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With Booker, Biyani adds last piece to retail jigsaw

Entry into cash and carry with UK's Booker group will allow him to take his food & FMCG products beyond his own retail stores

Viveat Susan Pinto  |  Mumbai 

Kishore Biyani, CEO, Future group
Kishore Biyani, CEO, Future group

Chief Executive has never been shy of taking up challenges. When the 55-year-old businessman, best known as India’s Sam Walton, the founder of Wal-mart, stepped into the food and manufacturing space a few years ago, many wondered how he would market products beyond his stores.

Biyani took a firm step recently to address this issue. His group’s food and arm, Future Consumer, entered into a joint venture with the UK’s to scale up the latter’s cash and carry business in India. Future Consumer will be investing Rs 50 crore in Booker India, which currently has six cash and carry stores in Maharashtra and Gujarat, in its bid to help the latter grow its footprint.

But there is more to this than meets the eye. Biyani will be in a strong position to pitch his portfolio of 21 food and products into general or traditional trade, a segment that cash and carry businesses address. So, the more he is able to help Booker set up cash and carry stores across the country, the greater are the chances of his products reaching small and medium retailers, experts tracking the market says.

“This is critical,” says Pinakiranjan Mishra, partner and national leader (& consumer products), EY. “If Future has to scale up its food & business, traditional trade is an important channel which cannot be ignored,” he says.

A big market

While modern trade (supermarkets and hypermarkets), pioneered by Biyani himself over a decade ago, has been a growing channel for branded products in food and lifestyle, has a sizeable proportion of sales coming from traditional trade. According to industry estimates, almost 92 per cent of sales in India comes from traditional trade. So, despite all the heft that Biyani has in modern trade, he cannot afford to overlook this segment. 

has 17-18 million square feet of space in India across brands such as Big Bazaar, Food Bazaar, KB’s Fairprice and HomeTown, among others.

Retail
In an interview to Business Standard, Biyani said, “The Booker JV is one among a number of initiatives that we’ve taken to widen distribution of our products in traditional trade. Like, for instance, the availability of our Tasty Treat range of processed foods in general trade in Varanasi and Allahabad. This could be taken to more cities in the future. We also run fair-price shops in Rajasthan through a tie-up with the state government there. This model of public-private partnerships could also be expanded as we seek to grow distribution.”

Biyani is tapping a few other channels as well such as chemists for his personal care products. Kara wet wipes, launched earlier this year by his group, is available in pharmacies besides modern trade. Kosh,  the oats brand, launched last month, is being pushed in traditional trade across the country. More products are expected to join the list as the group presses the accelerator in terms of food & launches.

Biyani is also tying up with competitors to widen reach of his products. Such collaborations with Trent’s Star Bazaar, Metro and Spar are already up and running.

The angle

While Biyani has experimented with a number of formats, cash and carry was a missing link. The closest that Biyani came to a wholesale operation was when he acquired Aadhar, the rural wholesale unit of the Godrej Group, a few years ago. Positioned largely as a rural supermarket, Aadhar has one cash and carry store. 

Clearly, Biyani needed to do more, say experts, if he had to mark his presence in cash and carry. “As a format, cash and carry is one of the most exciting at the moment. Incumbents such as Wal-mart, Metro Cash and Carry are all doing well in this space,” Arvind Singhal, chairman, Technopak, says.

Both Wal-mart and Metro are estimated to have close to Rs 4,000 crore coming from their cash and carry operations. Revenue of the third player, Reliance Market, is in the region of Rs 3,000-4,000 crore, say industry sources.

“There was a slot for a fourth player in cash and carry,” says Singhal. “By tying up with Booker, Future in a sense is ensuring it can consolidate its position there. At the same time, prospects of growth are huge by targeting the right locations and captive markets.”

The Cash and carry market is pegged at Rs 11,000 crore in India, growing at 12-15 per cent per annum. One of the reasons for its growth, say experts, is that businesses find it convenient to place orders and receive merchandise all under one roof, which is unlike the regular wholesale market where this concept of a one-stop-shop does not exist. So, stationery could be located in one place, food in another and somewhere else in a wholesale market.

This concept of a one-stop location has also ensured that the key players (Wal-mart, Metro, Reliance) can take their service offering to the next level. Metro Cash & Carry, for example, is appointing sales representatives who visit stores, take orders on the spot and ensure timely This is much like the direct distribution model of companies, where salesmen service stores directly  to expand the reach of their company’s  products.

Booker is also expected to go the whole hog now in cash and carry following its JV with Future. The latter, in return, will be exposed to Booker’s international best practices in wholesale.

