After trying to make a dent in the cola market with Campa by offering higher trade margins to the supply chain, Reliance Consumer Products is betting on the same strategy to capture the chips, namkeen, and biscuits market in the country’s booming snacks sector.
The Mukesh Ambani-led company is offering super stockists around 6.5 per cent, nearly double the typical trade margin of around 3-5 per cent (including performance-based incentives), from other brands in these categories.
Its current brands in the chips and namkeen market include Alan Bugles and Snactac, while its biscuit brand is marketed under the name Independence.
Distributors are also receiving increased incentives, with margins of about 8 per cent plus an additional 2 per cent (including performance-based incentives).
In comparison, other snack brands typically offer distributors 6-6.5 per cent.
Retailers are also offered a margin of 20 per cent, much higher than the 8-15 per cent margin (including margins and quantity purchase schemes) provided by other brands in the segment that has long been dominated by established companies like Pepsico, Britannia, and local players.
The Indian snacks market was valued at Rs 42,694.9 crore in 2023, according to IMARC, and is expected to grow at a compound annual growth rate of 9.08 per cent to reach Rs 95,521.8 crore by 2032.
Reliance Consumer announced its entry into the fast-moving consumer goods market in 2022.
About a year later, the company began its push into the consumer market by offering higher margins in the cola segment and pricing its products below the competition.
In May last year, Reliance Consumer announced it would bring the US-based General Mills brand Alan Bugles to India, with products starting at Rs 10 and available in multiple flavours, including original (salted), tomato, and cheese.
Reliance Consumer did not respond to Business Standard’s email seeking comment on offering higher trade margins to the supply chain.
A source familiar with the matter said: “Reliance Consumer has optimised its sales force, so the slightly higher margins also support distributor sales efforts.”
On the retail front, the source added, the company is offering more launch promotions, as it is not spending even 10-15 per cent of what major players allocate for marketing.
This approach enhances point-of-sale visibility.
“Retailer margins cover point-of-sale visibility costs, substituting for lower marketing spend,” the source said, adding, “The trade has long been neglected by big players, and we are leveraging that to build strong partnerships.”
In its July-September quarter earnings, Reliance Retail Ventures reported continued growth across categories in the consumer brands segment, with revenue from general trade growing over 250 per cent year-on-year.
