Future Consumer Ltd (FCL), the FMCG arm of Kishore Biyani-owned Future Group, wants to reduce the company’s dependence on Future Retail over the next three to five years.
The company will rely more on other avenues for distributing its brands, in addition to the 1,700 Future Group retail chain outlets including Big Bazaar, Easysay, Hypercity, Foodhall, and WH Smith.
"Over next three years, we will reduce our dependence on just the Future Group, significantly. It will be not just through general trade but also throughother avenues that we have, like e-commerce, rural distribution network, and franchisee stores," said Rajnikant Sabnavis, CEO, Future Consumer.
Future Consumer currently has more than 22 brands that spans across over 50 categories. Some of these brands include Tasty Treat for snacks, Voom for fabric care, Dreamery for dairy, Karmiq for dry fruits, Mother Earth for organic staples, TS for beauty, Kara for personal care, among several others.
Outside Future Group, Future Consumer brands are already available at retail outlets like Amazon, Nykaa, Spencer's, Star Bazaar, Haiko Supermarket and many others.
According to market research firm Nielsen, Future Consumer's Toilet Cleaner brand Cleanmate has 4 percent market share in total trade, Tasty Treat Wafer Biscuits (7 percent), Tasty Treat Bourbons (2 percent) and Golden Harvest packaged rice (11 percent).
Sabnavis also said that Future Consumer and Amazon Retail India Private Limited (ARIPL) have signed a long-term agreement for distribution of Future Consumer's portfolio of brands online.
Sabnavis, who joined Future Consumer in January 2020, has been tasked with turning around the fortunes of Future Consumer.
The company reported widening of consolidated net loss to Rs 9.14 crore for the quarter ended December 30, 2019.
The company had posted a loss of Rs 5.14 crore in Oct-Dec 2018-19.
Future Consumer achieved EBITDA margins of 4 percent, an expansion of 110 bps YoY and achieved gross debt reduction of Rs 696 million, as of December 2019.
Sabnavis, who has over 22 years of experience working with brands like Hindustan Unilever and Jyothy Laboratories, said a slew of big brands have come with private labels but have not been very successful.
He said that Future Consumer has created brands through consumer insights but now it will also rely more on general trade for increasing its sales.
"Now, it’s time for Future Consumer to scale up from here. So I have accepted the challenge. I have started understanding the market, visiting stores, understanding the business and I am creating the plan for next one year and then three years," said Sabnavis.
He also said that they have chalked out a plan to garner higher gross margins.
To begin with, the company has discontinued all the loss making products from their portfolio and identified products that are distinct and more profitable.
"We have identified parts of our portfolio where we have significant differentiation and are more profitable such as Hyderabadi Biryani rice, then Karmiq is leader in dry fruits on Amazon, then our desi aata portfolio and continue to focus that stock is available at all times.
"Next, we need to do is spend more on signage . Improve standard metrics of cost leadership and supply chain cost leadership in terms of ensuring that we have better vendor management systems in place, superior inventory control which will give us those little percentage points that will flow through," he added.
Sabnavis has also created a plan of new launches for the next two years but he refrained from revealing further details.
AMAZON TIE-UP
E-commerce contributes a small portion of Future Consumer’s sales and deal with Amazon is expected to give a fresh fillip to Future Consumer’s growth plans and increase the existing share of sales that originate from outside the Future Group network.
While Sabnavis did not disclose the exact number due to their confidentiality agreements with Amazon, he confirmed that Future Consumer is working closely with Amazon to ensure FCL brands get visibility across Amazon home page and category home pages.
Amazon is a significant alternate channel for Future Consumer brands. Through Amazon, Future Consumer brands are available in more than 20,000 pin codes in more than 650 cities on Amazon Pantry, Amazon Fresh and Prime Now.
Dairy Brand Dreamery is available on Amazon Fresh and Nilgiris Dairy will also launch on Amazon Fresh by the end of the March.
Sabnavis said the company is working on alternate distribution channel for Future Consumer.
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