Fate of Future Consumer and Brooker Group JV uncertain

Tesco has a JV with Trent Hypermarket in India, which runs stores under the Star brand

Tesco, the world’s third largest retailer, is rethinking about operationalising the joint venture (JV) between Future Consumer and Booker Group in this country, said a source. Early this year, Tesco bought Booker, the UK-based wholesaler, for $4.7 billion.

In November last year, Future Consumer, food and fast-moving consumer goods arm of Future Group, entered the cash and carry (wholesale) business by forging an equal JV with Booker Group. The latter had been present in India since 2009. “They (Tesco) already have a JV with Tata-led Trent. They feel one more JV is not needed,” said the source. Tesco is yet to take a final decision, added the source.

Tesco is the biggest operator of supermarkets in Britain; it runs 6,800 stores. It has a JV with Trent Hypermarket in India, which runs stores under the Star brand; the agreement is to provide sourcing, technical and marketing know-how to Star stores.

Tesco had earlier shelved a plan to set up cash and carry stores in this country. An e-mail to Tesco did not elicit a response. Kishore Biyani, group chief executive at Future, also did not reply to an e-mail.

If both shelve the plan, it will be the second one for a JV in wholesaling which turned unsuccessful for Future Group. Earlier, Future Group and Fung Group — promoted by Hong Kong-based billionaire Victor K Fung — shelved a plan for a 50:50 venture in import and wholesaling. The plan was for the venture to operate large wholesale markets, on the lines of the YIWU market in China and Dragon Mart in Dubai.

Booker Group entered India in 2009 and has six cash and carry stores in Maharashtra and Gujarat. The JV with Future had planned 60-70 stores in the next three to four years and explore distribution of goods in the UK. Booker Group has 200 branches in the UK and did business of £5 billion in 2015.

Tesco rival Walmart has 21 stores in this country and plans another 50 in the next five years.