ValuePickr Forum

Future Consumer Enterprises Ltd

(Gorthi) #123

Hi,

I just come this thought process while analysing this co…let me know ur thoughts

If I look into what exactly what future retail and future consumer doing… I feel these separation is just kind of hype or something end results not that exciting…

It’s just basically retail company and devided in to 2 l. e future retail nd future Consumer …for any retail company margin comes from selling others goods and selling theirs own goods.
Margins from their own goods always higher than the others goods… In blended margins will be good…

Now these guys taken over creamy business in the name of future consumer… Started comparing future retail with other good performing retailers and catching up valuations… Future Retail never going to have that margins because own goods sold by other entity…

Now future consumer, there are trying to convert this as a big fmcg Co with all kind of goods and brands… Again here also their customers always who comes to their own stores…they getting outside and having goods margin way distant dream…

For other retailers like dmart and reliance anyways they sell their goods without much overheads like advertaisments nd others…and in case of future group they do it in 2companies . all kind of different layers… It all seems to be too messy and getting profit out of it not so easy

(shreys) #124

Dear @Gorthi
Your question is intended for me or @grohal?

(Gorthi) #125

For you.

With due respect
I know you done extensive research by going all the way back…thought you might have different perspective on this…

(shreys) #126

I’ll share my thoughts. My understanding may be wrong. My apologies if I err.
FMCG companies typically have profit margins between 10-12%.
Large retailers have margins between 4-6%.
I’ll blend both the margins and the resultant is somewhere around 8% net profit margins.
It’s a very optimistic case.
Now, let’s say the company is able to register profits soon at 8% NPM. Another assumption- The company will grow at 30% CAGR.
With these assumptions the FCL should be able to generate around 1000-1200 crores profit by 2025-2027. But, this case is an ideal situation.
In my humble opinion, only a couple of retailers will be able to attain pan India presence and grow.
Dmart is an extremely strong competitor. Their Premia brand is very good. I’ve personally been a user.
Future consumer is launching too many brands too quick. It’ll eventually face competition from the established FMCG players.
Dmart, on the other hand is focused on retailing as well as selling its own brands.
I find it hard to believe that people would end up switching to FCL products.
In Dmart’s case people visit Dmart to purchase other brands’ products. But, eventually people transition to Dmart’s products- thanks to the good price and quality.
But, private label products can rarely be drivers for the company.
Costco- the American retailer has one of the most popular brands in America-Kirkland Signature.
And it has been there for 20 years.
But, it contributes just around 25% to its top line.
Brand building is very,very tough especially when it comes to FMCG products.
We’ve been accustomed to one product for years and to hard to switch.
There’s also the tendency to avoid regret.
Hence, we end up buying our usual products and not try new ones.

5 Likes
(Darkwanderer79) #127

Tatsy Treats new campaign which went on air a week back…

(Gary) #128

IMHO the real game changer is as follows -
A. New consumer brands are emerging as pace faster than ever e.g paperboat
B. Food in particular is getting disrupted. E.g how many of you bought packed curd 5 years ago
C. Biyani took some early bets with his massive investment in Bangalore food park
D. Results so far are mixed but it’s a moot point that out of 30 brands he claims to have created, at least a few are generating respectable growth OUTSIDE of controlled supply chain ie big bazaar. E.g. I’m visibly surprised at Sunkist takeoff vesus the poor show by ITC’s B Natural
E. This is commendable particularly when we compare with how difficult the FMCG journey for ITC has been despite all the free cash they have ploughed in.

And thus, future consumer is a bet worth taking in my view. Of course, the real metric would be how these brands survive and thrive outside of big bazaar supply chain

4 Likes
(Aditya Mehta) #129

You mentioned that Sunkist has taken off well as compared to ITC’s B Natural.
I would like to know the reasoning behind this statement.
Could plz share your source of information?

1 Like
(phreak) #130

Having tried Sunkist, Real, Tropicana, Minute Maid and B-Natural - I don’t think anything is remotely as good as B-Natural in terms of quality. ITC might be a little ahead of its time here. Their Mixed Fruit is thicker than the rest (Same is true for their Guava as well), noticeably so and all their products taste more natural. Its not there yet but I think ITC products will do well in the future once Indians are ready to pay for quality.

