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June 28, 2021
Written By Venkata Susmita Biswas
There has been an uptick in the sales of robotic and upright vacuum cleaners in India
Unlike the western markets, the penetration of vacuum cleaners remains negligible in India.
Vacuum cleaners — one of the least bought consumer electronics products in India — saw an upsurge in demand in 2020. The burden of juggling household chores and office work due to the pandemic-induced lockdown, and a heightened sense of hygiene, has encouraged more Indians to invest in vacuum cleaners.
Xiaomi launched its autonomous vacuum cleaner in India late last year, and Realme is set to enter the market ahead of Diwali. Eureka Forbes and Inalsa, too, have introduced robotic vacuum cleaners. Dyson, which has been present in this category since 2018, added a second demo outlet in Mumbai in February 2021, expanding the brand’s offline retail footprint to seven stores.
Euromonitor International estimates India’s vacuum cleaner market to be worth Rs 275.6 crore in 2021. In 2020, more than 4.3 lakh units of vacuum cleaners were sold in India. Anurag Mishra, principal, Kearney, informs that until 2020, the market had been growing at 1-2% per annum. But this grew to 5-6% in 2020.
A clean sweep
Xiaomi India ran a crowdfunding initiative for its robotic vacuum cleaner in 2020. This was mainly to understand if the spurt in demand for vacuum cleaners was merely a fad. The company said it will bring the product to India if 10,000 orders are placed.
“When we evaluated the vacuum cleaner category in 2018, the market was tiny,” says Raghu Reddy, chief business officer, Xiaomi India. But things changed last year. About 85% of the crowdfunding goal was achieved, and Xiaomi launched the Mi Robot Vacuum Mop-P at Rs 17,999 (offer price).
Eureka Forbes, which commands about 70% of the market, added a vacuum cleaner that also mops, an autonomous vacuum cleaner and a handheld variation last year. “Until 2020, the category was chugging along with single-digit growth,” says Shashank Sinha, chief transformation officer, and head – strategic marketing, Eureka Forbes. He adds typically cleanliness fanatics opt for upright or canister models for more efficiency, while working professionals prefer robotic models.
As per industry analysts, among upright vacuum cleaners, the most popular price point tends to be around Rs 18,000. Autonomous vacuum cleaners can cost anywhere between Rs 15,000 to Rs 1 lakh; among these, the ones in the Rs 25,000-30,000 range are in demand.
Pulak Satish Kumar, director and COO, iRobot India, saw a threefold growth in demand for the Roomba and other iRobot automated vacuum cleaners in 2020. He says these machines, which can be programmed to work on a set schedule, are popular among affluent tech-savvy consumers and those who have lived abroad and used similar products.
Costly affair
Unlike the western markets, the penetration of vacuum cleaners remains negligible in India. According to industry estimates, refrigerators have a penetration of 33%, washing machines even lower at 12% and ACs have a penetration of a little over 5%.
Devangshu Dutta, chief executive, Third Eyesight, attributes the low penetration to affordable labour being available abundantly. Washing machines have been around for as long as vacuum cleaners in India. But both these products have had vastly different journeys.“Washing machines had become an upcoming trend in metro cities about a decade after their launch in India,” Dutta observes. “They reduced the homemaker’s workload. Vacuum cleaners, which are still expensive, cannot be handed to the domestic help, who would need to be educated to use the product.”
Historically, vacuum cleaners have been sold on the premise that our homes host a multitude of unhygienic matter, dust and other microscopic particles that are not visible to the naked eye. “We had to create a need. We did this by showing dust inside homes, embarrassing customers and pushing a sale,” says Sinha of Eureka Forbes. Direct selling has been the predominant retail channel for this product — about 40% of vacuum cleaners are still sold through this channel.
Inalsa, which ventured into affordable vacuum cleaners about four years ago, is selling its latest product exclusively on Flipkart. “Going omnichannel, selling on e-commerce platforms and playing on price points are required for this market to grow,” says Kearney’s Mishra. He expects the sudden demand to taper and settle at a growth rate of 3-5% per year, for the next few years.
Source: financialexpress
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June 1, 2021
Written By DEVIKA SINGH
The FMCG major in a presentation circulated internally has acknowledged that more than 60 percent of its products do not meet recognised definition of health.
NESTLE USA – entrance to headquarters building with sign (Source: ShutterStock) Nestle
The spectre of ‘unhealthy foods’ is back to haunt Nestle again, this time globally. One of the largest food companies in the world and the maker of popular brands in India such as Maggi and KitKat has been cast in a negative light after (inadvertently) admitting that it has a large share of ‘unhealthy products’ in its portfolio.
