidated net loss widened to Rs123.13 crore from Rs105.8 crore a year earlier. However, consolidated revenue during the period grew 34% to Rs1,757.8 crore from Rs1,316.6 crore.