Future Group chases Reliance on pvt brands

Kishore Biyani's Future Group is getting its act together on supplying its private labels outside the group's 1,000-odd outlets, even as Mukesh Ambani's Reliance Retail has already marched ahead by starting to sell some of its private brands to kiranawalas (independent stores).

Future is yet to finalise its plans to supply its private brands to kiranawalas, but the group has started marketing its select private brands such as Cleanmate in floor-cleaners, Sach in toothbrush and Tasty Treat in processed foods to hotels and small retail chains, among others.

The group has already advertised that it would give a margin of up to 55 per cent on the maximum retail price, depending on the category, to prospective clients.

However, the group's plans to supply its brands to kiranawalas across the country will take a while, as it is strengthening its distribution set-up, said an executive. The group was earlier planning to supply its brands to kiranas from the second half of 2009.

"We are getting ready for that. We will start supplying to them soon,'' said Kishore Biyani, chief executive of Future Group, which runs nearly 1,100 stores.

In comparison, Reliance Retail is already supplying its oil and milk under the Life brand to select retail stores in Rajasthan, Haryana, Punjab and Andhra Pradesh, among others, through milk distributors. It has planned to add more products and more cities in the coming months, said sources in the know.

But, not all retailers are enthused with the idea. "It is not easy to supply our private brands. There are so many national brands and cash and carry brands vying with each other to get business from kiranas. We have to look at our business first. If we have enough volumes, then there are no issues,'' said a top executive at Spencer's.

Future Group has nearly 300 products and 25 categories under its own private brands. Depending on the category, the group currently draws up to 15-40 per cent of its revenues from these.

The group currently earns around Rs 150 crore in revenue from private brands in FMCG (fast moving consumer goods) products and Rs 450 crore from its overall private brand portfolio. The group expected a sales growth of 70 per cent in private brands in the current financial year, said Damodar Mall, group customer director of Future Group on the sidelines of Food Forum India 2010 here.

According to industry estimates, the profit margins for private labels ranged from 15-20 per cent in FMCG products, around 20 per cent in electronic goods and 30-70 per cent in apparel.

"We have strong FMCG ambitions from our private brands portfolio. We are getting into busy categories such as toothpaste and detergents. We want to be among top three brands available in our stores,'' Mall said.

"We are investing in food parks, collection centres and manufacturing centres as part of our plans of backward integration,'' he added.

Future Logistics Solutions, an arm of the group, had already forayed into third-party logistics operations by signing leading electronic and FMCG companies such as Hitachi and Nestle.

Future Group also recently acquired Capital Foods, a processed foods company. "We are bringing all our FMCG play together as part of integrated food strategy," Mall added.