Reliance has already disrupted telecom by setting prices much lower than the competition, it’s on its way to disrupting colas by pricing Campa Cola much cheaper than Coke, but it now it seems to have soaps and detergents in its sights.
Reliance has entered the personal and homecare business, and is offering its own products at 30-35% cheaper than its competitors. Reliance has launched Glimmer beauty soaps, Get Real natural soaps, and Puric hygiene soaps, which would compete against HUL’s Lux and Reckitt’s Dettol. It has also launched Enzo brand of detergents, which competes with P&G’s Surf Excel. Reliance has also launched Dozo dishwash bars, which will compete with HUL’s Vim and Jyothy Lab’s Exo and Pril.
But Reliance’s products are priced much lower than the competition. Relaince’s Glimmer beauty soaps, Get Real natural soap, Puric hygiene soap are all priced at Rs 25 for 100 gm bars. In comparison, Lux soap costs Rs. 35 for 100 gm, Dettol costs Rs. 40 for 75 gm, and Santoor costs Rs. 34 for a 100 gm bar. Reliance’s Enzo liquid detergent’s 2 liter pack is priced at Rs. 250 on JioMart, while a 2-litre pack of Surf Excel Matic priced at Rs. 325.
In the dishwashing category, Reliance has introduced a Rs. 1 sachet for its Dozo dishwashing liquid, and has also made it available in refill bottles of Rs. 10, Rs. 30 and Rs. 45. These products are expected to compete with HUL’s Vim and Jyothy Lab’s Exo and Pril.
These price cutting moves are similar to what Reliance has done in the cola business. After acquiring the Campa Cola brand for just Rs. 22 crore last year, Reliance has relaunched Campa Cola at prices much below Coke and Pepsi. While Coke and Pepsi’s 200 ml PET bottles cost Rs. 15, Reliance had launched its Campa Cola bottles for just Rs. 10. This had prompted Coke to slash prices of its own 200 ml bottle from Rs. 15 to Rs. 10 to bring them at par with Campa Cola. Reliance’s Campa Cola rollout is currently happening only in a few states, but after a big marketing campaign centered around the IPL, Reliance plans to make Campa Cola available across India.
These strategies are reminiscent of what Reliance had done — with great success — in telecom. In 2016, Reliance had launched Jio, and essentially gave away its services for free for the first few months. As incumbents rushed to slash their own prices, Reliance quickly garnered market share. Within a few years, Reliance Jio become India’s largest telecom company, a lead it maintains to this day.
And Reliance could well pull off a similar coup with FMCG goods. Unlike HUL, P&G, Coke or Pepsi, Reliance already has a massive distribution network through an integrated network of 17,225 stores across the country. While companies like HUL, P&G, Coke and Pepsi give away a part of their margins to the supermarkets or online stores that stock their products, Reliance can reach consumers directly, and cut out the middleman. This could make it possible for Reliance to consistently undercut incumbents on price. If Reliance can provide high-quality products at affordable rates, it could end up taking away a big chunk of the market shares of the existing players.
The scope of Reliance’s ambition, though, is something to behold. It is already India’s most valuable company, but still seems keen on entering niche markets including colas, soaps and detergents to grow its bottom line. Reliance’s portfolio, ranging from telecom to consumer goods to oil, is now so vast that it appears that the company is essentially taking a bet on the Indian economy. And if the Indian economy fires over the next decade, Reliance appears well-positioned to multiply its business manifold in the coming years.
RRVL runs an integrated network of 17,225 stores and digital commerce platforms that cover a wide range of categories, including grocery, consumer electronics, fashion & lifestyle, and pharma consumption baskets.
Enzo 2 litre front load and top load liquid detergent is ₹250 (on Jio Mart) in comparison to a 2-litre pack of Surf Excel Matic priced at ₹325.
Glimmer beauty soaps, Get Real natural soaps, and Puric hygiene soaps
After stirring a price war in the soft drink segment with the relaunch of Campa, billionaire Mukesh Ambani-led Reliance has entered the personal and home care segment of FMCG, offering products at 30 to 35 per cent lesser price.
Experts say “the jury is out” and a competitive offering from Reliance would attract the customers to try its products and evaluate performance, quality and perception in comparison to the same from the established brands.
Products of RCPL, the FMCG arm and wholly-owned subsidiary of Reliance Retail Ventures Limited (RRVL), are available only in selected markets but the company is building a dealer network on a pan-India basis, and the availability of its products will be scaled up across modern and general trade channels.
