Future group revs up joint ventures as tussle with Amazon drags on

The Future group is re-energising its joint ventures (JVs) with dairy major Fonterra and American food firm Hain Celestial as it prepares for life after a tough 2020.

The Kishore Biyani-led group’s debt had spiralled out of control last year, forcing it to get into a nearly Rs 25,000-crore transaction with Reliance Retail. The deal, which includes sale of the retail, wholesale, and logistics assets of the Future group, has since been challenged by Amazon. While the legal battle drags on, Biyani has put in place a blueprint that will see Future expand its presence in dairy and chips, top sources in the group said. Dairy is part of the Fonterra Future JV, while the chips business is part of the JV with Hain Celestial.

Future will also aggressively push these products into modern trade, general trade, and e-commerce as part of a larger plan to give a fillip to its manufacturing, distribution, and sourcing operations, which will be part of Future Enterprises after the legal hurdles to the deal with Reliance are cleared and the two-step transaction is concluded in accordance with its scheme of arrangement proposed in August 2020.

Currently, Future’s JVs for fast-moving consumer goods, including those with Fonterra and Hain Celestial, are part of Future Consumer. JVs to manufacture fashion brands are housed in other Future group companies. Future Consumer, Future Retail, and Future Lifestyle Fashions, among other Future group firms, will be merged into Future Enterprises before the wholesale, logistics and retail assets are acquired by Reliance.

A third JV with an Indian company, Aussee Oats, also part of Future Consumer, manufactures the Kosh brand of oats, sold in Future group outlets. A second brand called Oateo, manufactured by this JV company, may be introduced in Future group outlets in the months ahead, persons in the know said.

Phase I of the plan to rev up the JVs will see the Fonterra Future venture expand its products from eight to 20, including categories such as ghee, curd, flavoured milk, and cheese, in the next few weeks.

In 2019, Fonterra Future had launched tetrapak milk, milk shakes, and yoghurts. The new products will be launched in five cities, including Delhi, Mumbai, Bengaluru, Pune, and Hyderabad. The JV with Hain Celestial will see it launch gourmet chips at Rs 70 per pack under the Terra Chips brand. This is one-sixth the price of an imported Terra Chips pack, which costs over Rs 400 per unit.

The Future-Hain Celestial venture will locally manufacture Terra Chips, sourcing root vegetables such as sweet potatoes and turnips from local farmers, persons in the know said. Terra Chips will be targeted at consumers seeking healthy snacking variants and will be available in multiple flavours.

Fonterra Future, on the other hand, is looking to tap the growing value-added dairy space in the country, growing at 20 per cent per annum. Fresh milk is growing at half that rate, according to sector experts. In an earlier conversation with Business Standard, the Future group had indicated that it was targeting a business of Rs 6,000 crore in five years from value-added dairy products, given the growth prospects within the category.