Future Group follows Reliance on private brands

Mumbai: 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), reports Raghavendra Kamath from the Business Standard.

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However, 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 percent on the maximum retail price (MRP), 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 percent of its revenues from these.

The group currently earns around 150 crore in revenue from private brands in FMCG (fast moving consumer goods) products and 450 crore from its overall private brand portfolio. The group expected a sales growth of 70 percent 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 percent in FMCG products, around 20 percent in electronic goods and 30-70 percent in apparel.