This week in FMCG & Retail: Reliance Retail on 'hyper growth trajectory'; HUL confident of India’s growth

Interestingly, an important part of the company’s expansion of the retail business is the completion of its merger with Future Group’s retail and wholesale businesses, which would give Reliance a ready-made network of over 1,500 retail outlets, especially BigBazaar. However, the deal continues to be embroiled in legal battles with Amazon strongly opposing the deal.

In fact, days before the AGM, Reliance Retail continued making its argument in the National Company Law Tribunal (NCLT), seeking to call for a shareholder meeting on August 3 to approve the scheme with Future Retail. This even as Amazon continues to record its objections that any progress on the deal would the detrimental to the company. NCLT has reserved the order in the case.

On the FMCG front, two major consumer goods players held their AGM in the week, exuding confidence in the country’s growth prospects.

The effects of the COVID-19 pandemic are only a pause in India’s consumption and growth story, Sanjiv Mehta, Chairman and Managing Director of Hindustan Unilever Limited (HUL) said on Tuesday.

To be fair, apart from inflationary pressures, FMCG players weren’t among the sectors that stood majorly impacted due to the pandemic. While discretionary spending may have fallen, last year consumers stocked up amid the uncertainty of lockdown and through the year, staying at home meant consumers were eating at more intervals. In addition, hygiene and health-related products and immunity-boosting products saw a major boost over the past year.

Rural growth too didn’t see any impact especially since the first wave didn’t really impact rural areas.

Mehta also alluded to this during the AGM where he said that while it may take a few weeks to ascertain the impact of the second wave on rural areas, he expects rural growth to continue to remain resilient, especially in the light of a normal monsoon and an increase in the minimum support price of some key crops.

He also said that the company added 30 percent more capacity in its supply chain to make it more agile, while investing in technological capacities as well.

In fact, strengthening supply chains and distribution networks has been the biggest takeaway for FMCG players in the past year, something N Chandasekaran, Chairman of Tata Sons also stressed upon during the Tata Consumer Products AGM.

Like HUL, TCPL too is integrating its distribution network and supply chain to drive efficiency and has in fact increased its direct coverage of outlets by 30 percent – a trend we saw all consumer goods majors adopting in the past year as supply chains broke down in the beginning of the first wave of the pandemic.

In other news, Dabur took another step in its aggressive push to grow its ayurvedic medicines and health portfolio. The company commenced the construction of its largest manufacturing facility in Madhya Pradesh with an investment of Rs 550 crore. The first phase of this unit, which will manufacture Dabur’s range of food products, ayurvedic medicines and health supplements is scheduled for completion by FY22-end.