“They are creating a distinct and dedicated distribution network comprising traditional dealer/stockists as well as modern trade b2b channels,” said an industry source.
It articulates ambitions to be a relevant player in the USD 110-billion FMCG (Fast Moving Consumer Goods) segment, largely dominated by players as HUL, P&G, Reckitt, and Nestle.
RCPL has priced its Glimmer beauty soaps, Get Real natural soaps, and Puric hygiene soaps at ₹25, which is much lower than the products of leading brands such as Lux ( ₹35 for 100 gm), Dettol ( ₹40 for 75 gm) and Santoor ( ₹34 for 100 gm) etc, while prices of its Enzo 2 litre front load and top load liquid detergent is ₹250 (on Jio Mart) in comparison to a 2-litre pack of Surf Excel Matic priced at ₹325.
For Enzo front-load and top-load detergent powder, it had priced at ₹149 for 1-kilogramme pack (on Jio Mart).
Front-load and top-load refer to the two categories of washing machine.
While, in the dish wash segment, it has started with the attractive price point of ₹5, 10 and 15 for bars and has also launched liquid gel packs at price points of ₹10, ₹30 and ₹45.
RCPL, which competes with HUL’s Vim, Jyothy Lab’s Exo and Pril in the dish wash category, has also introduced a ₹1 sachet of liquid gel in the category.
It is yet to announce the price of Enzo detergent bars.
Earlier this month, RCPL relaunched the iconic soft drinks brand Campa, entering into the turf of US cola majors PepsiCo and Coca-Cola. It had priced competitively at ₹10 for a 200-ml bottle and ₹20 for a 500-ml bottle.
According to the online market and consumer data platform Statista, the Indian soft drinks segment is estimated at USD 8.85 billion.
“They want to compete with HUL’s Surf and Lux, market leaders in their respective categories. They have a product, which is of ₹25 against ₹34 of Lux, it is a substantial incentive for the customer to try it once. Once the customer has tried it and the product is actually as good as Lux is, then Reliance can build a market. But if the consumer finds that it is slightly inferior to Lux, then Reliance will not succeed,” said Singhal.
He added that Reliance does its homework very well and is quite successful also. It has been strongly focused on areas of private consumption.
A report from expert market research estimates the Indian beauty and personal care industry valued at USD 21.65 billion in 2022.
Pallab Roy- Partner, KPMG in India, said the Indian FMCG space has become interesting with many companies announcing their forays and investments in this space. It continues to have attractive margins with good scope to grow on account of moving from loose to packaged products as well as consumption per capita.
“Having said that, it also takes a good amount of time as well as investments to create iconic FMCG brands with pull and a formidable distribution network. While the jury is out on this one, the FMCG industry will surely transform further, and this will work out better for the consumer,” said Roy.
Deloitte India Consulting Partner Rajat Wahi said with better technology, ingredients and other support available, including many third-party manufacturers who have scaled up in the last 5 years, it has become easier for new and existing players to develop and launch brands today, and this is reflected by the many new D2C/consumer brands launched every day across packaged food, beauty, health, wellness, etc.
But the real challenge for most brands is around scaling up and reaching consumers across the physical retail, especially the general trade in India as e-commerce today accounts for only 4-5 per cent of retail.
Modern trade accounts for another 8-10 per cent of total retail for FMCG and consumer products and balance 85-87 per cent of retail is still represented by general trade, local small chains or neighbourhood mom & pop stores which represent between 11-13 million outlets.
These outlets are serviced by thousands of distributors and dealers and such networks have been built by leading FMCG brands over many decades. They continue to be fine-tuned with best practices and technology and where every per cent of margin has been rationalised to make the entire value chain competitive.
“In my view, these “fortresses” or “moats” are almost unscalable today by the newbies as they look to expand their reach across the country, and it will take them years, if not decades, to replicate this model. This may be equally challenging for any retailer wanting to launch their private brands in India, as the conundrum of supplying the brands to the existing 11-13 million outlets still remains for them,” said Wahi.
All India Consumer Products Distributors Federation (AICPDF) President Dhairyashil Patil said RCPL stock is yet to hit the market.
“In soaps, some brands as Lux, Santoor etc. are established ones and dominate the market. Besides, there are more than 1,000 other brands which are available in the market. But unless and until it becomes a brand and starts advertising with a media campaign and make products available in the market, it would not be able to be noticed,” he said.