Reliance Consumer Products Ltd, A subsidiary of Reliance retail the retail arm of RIL is coming with wide of range of product in FMCG products at a 30-35% discount.
From the article ~
It articulates ambitions to be a relevant player in the USD 110-billion FMCG 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.
Let’s see how the sector reacts. Whenever there’s price war, the sectors will start having margin pressure and consumers will eventually be the winners.
30-35% is a big deal frankly speaking. I’d be wary of buying FMCG stocks especially the big MNC ones like HUL, P&G, Nestle till the dust settles. I’m afraid these are only baby steps by reliance.
Side note - Markets are down by a very decent amount and there is definitely a strong case building for decent short covering in many sectors which might include FMCG initially but eventually this price war is going to start playing an impact on the margins of existing players.
One more previous case that we can recollect in the recent past is what happened to the sector when patanjali entered and initially tried very hard to create waves in the sector and that showed in stock prices as well before eventually coming back to normal.
I expect a similar outcome but reliance is no patanjali. It’s much bigger so the process is going to be slow and long drawn than earlier is what I firmly believe.
I doubt it will have impact as much as what it did for telecom space as there were limited players in telecom whereas retail is pretty diversified and widespread + Reliance retail is already incumbent and one of the leading retail FMCG company
Fully agree, We have a population of 1.4 billion and spread across a country which is very wide, hence it is not easy to penetrate and wipe out the existing players. Also there is product loyalty and if the price differential is not significant, no body will change. Reliance is knows to give massive discount, it is good for the people, but once they go back to their original rates, people will move back. As meher said, FMCG is not Telecommunication which never had any great player when Jio walked in. Moving to and from for a FMCG product is the most easiest thing to do unlike moving from one teleprovider to another.
PS: Do anyone drink campa cola? wonder what happened to Thums up, Torino, Gold Spot.
I was reading a report & what grabbed my attention was how rural demand is displaying impressive growth in consumption… for instance:
Instant noodle sales are growing nearly twice as fast in rural India compared to urban in both penetration and frequency. Seemingly ‘urbane’ brands in categories like deodorant and fabric softener are growing much faster in rural India than urban
It might be due to low base effect as there was slowdown last year. or I might be wrong and what we are witnessing is a structural change in the consumption pattern in some of the rural population. The growth potential without a doubt is in the rural areas.