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Future Consumer picking 50% stake in wholesale retailer Booker Group’s Indian arm

15 November, 2016

Future Consumer Ltd, the fast moving consumer goods (FMCG) arm of Kishore Biyani-led Future Group, is getting into the cash and carry (wholesale) business in a joint venture (JV) with the UK-based Booker Group. The JV will help scale up Booker’s network in India, with the aim to service the merchandising requirements of neighbourhood retailers across the country.

The company is picking 50% stake in Booker’s Indian arm by investing Rs 50 crore ($7.4 million), it said in a stock market disclosure. The deal is routed through Future Group’s FMCG arm to leverage its food business.

“Booker India has developed one of the lowest cost distribution networks for FMCG products through its cash and carry network in India,” said Kishore Biyani, founder and Group CEO of Future Group.

Booker Group entered India in 2009 and has invested in creating a network of six cash and carry stores that claim to be supplying food, FMCG and related merchandise to thousands of small retailers and enterprises in Maharashtra and Gujarat. The chain currently operates out of four locations in Mumbai and one each in Pune and Surat.

“Together Booker and Future Group can scale up the business and reach out to a much larger number of retailers and customers in India,” said Charles Wilson, CEO of Booker Group.

Booker Group is the UK’s leading food wholesaler offering branded and private label goods which are sold to over 900,000 business customers, including independent convenience stores, grocers, leisure outlets, pubs and restaurants. Besides Booker India, the Group comprises Booker Wholesale, Makro and Booker Direct, among others. Booker Group posted revenues of around £5 billion in 2015.

Future Consumer offers a range of brands and products that include Tasty Treat (processed food), Nilgiris (dairy and bakery), Sunkist (beverages), Swiss Tempelle (personal care), Kara (beauty-on-the-go) and CleanMate (home care). The joint venture will help Future Group sell these brands through the Booker India network.

Future Consumer has dedicated manufacturing facilities at India Food Park, Tumkur (Karnataka), with extensive sourcing and processing facilities across the country. The company also operates JVs with Migros Group from Switzerland and Aussie Oats in Sri Lanka, and a licensing partnership with Sunkist Growers from California, the US. 

Its products are distributed through multiple retail chains such as Big Bazaar, EasyDay, Heritage, Nilgiris, Aadhaar, Annapurna Bhandaar, Metro Cash & Carry and Tesco Star Bazaar, beside other channels.

The retail unit of Future Group, which hopes to earn Rs 1 lakh crore in annual turnover by 2021, was involved in numerous merger and acquisition deals to expand its operations. Earlier this month, it acquired the retail and allied businesses of Hyderabad-based Heritage Foods Ltd.

Future Group, the second-biggest brick and mortar retailer after billionaire Mukesh Ambani-led Reliance Retail Ltd, had earlier acquired Big Apple, Nilgiri’s and Bharti Retail. It had purchased Nilgiri’s, a south India-based chain, in November 2014.

In September, Future Group reportedly bought Sangam Direct, a chain of retail stores earlier known as Sabka Bazaar, from Wadhawan Retail Ventures Pvt. Ltd for an undisclosed amount.

Biyani, who had accused e-tailers of predatory pricing backed with foreign funding, made his first acquisition in the e-commerce segment earlier this year by taking over Rocket Internet-backed online furniture and home furnishings store FabFurnish.com in an all-cash deal.

The group also operates its own online shopping ventures such as Bigbazaardirect.com and futurebazaar.com but has limited presence in India’s overall e-commerce industry.

Walmart Stores Inc and Metro AG are the global retailers that are operating in the country. US-based offline and online retailer Walmart has been present in India for almost a decade now. The company had entered into an equal joint venture with Sunil Bharti Mittal’s Bharti Enterprises. However, in 2013, it bought out its partner and decided to go solo. Walmart operates 21 Best Price wholesale offline stores in nine states in India.

The company was also in talks with Indian e-commerce firm Flipkart India Pvt. Ltd for an equity partnership. Walmart employs around 2.3 million people in its 11,527 stores across 28 countries and recorded $482 billion in total revenues last year.

METRO Cash and Carry, the local arm of German wholesale major Metro Group, started operations in India in 2001 and was the first foreign retailer to open its outlet in the country. It has been running its wholesale retail outlets for over a decade. METRO Cash & Carry sells about 8,500 products across categories including food and grocery, health and beauty products, electronics items and apparel.

Another player in the same space is Trent Hypermarket Pvt. Ltd (THPL), a joint venture between Tata group company Trent Ltd and UK’s largest supermarket chain. THPL operates the Star Bazaar, Star Market and Star Daily retail businesses.

In July 2014, French retailer Carrefour SA exited India by closing its five cash & carry or wholesale stores in the country which it had been operating for four years.

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Future Consumer picking 50% stake in wholesale retailer Booker Group’s Indian arm

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