If you are wondering what the fuss is about, here are answers to five big questions on the episode, including the potential implication on the company’s Indian unit.
What is the row all about?
Nestle in a document circulated internally has acknowledged that more than 60 percent of its products do not meet the “recognised definition of health” and that some of its products “will never be healthy no matter how much the company renovates,” reported the Financial Times.
According to the UK-based newspaper, the presentation was circulated internally among the company’s top executives earlier this year and said only 37 percent of Nestle’s food and beverages by revenues, excluding products such as pet food and specialised medical nutrition, achieve a rating above 3.5 under Australia’s health star rating system.
Even within its overall food and drink portfolio, about 70 percent of food products failed to meet that threshold, along with 96 percent of beverages — excluding pure coffee — and 99 percent of confectionery and ice cream portfolio, as per the report.
The rating system is used in research by international groups such as the Access to Nutrition Foundation.
Ouch! What does Nestle have to say about this revelation?
After the report surfaced, Nestle S.A released a statement saying that it is working on a company-wide project to update nutrition and health strategy.
“We are looking at our entire portfolio across the different phases of people’s lives to ensure our products are helping meet their nutritional needs and supporting a balanced diet,” said a Nestle S.A spokesperson.
The company in its statement cited its efforts to improve the nutritional footprint of its products. “For example, we have reduced the sugar and sodium in our products significantly in the past two decades, about 14-15 percent in the past 7 years alone.”
However, it also specified that external nutrition profiling systems like the Health Star Rating and Nutri-Score don’t capture Nestle’s entire portfolio.
“About half of our sales are not covered by these systems. That includes categories such as infant nutrition, specialised health products, and pet food, which follow regulated nutrition standards,” the spokesperson said.
The company’s Indian unit also has released a statement on the controversy.
“Nestle India believes that nutrition is a fundamental need and the food industry has a vital role to play in enabling healthier lives. Driven by our purpose, we are constantly striving to increase the nutrient profile of our products, as well as innovate with new and nutritious offerings,” said a Nestle India Spokesperson.
Hmm … will the development have an impact on the company’s Indian unit?
According to analysts, given that Nestle’s India portfolio is quite different from its parent company, the development will not have much of an impact here.
“Given that Nestle has not positioned its products such as Maggi in the health category there is no change in the perception towards its brand with the recent development,” says an analyst at a top brokerage firm.
Out of Nestle’s 35 billionaire brands, only nine have a presence in India. Its brands such as DiGiorno croissant crust pizza, Hot Pockets pepperoni pizza, San Pellegrino drink, and Nesquik with the worst scores, as mentioned in the Financial Times report, are not present in India.
“Indian portfolio is different from the parent company’s as it is a small sub-set with a lot of localisation for country-specific needs. Also, India is one of the few countries which has had a local research and development facility for a long time,” said Abneesh Roy, Executive Vice-President, Edelweiss Financial Services.
Besides this, Nestle India has a higher share of milk and value-added milk products in its sales mix, which bodes well for the company say analysts given that milk has a high nutritional quotient. Last year, the company drew over 46 percent of its sales from milk and nutrition products, higher than prepared dishes which includes Maggi noodles (shown in the chart below). Volume growth, however, is driven by prepared dishes.
Its initiatives in the country towards introducing atta, spinach variants of Maggi noodles, fruit and nuts to chocolates and reducing sugar and salt content are being seen as an effort to increase the health quotient in its products, by analysts.
Devangshu Dutta, chief executive at retail consultancy Third Eyesight is of opinion that India usually remains unimpacted by developments in these multinationals globally as there is lower sensitivity and awareness in the country. “Take, for example, veganism which is a huge trend in the West but has not caught on as much in India yet.”
He believes the country would eventually be impacted by these developments but not immediately.
What is the real significance of this controversy?
Nestle has come under fire in the past because of concerns about its food products. Back in 2015, Nestle had landed in trouble after Maggi, its most popular product in the country, was found to have monosodium glutamate or MSG by the Food Safety and Standards Authority of India (FSSAI). In a major setback for the company, the food safety regulator had consequently banned the sale of the product in the country. Maggi then commanded over 80 percent of the market share in India. Nestle’s volumes had plunged sharply in 2015 due to the Maggi crisis. (as shown in the chart below).
Subsequently, after five months of legal battle, Nestle relaunched Maggi in the country, however, it resulted in the loss of some of its market share. Today, the company holds almost 60 percent market share in the instant noodles category, as per estimates.
In the light of these events, the recent controversy around its product portfolio becomes significant as Nestle cannot afford a repeat.