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With Booker, Biyani adds last piece to retail jigsaw

Entry into cash and carry with UK's Booker group will allow him to take his food & FMCG products beyond his own retail stores

Entry into cash and carry with UK's Booker group will allow him to take his food & FMCG products beyond his own retail stores
Chief Executive has never been shy of taking up challenges. When the 55-year-old businessman, best known as India’s Sam Walton, the founder of Wal-mart, stepped into the food and manufacturing space a few years ago, many wondered how he would market products beyond his stores.

Biyani took a firm step recently to address this issue. His group’s food and arm, Future Consumer, entered into a joint venture with the UK’s to scale up the latter’s cash and carry business in India. Future Consumer will be investing Rs 50 crore in Booker India, which currently has six cash and carry stores in Maharashtra and Gujarat, in its bid to help the latter grow its footprint.

But there is more to this than meets the eye. Biyani will be in a strong position to pitch his portfolio of 21 food and products into general or traditional trade, a segment that cash and carry businesses address. So, the more he is able to help Booker set up cash and carry stores across the country, the greater are the chances of his products reaching small and medium retailers, experts tracking the market says.

“This is critical,” says Pinakiranjan Mishra, partner and national leader (& consumer products), EY. “If Future has to scale up its food & business, traditional trade is an important channel which cannot be ignored,” he says.

A big market

While modern trade (supermarkets and hypermarkets), pioneered by Biyani himself over a decade ago, has been a growing channel for branded products in food and lifestyle, has a sizeable proportion of sales coming from traditional trade. According to industry estimates, almost 92 per cent of sales in India comes from traditional trade. So, despite all the heft that Biyani has in modern trade, he cannot afford to overlook this segment. 

has 17-18 million square feet of space in India across brands such as Big Bazaar, Food Bazaar, KB’s Fairprice and HomeTown, among others.

Retail
In an interview to Business Standard, Biyani said, “The Booker JV is one among a number of initiatives that we’ve taken to widen distribution of our products in traditional trade. Like, for instance, the availability of our Tasty Treat range of processed foods in general trade in Varanasi and Allahabad. This could be taken to more cities in the future. We also run fair-price shops in Rajasthan through a tie-up with the state government there. This model of public-private partnerships could also be expanded as we seek to grow distribution.”

Biyani is tapping a few other channels as well such as chemists for his personal care products. Kara wet wipes, launched earlier this year by his group, is available in pharmacies besides modern trade. Kosh,  the oats brand, launched last month, is being pushed in traditional trade across the country. More products are expected to join the list as the group presses the accelerator in terms of food & launches.

Biyani is also tying up with competitors to widen reach of his products. Such collaborations with Trent’s Star Bazaar, Metro and Spar are already up and running.

The angle

While Biyani has experimented with a number of formats, cash and carry was a missing link. The closest that Biyani came to a wholesale operation was when he acquired Aadhar, the rural wholesale unit of the Godrej Group, a few years ago. Positioned largely as a rural supermarket, Aadhar has one cash and carry store. 

Clearly, Biyani needed to do more, say experts, if he had to mark his presence in cash and carry. “As a format, cash and carry is one of the most exciting at the moment. Incumbents such as Wal-mart, Metro Cash and Carry are all doing well in this space,” Arvind Singhal, chairman, Technopak, says.

Both Wal-mart and Metro are estimated to have close to Rs 4,000 crore coming from their cash and carry operations. Revenue of the third player, Reliance Market, is in the region of Rs 3,000-4,000 crore, say industry sources.

“There was a slot for a fourth player in cash and carry,” says Singhal. “By tying up with Booker, Future in a sense is ensuring it can consolidate its position there. At the same time, prospects of growth are huge by targeting the right locations and captive markets.”

The Cash and carry market is pegged at Rs 11,000 crore in India, growing at 12-15 per cent per annum. One of the reasons for its growth, say experts, is that businesses find it convenient to place orders and receive merchandise all under one roof, which is unlike the regular wholesale market where this concept of a one-stop-shop does not exist. So, stationery could be located in one place, food in another and somewhere else in a wholesale market.

This concept of a one-stop location has also ensured that the key players (Wal-mart, Metro, Reliance) can take their service offering to the next level. Metro Cash & Carry, for example, is appointing sales representatives who visit stores, take orders on the spot and ensure timely This is much like the direct distribution model of companies, where salesmen service stores directly  to expand the reach of their company’s  products.

