Taking inspiration from the successful Patanjali, The Future Group is seeking a robust and visible presence in the ayurvedic personal-care space and is already evaluating potential acquisition targets, group CEO Kishore Biyani said.
The organized retailing pioneer’s FMCG business Future Consumer will soon be launching an ayurvedic hair oil and other beauty products targeting the mass market.
“We are in talks for acquisitions in the ayurvedic beauty space. Valuations might be little high now, but we are exploring opportunities,” said Biyani.
He said that the Future Group, which brought modern retailing into India, is inspired by the rapid growth of Patanjali and wants to become as big as the herbal-products major in the FMCG space. The FMCG business will touch Rs 3,500 crore in sales this fiscal, more than doubling from Rs 1,645 crore in FY17. He said the target is to expand the segment by 70-80% in FY19, whereby revenue will be just shy of the billion dollar milestone.
Biyani further said, “The long-term goal is to make it an Rs 20,000-crore business by 2021-22. The Tasty Treat brand in itself is poised to become more than Rs 1,000 crore by March 2019.”
The group’s FMCG business which is run by Biyani’s daughter Ashni is driving along with group CEO of foods business Sadashiv Nayak. Biyani said the company has managed to grab a good share in packaged tea and has also just launched biscuits with a wide portfolio of Marie, Digestive and cream cookies under the Tasty Treat brand. Detergents will follow.
“Body wash is another category where we have recently entered at an aggressive price of Rs 39 to replace soaps, triggering a war in the segment and pushing other brands to reduce prices. In soaps, we already sell five crore bars a year,” said Biyani.
A recent report by Motilal Oswal revealed Future Consumer’s distribution network is spread across other organised retail chains and neighbourhood groceries, covering 80,000 stores. The group has also decided to increase the proportion of Future Consumer brands in Future Retail stores to 60% from 20% now.
“The group’s focus on retail expansion is part of its strategy to boost the sales of its growing brand's portfolio. Importantly, placing the interests of Future Consumer on a par with Future Retail will not only enable quick ramp-up of group revenue but also ensure higher profitability and RoCEs (return on capital employed), aiding cash flows,” the report said.
Another report by Indsec Securities said that Future Consumer’s distribution cost is significantly lower than other FMCG companies as it is modern-trade driven. “Additionally, the company has lower advertising spends as it focuses on in-store promotions and digital platforms,” it said.