Source: moneycontrol
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May 29, 2021
Written By Samreen Ahmad
Deal done through subsidiary Tata Digital Ltd; green signal from CCI came last month
According to a report by RedSeer and BigBasket, India’s e-grocery market is expected to grow from $1.9 billion in 2019 to $3 billion by the end of 2020
After Tata Sons announced the acquisition of BigBasket on Friday, the e-grocery player’s co-founder and Chief Executive (CEO), Hari Menon, said it is going to be business as usual at the company.
“Everything is going to be the same and all the founders will continue to be in the company,” Menon said.
Cementing its foray into the online grocery market, Tata Sons, through its subsidiary Tata Digital, has acquired a majority stake in BigBasket. While the company declined to comment on valuations, reports suggest Bigbasket’s valuation at $2 billion.
The Competition Commission of India had last month approved Tata Digital’s acquisition of up to 64.3 per cent of the total share capital of BigBasket’s parent company Supermarket Grocery Supplies.
“Grocery is one of the largest components of an individual’s consumption basket in India, and BigBasket, as India’s largest e-grocery player, fits in perfectly with our vision of creating a large consumer digital ecosystem. We are delighted to welcome BigBasket as part of Tata Digital,” said Pratik Pal, CEO, Tata Digital.
It actively took around six months for both the companies to close the deal. With this acquisition, majority shareholders — Alibaba and Actis LLP — have exited the company. Other investors such as Ascent Capital and serial entrepreneur K Ganesh have also made an exit.
“Trifecta is proud to be a partner in the journey of BigBasket thus far. This investment from the Tata Group is truly a testament of the Indian startup ecosystem coming of age, and interest in category leaders not just from the global investor community but also large strategic partners,” said Nilesh Kothari, managing partner at Trifecta Capital.
According to a report by RedSeer and BigBasket, India’s e-grocery market is expected to grow from $1.9 billion in 2019 to $3 billion by the end of 2020. At an annual growth rate of 57 per cent, it is expected to touch $18 billion by 2024.
“We are excited about our future as part of Tata Group. We would be able to build stronger consumer connect and accelerate our journey,” said Menon, who started the company from a small Bengaluru office along with four partners V S Sudhakar, Vipul Parek, Abhinay Choudhari and V S Ramesh in 2011.
Currently, the company fulfils around 15 million orders per month in 30 cities across India. It has also reached the milestone of $1 billion in annual revenue.
Tata Digital is also raising Rs 5,000 crore through a commercial paper. Analyst tracking the group said the company would need access to capital as it prepares its digital development and operational expenses.
The acquisition of BigBasket is part of Tata Group’s strategy to build a digital consumer ecosystem. The salt-to-software conglomerate is making inroads in new-age digital markets such as online pharmacy and online fitness, according to reports. While it has signed a deal to acquire a majority stake in e-pharma player 1mg, reports say the conglomerate is also in talks to acquire a stake in Mukesh Bansal’s fitness start-up CureFit. “Food and grocery is critical in terms of share of consumption and significant in the Tata Group’s strategy to be a player of consequence in the digital space,” said Devangshu Dutta, chief executive of Third Eyesight.
Source: business-standard
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April 21, 2021
Debojyoti Ghosh, Fortune India
April 21, 2021
Billionaire entrepreneur Kumar Mangalam Birla-led retailer Aditya Birla Fashion and Retail Limited (ABFRL) has continued its build-up in the ethnic wear market with its fourth deal since 2019 and second this year. In February, the Mumbai-based fashion retailer picked up a 33.5% stake in fashion designer Tarun Tahiliani’s Goodview Properties—that will own and operate the designer’s eponymous couture label—for ₹67 crore. That was a month after ABFRL acquired a 51% stake in Kolkata-based designer Sabyasachi Mukherjee’s company, Sabyasachi Couture, which sells garments, accessories, and fine jewellery, for ₹398 crore.
ABFRL, which owns fashion brands such as Louis Philippe and Van Heusen, said in a statement that ethnic wear “is a large and growing market with a significant opportunity to build scale” and expects it to be an important category over the next few years.
Experts note the two recent deals come as the luxury industry, including fashion, has been hammered by the pandemic. The year-long shutdown in global travel has slowed over a decade of growth across luxury categories. Indeed, the global fashion industry’s profit is expected to have slumped about 93% in 2020, according to a report by consulting firm McKinsey and The Business of Fashion in December.
“[Luxury] business has been hit hard during the pandemic, like all fashion and retail businesses. And a significant injection of money is needed to maintain the business momentum, and to scale it further,” says Devangshu Dutta, chief executive of retail consultancy Third Eyesight.