3 Likes
(grohal) #131

Indians are already paying for quality, see the sales of Paper Boat!

(phreak) #132

Good point. I think Paper Boat has great packaging, marketing and branding to go with its quality. Also, their fast moving line is the 200 ml packs while the ones I was talking about were the 1 litre packs. Maybe the pack size could have something to do with sales too.

2 Likes
(shreys) #133

Today, after years, I had the opportunity to visit a Food Bazaar outlet. I’ve fond memories of visiting Food Bazaar as a child.
However, there has been a massive transformation at Food Bazaar over the years- Shelves dominated by brands from Future Consumer.
My thoughts on the shopping experience aren’t relevant to this enterprise. Hence, I’ll share my thoughts just on the products bought at the store.
First of all,
I’ll have to express my admiration for the fashion in which they’ve grown their consumer products business. My opinions on the valuation of the business may not be in harmony with that of others. But, I really like the brands they’ve created.
Before visiting the store I had come across promotional material on Tasty Treats.
Hence, I shopped for some products from the Tasty Treats brand.
Tasty Treats, as a brand encompasses multiple products with great diversity-
From Italian Pasta to Indian Khakhra.
From fruit juices to sauces .
From biscuits to pickles.
From rusks to soups.
That’s indeed a wide spectrum.

The product that impressed me the most was the range of Tasty Treat juices.
Now, there’s no dearth of fruit juices in Indian markets. Various flavours offered by various companies at various price points.
Tasty Treat juices are available in multiple flavours, choices.
Tasty Treat Mango Beverage-
Mango beverages are very popular in India.
Popular beverages in this category being Frooti, Maaza, Slice, Mango Sip,etc.
They typically cost around Rs 60- 65 per litre.
Tasty Treats’ mango beverage is available at Rs 90 for a 2 litre bottle( MRP). I was able to buy a bottle at Rs. 69 for 2 litres thanks to the discount offer.
The beverage was delicious. I understand that it’s totally subjective. But, for the price paid it was truly an excellent product.
I would recommend the offering.

Tasty Treat Mixed Fruit Juice:
2 litres of mixed fruit juice is available for Rs. 91 after discount. It’s less than half the price of competitors.
Decent taste and good value for money.
In my opinon, their popcorn range is excellent for the price compared to alternatives like Act 2.
And, cream wafers and biscuits are also comparable to competitors.
If an unbiased view is taken there’s a healthy chance someone might like these products and switch to it.
The tomato ketchup is alright.
As most will agree, taste is totally subjective.
There’s no right or wrong.
I would definitely rate the products highly- On taste front and value for money front.
I’d certainly be willing to try other products offered by Future Consumer.
Now, it’s pertinent to share that the sample size in my case was very small. But, most members liked these products.
Only problem being that these products aren’t available at other chains and stores.
If they’re able to facilitate wider distribution of their products I think that there would be quite a few consumers who’d be willing to try these products.

1 Like
(Darkwanderer79) #134

B-Natural have got some really innovative products lined up which will take them much ahead of the competition. They have made heavy investments / new production line set-ups…as they product is totally different from what is being offered in the market.

(Darkwanderer79) #135
(Marathondreams) #136
2 Likes
(Darkwanderer79) #137

Future Consumer has made further investment in Integrated Food Park Private Limited (‘IFPPL’), a subsidiary company, by acquiring the entire stake held by Capital Foods Private Limited in IFPPL.

(Gary) #138

I’m not making absolute comparison. B Natural was existing company and ITC bought over a year ago…while Sunkist is barely six month old (from the time they established supply chain)

(gmahtolia) #139

Just been to the Future Retail’s Big Bazar Gen Nxt store. Way better than the normal BB stores. Had good crowd and most importantly good showcasing of FConsumer products.

3 Likes
(Aditya Mehta) #140
(inonix) #141

Latest result. Q4 and FY18 .

(gmahtolia) #142

Numbers look OK when seen YoY but a mere 3% increase in topline QoQ is not an encouraging indicator.