ET, MUMBAI: Small and regional brands are tying up with retail giants to push their merchandise, as middle-class Indians shift from mom-and-pop stores to the comfort and variety of modern retail.
The latest to join the bandwagon is ayurvedic products maker Baidyanath Ayurved Bhawan. The 95-year-old company has tied-up with Future Supply Chain Solutions, the logistics arm of retail giant Future Group to widen its consumer base and boost its position in the health products segment where it competes with Dabur and Emami. The Kolkata-based company will use Future Supply Chain’s network to sell its ayurvedic medicines, tonics, hair oils and toothpastes in more than 2,000 outlets in the country.
Future Supply Chain serves several large retailers besides the parent group’s Big Bazaar.
“More than just sales, modern trade gives a very high visibility that’s important to us. Also, it’s an easy way to break into newer markets without investing substantially in distribution,” said Ameve Sharma, president of the over 350-crore Baidyanath.
This strategy is not only giving smaller brands a pan-India presence, but also helping them reap dividends. Within a year, the share of organised retail in total sales of brands such as Wagh Bakri tea, Super-Max shaving products, Nilon’s pickles, Dukes biscuits, NR Group’s Ripples fragrances has risen from near zero to about 15%.
“Due to consumers moving and settling across geographies within the country, we are able to support small and regional brands get national footprint and also where relevant communities stay,” said Devendra Chawla, president of FMCG and food at Future Group. “For several small vendor partners, setting up distribution networks can mean lot of resources and costs. Modern trade is the quickest route to market in relevant markets,” he added.
The move is also partly driven by the need to be where the competition is. “You have to be where your competitors are,” said Ravi Chandra, general manager, sales and marketing at Super-Max Personal Care, which earned 2% of sales from modern trade from just 0.2% a year earlier. “We have heightened our focus on modern trade as our product portfolio matched the target consumers of these stores,” Chandra added.