In March, Italy’s billionaire Agnelli family—best known as the founders of automaker Fiat—acquired a 24% stake in French luxury shoemaker Christian Louboutin for $642 million. Three months before that it paid $95 million for a controlling stake in Shang Xia Paris, a Chinese luxury goods business founded by French luxury brand Hermès and Chinese designer Jiang Qiong Er.
Many fashion firms have used the Covid-19-induced slowdown to reshape business models, streamline operations, and sharpen their customer propositions, said the report by McKinsey and The Business of Fashion.
And that is exactly what Tahiliani plans to do with his new corporate partner. The duo will create a new entity—80% held by ABFRL and 20% by Tahiliani—to launch a new brand of apparel and accessories in the affordable premium ethnic wear segment, while it also plans to launch a men’s ethnic wear brand.
“Discussions with ABFRL have been in the works for nearly two years. I couldn’t be happier about entering into this partnership. They understand scale and numbers like no one else in the market today. Each of their home-grown brands is a resounding success,” Tahiliani, founder and CEO of Tarun Tahiliani Brand, tells Fortune India. “This collaboration permits me the financial freedom to focus on designing,” he adds.
ABFRL aims to build the new ethnic wear brand into a ₹500-crore business in the next five years, with more than 250 stores across India. The first tranche of stores is expected to open by September. “This new entity with ABFRL currently concentrates only on menswear. In our collective opinion, at present, there is only one branded national player in the Indian ethnic [wear] for men space. In order to scale this up, we need to be in three or four categories of clothing. This will give depth, both in terms of style and sizing to the men who come into the store,” says Tahiliani.
Currently, the top panIndia ethnic wear brand for men is Vedant Fashions’ Manyavar. The Kolkata-based company forayed into women’s wear in 2016 selling lehengas, saris, and the like under the label Mohey,
ABFRL’s previous deals in the segment—both in 2019—were a 51% stake in fashion designers Shantanu & Nikhil’s Finesse International Design for a reported ₹60 crore, and its ₹110-crore acquisition of Jaypore. Both make apparel, footwear, accessories, and other items.
ABFRL’s managing director, Ashish Dikshit, declined to comment for this story. ABFRL had, when announcing the Sabyasachi Couture investment, said it expected that deal to accelerate its strategy to build a comprehensive portfolio of brands across segments, occasions, and geographies.
Experts say ABFRL’s recent investments allow it to tap into the designer’s creative stream and goodwill, while providing the financial and organisational muscle of a large corporate. Albeit one that is not aiming too far upmarket.
“We shouldn’t see the ABFRL [stake] acquisitions as entry into couture, which is a different business from the ready-to-wear market. It is the expansion of these brands into ready-to-wear, tapping into the desirability of the designer brand, while making it accessible and affordable to a larger market is what will be of interest,” says Third Eyesight’s Dutta.
Indeed, Mukherjee, in a press release in late January, noted, “As my brand evolved and matured, I began searching for the right partner in order to ensure continuity and long-term sustainable growth.”
Nonita Kalra, a veteran fashion editor, says that the ABFRL deal shows the growing heft of the [Sabyasachi] brand in the fashion business. “Corporates aren’t sentimental. They are hard-nosed about investments, with careful due-diligence. ABFRL is paying what it is worth and expecting it to grow bigger. They are never going to invest in a stagnant business,” she says.
Experts, though, caution that while corporate partnerships and acquisitions allow a designer-entrepreneur and their investor partners to unlock some of the value being built, it is essential to have clarity about each brand’s design language and target consumer. “With [ABFRL’s] new venture [in men’s ethnic wear with Tahiliani], the key thing to understand is how the company will differentiate it from Shantanu & Nikhil’s positioning and focus, which is also menswear-driven,” says Abneesh Roy, executive vice president, Edelweiss Securities. “The challenge will be ensuring that each brand maintains its distinctive identity, while deriving synergies from the group.”
ABFRL has stitched up some unique deals; it now has to ensure they don’t unravel.
(The story originally appeared in Fortune India‘s April 2021 issue).
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April 14, 2021
Written By zenger.news
CHENNAI, India — American tech mogul Jeff Bezos, who owns Amazon, had one billionaire to fight in the Indian e-commerce space — Mukesh Ambani, who owns Reliance Industries. Now, another — Gautam Adani, who owns the Adani Group — has put a leg into India’s highly competitive e-commerce market, which is expected to grow to $200 billion by 2026.
Walmart-owned, and one of India’s largest e-commerce firms, Flipkart has inked a deal with multinational conglomerate Adani Group to build one of its largest fulfillment centers in the financial capital Mumbai.
