The Tatas and Future Group may be competitors in modern retail, but their entities have joined hands to work up a winning proposition.
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In a first-of-its-kind alliance, Kishore Biyani-led Future Consumer Enterprises Ltd (FCEL) has entered into an agreement with Trent Hypermarket Ltd of the Tata Group to supply its food and non-food branded products to Star Bazaar, which will retail these brands at its outlets.
Star Bazaar, a joint venture of Trent Hypermarkets and British multinational retailer Tesco, is a multi-format retail chain that operates in Maharashtra and Karnataka. It competes with the Future Group’s Big Bazaar.
As per the tie-up, Star Bazaar will display and retail 148 distinct types of products/items — called SKUs (stock keeping units) in retail parlance — of 10 brands of FCEL, which is a fast-moving consumer goods (FMCG) company of the Future Group.
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This move is expected to give a fillip to FCEL’s brands at a well-known modern retail chain. Also, FCEL has been looking to effectively compete with other FMCG companies operating in the country.
On the other hand, Star Bazaar and its customers are expected to benefit from the aggressively-priced, quality products to be supplied by FCEL. “This is a first-of-kind tie-up,” Kishore Biyani, Group CEO, Future Group, told The Hindu . “I have been telling that FCEL is a FMGC company, not a retail company. But people were not listening. Today we have built a strong portfolio of brands. We have 550 SKUs and by the end of next year, we will have 1,000 SKUs and generate a turnover of Rs 4,000 crore. This tie-up is a beginning for us.” “It will help us distribute our products through large modern store formats and we can reach more and more consumers. I can’t be happier that this new journey is starting with a group like Tata,” he said.
FCEL’s brands include Sunkist, Tasty Treat, Karmiq, Desi Atta and Fresh & Pure in the foods category while its home and personal care brands include Clean Mate, Care Mate and Think Skin.
Apart from being available at Star Bazaar outlets, these brands will soon be retailed at other modern retail formats, cash and carry, and wholesale stores. Eventually, all these brands will reach general and pop and mom stores as well. As of today, the brands are present in over 750 outlets, including Big Bazaar.
“We have created many brands that have been appreciated by consumers. We never conceptualised these as house brands. These are as good as other known brands in the market,” Mr Biyani said, adding now consumers will decide whether the brands will succeed in the market. He said his company is building manufacturing and distribution capabilities to emerge as a leading FMCG company in India. Stating that the tie-up will help customers access products at a ‘great price’, Jamshed Daboo, managing director, Trent Hypermarket Ltd, said, “With this, we will bring our customers an extensive range of high-quality food products and non-food merchandise. Our objective is to enhance our existing range and ensure that we address the growing needs of customers to access unique products at affordable price points.”
To a question on business rivalry, Mr Daboo said, “We see FCEL as a partner in the consumer goods space.” Future, along with Star Bazaar, has plans to aggressively promote the brands. And this alliance will increase the reach of its brands to three million additional customers who visit Star Bazaar annually.
This move is expected to give a fillip to FCEL’s brands at a well-known modern retail chain