RIL may be a greater threat to D2C FMCG brands, says Kantar report

Reliance, which is now active in a variety of fast-moving consumer goods businesses, might pose a challenge to these smaller online-only firms, the report said

Reliance Industries Limited (RIL) could pose a greater threat to direct-to-consumer (D2C) FMCG businesses aiming to sell their products through traditional trade than established corporations such as Hindustan Unilever, ITC, and Procter & Gamble, according to a report by Kantar.

Reliance Consumer Products, a Reliance Retail company, is increasingly purchasing consumer brands or entering new categories on its own.

D2C brand income could reach $10 billion by 2025, up from $4 billion now. However, Reliance, which owns the country's largest supermarket chain and is now involved in a number of fast-moving consumer goods industries, might pose a threat to these smaller online-only firms, the report said.

 

“Reliance can be a huge disruption given the kind of play they want in multiple categories. And in that kind of environment, it is not really the best of times for D2C brands entering offline,” Soumya Mohanty, managing director, South Asia for Insights Division at Kantar, told the Economic Times.

D2C brands generate the majority of their revenue or customer acquisition through direct-to-consumer internet channels, or they began with an online-first distribution strategy before embracing omnichannel.

For the past several years, several larger D2C brands such as Mama Earth and Sugar Cosmetics, have been selling products in their own stores and supermarkets.

“There is a large FMCG market and the per-capita consumption in many categories is low. But the job to increase penetration is for larger companies and when D2C targets their consumers offline, they will face a bigger challenge,” Mohanty was quoted as saying by the ET.

Reliance has 17,225 outlets across the country and also offers online shopping through the JioMart app. While fast-moving consumer goods companies sell their items through supermarkets and online platforms in exchange for specific margin payments, Reliance has the capacity to sustain a price war and conquer markets due to its direct customer access and the elimination of middleman margins.