Booker is also expected to go the whole hog now in cash and carry following its JV with Future. The latter, in return, will be exposed to Booker’s international best practices in wholesale.

image
Business Standard
177 22

With Booker, Biyani adds last piece to retail jigsaw

Entry into cash and carry with UK's Booker group will allow him to take his food & FMCG products beyond his own retail stores

Chief Executive has never been shy of taking up challenges. When the 55-year-old businessman, best known as India’s Sam Walton, the founder of Wal-mart, stepped into the food and manufacturing space a few years ago, many wondered how he would market products beyond his stores.

Biyani took a firm step recently to address this issue. His group’s food and arm, Future Consumer, entered into a joint venture with the UK’s to scale up the latter’s cash and carry business in India. Future Consumer will be investing Rs 50 crore in Booker India, which currently has six cash and carry stores in Maharashtra and Gujarat, in its bid to help the latter grow its footprint.

But there is more to this than meets the eye. Biyani will be in a strong position to pitch his portfolio of 21 food and products into general or traditional trade, a segment that cash and carry businesses address. So, the more he is able to help Booker set up cash and carry stores across the country, the greater are the chances of his products reaching small and medium retailers, experts tracking the market says.

“This is critical,” says Pinakiranjan Mishra, partner and national leader (& consumer products), EY. “If Future has to scale up its food & business, traditional trade is an important channel which cannot be ignored,” he says.

A big market

While modern trade (supermarkets and hypermarkets), pioneered by Biyani himself over a decade ago, has been a growing channel for branded products in food and lifestyle, has a sizeable proportion of sales coming from traditional trade. According to industry estimates, almost 92 per cent of sales in India comes from traditional trade. So, despite all the heft that Biyani has in modern trade, he cannot afford to overlook this segment. 

has 17-18 million square feet of space in India across brands such as Big Bazaar, Food Bazaar, KB’s Fairprice and HomeTown, among others.

Retail
In an interview to Business Standard, Biyani said, “The Booker JV is one among a number of initiatives that we’ve taken to widen distribution of our products in traditional trade. Like, for instance, the availability of our Tasty Treat range of processed foods in general trade in Varanasi and Allahabad. This could be taken to more cities in the future. We also run fair-price shops in Rajasthan through a tie-up with the state government there. This model of public-private partnerships could also be expanded as we seek to grow distribution.”

Biyani is tapping a few other channels as well such as chemists for his personal care products. Kara wet wipes, launched earlier this year by his group, is available in pharmacies besides modern trade. Kosh,  the oats brand, launched last month, is being pushed in traditional trade across the country. More products are expected to join the list as the group presses the accelerator in terms of food & launches.

Biyani is also tying up with competitors to widen reach of his products. Such collaborations with Trent’s Star Bazaar, Metro and Spar are already up and running.

The angle

While Biyani has experimented with a number of formats, cash and carry was a missing link. The closest that Biyani came to a wholesale operation was when he acquired Aadhar, the rural wholesale unit of the Godrej Group, a few years ago. Positioned largely as a rural supermarket, Aadhar has one cash and carry store. 

Clearly, Biyani needed to do more, say experts, if he had to mark his presence in cash and carry. “As a format, cash and carry is one of the most exciting at the moment. Incumbents such as Wal-mart, Metro Cash and Carry are all doing well in this space,” Arvind Singhal, chairman, Technopak, says.

Both Wal-mart and Metro are estimated to have close to Rs 4,000 crore coming from their cash and carry operations. Revenue of the third player, Reliance Market, is in the region of Rs 3,000-4,000 crore, say industry sources.

“There was a slot for a fourth player in cash and carry,” says Singhal. “By tying up with Booker, Future in a sense is ensuring it can consolidate its position there. At the same time, prospects of growth are huge by targeting the right locations and captive markets.”

The Cash and carry market is pegged at Rs 11,000 crore in India, growing at 12-15 per cent per annum. One of the reasons for its growth, say experts, is that businesses find it convenient to place orders and receive merchandise all under one roof, which is unlike the regular wholesale market where this concept of a one-stop-shop does not exist. So, stationery could be located in one place, food in another and somewhere else in a wholesale market.

This concept of a one-stop location has also ensured that the key players (Wal-mart, Metro, Reliance) can take their service offering to the next level. Metro Cash & Carry, for example, is appointing sales representatives who visit stores, take orders on the spot and ensure timely This is much like the direct distribution model of companies, where salesmen service stores directly  to expand the reach of their company’s  products.

Booker is also expected to go the whole hog now in cash and carry following its JV with Future. The latter, in return, will be exposed to Booker’s international best practices in wholesale.

image
Business Standard
177 22