The fulfillment center, a distribution facility where inventory is stored, so online orders can be picked, packed, and processed, is expected to boost Flipkart’s supply chain capabilities in a tightly contested three-pronged e-commerce race.
Flipkart and Adani Group have not disclosed the financial terms of the agreement. Adani Logistics, a unit of Adani Ports & Special Economic Zone Ltd, will build a 534,000 square foot fulfillment center and lease it to Flipkart to meet the “growing demand for e-commerce in India’s western region”.
“This broad-ranging partnership across our logistics and data center businesses is a unique business model, and we see this as a great opportunity to serve Flipkart’s physical as well as digital infrastructure needs,” Karan Adani, chief executive officer of Adani Ports and Special Economic Zone, said in a joint statement on April 12.
The facility, which can house 10 million inventory units and is roughly the size of nine football fields, is expected to be operational in the third quarter of 2022.
Based in India’s tech capital Bengaluru, Flipkart will also develop its third data center at AdaniConneX Pvt Ltd in the south Indian city of Chennai to store data locally. AdaniConneX is a recently formed joint venture between U.S. EdgeConneX and Adani Enterprises, the flagship company of Adani Group, to provide data center solutions.
The deal will indirectly pit billionaire Adani against India’s richest man Ambani and Bezos.
“The big thing for all e-commerce companies and companies like Adani is having real estate in the right location and offer services and facilities on top of that,” Ashutosh Sharma, vice-president and research director at Forrester Research, India, told Zenger News.
“Having warehouses and distribution centers built closer to import hubs such as Mumbai, Vishakapatnam, and Chennai is a huge advantage. Adani already has a huge presence in these ports and the real estate in those coastal cities. It allows them to handle the shipment, and companies like Flipkart need this kind of capability,” Sharma said.
Flipkart has not disclosed the number of its fulfillment centers in India, but industry estimates vary between 50 and 60. Rival Amazon India said it has 60 such centers across 15 states as of July 2020.
As Amazon and Reliance Industries invest in scaling up their warehousing facilities, Flipkart is following suit and has been steadily investing in its logistics and supply chain capabilities for a while.
In December 2019, it led the $60-million investment round in last-mile delivery start-up Shadowfax. The same month, Flipkart and its parent Walmart participated in a $15-million investment round for fresh produce supply start-up Ninjacart and again invested $30 million in the start-up in October 2020, as per data from the company research platform Tracxn.
Flipkart has also invested in freight service provider BlackBuck.
“An e-commerce business is not limited to simply developing a website and selling goods online, but it depends heavily on efficient supply chain management,” Karan Chechi, director at TechSci Research, told Zenger News.
“The expansion of the facility in one of the most demanded Indian cities is expected to help Flipkart gain a competitive edge over the other existing e-commerce players in the country.”
Amazon and Reliance Retail, part of Reliance Industries, have also pumped money into their e-commerce operations.
Image of an Amazon warehouse unit. (Matt Cardy/Getty Images) The latter bought Future Group’s Retail unit for $3.4 billion and is involved in a legal battle with Amazon India, who is opposing the deal. With the deal, Reliance also acquired Future Retail’s vast logistics and warehousing business.
Last year, Reliance bought a minority stake in lingerie retailer Zivame for an undisclosed amount. Amazon Technologies acquired retail tech start-up Perpule in March this year for $14.7 million.
The nationwide lockdown last year in India due to the pandemic saw e-commerce firms ramping up their warehouse facilities to meet a surge in demand as most of the country was confined to their homes.
“At present, the pan-India footprint of e-commerce warehousing is 4.6 million square meters (49 million square feet), and more than half of it is occupied by a single player, Amazon,” according to a report from real estate consultancy Knight Frank.
Flipkart is in second place with around 15 percent share, while the total occupancy of the top two e-commerce players is about 70-75 percent, the report notes.
The Indian warehousing market is expected to grow at a compound annual growth rate of 9.8 percent to reach $19.53 billion by 2025, as per a Research & Markets release.
Flipkart’s parent Walmart entered the Indian market in 2007 with its business-to-business (B2B) joint venture with Bharti Enterprises, another multinational conglomerate.
“If you look at it from Walmart’s perspective, they had partnerships from the beginning before they entered the market,” Devangshu Dutta, chief executive officer of retail and e-commerce consulting firm Third Eyesight, told Zenger News.
“If you look at the current environment, Adani or Reliance is a good partner to have. Flipkart’s deal is for logistics and data, and it’s not like 100 percent of their fortunes are tied to Adani. It probably provides some cushion against the market pressures that might happen,” Dutta said.
Source: jacksonvillefreepress
