Future Brands, part of the Future group, which works with small and medium enterprises to scale up their brands, intends to take on more portfolios where it will be involved in operating and managing the brands of their clients.

This, says Mr Santosh Desai, CEO, Future Brands, would go beyond the brand advisory role it stuck to till earlier. Future Brands at present is managing the brand portfolio for the Kolkata-based McNroe Chemicals which has a clutch of toiletry brands such as Wildstone and Secret Temptation.

General trade brands

“These are not private label brands but general trade brands where we operate the brand on behalf of the client,” Mr Desai told Neytri in a recent interview. Future Brands has also tied up with a Bangalore-based baby care brand in a similar arrangement to scale up the brand.

As Ms Aanchal Jain, Vice-President (Brand Partnerships), Future Brands explains, this vertical of the company enters into brand partnerships with SMEs which are experiencing high growth but unable to scale up their brands to the next level. “We look after the marketing, packaging and media and manage the brand. Our team manages all the interfaces needed for the brand,” she says.

Since May of 2008 when Future Brands started managing the Wildstone brand of talcs and deodorants, the deo brand has become the third largest player in terms of share in the rapidly growing market for deos, says Ms Jain. In the last year, the Rs 550-crore market for deodorants saw a 45 per cent growth rate over the previous year. While HUL’s Axe has a 25 per cent share of the market, followed by Paras’ Set Wet, Wildstone has garnered a 7.4 per cent share, says Ms Jain. The brand, she says, is strong in certain markets such as Uttaranchal and Chhattisgarh as well as in West Bengal. There are plans to begin distributing the talc and deo brands in the South from this year on.

Under the stewardship of Future Brands, Wildstone and Secret Temptations will also be extended to the haircare and skincare categories and there are plans of extending it to apparel and accessories as well. Future Brands is also working on newer fragrances for Wildstone with a French perfumery from the town of Grassie in France. “Almost 70 per cent of customers are repeat and that’s helped the brand grow,” adds Ms Jain.

Consulting work

While Future Brands has done brand consulting work for prominent brands such as Titan, where it helped in defining its new positioning, its brand partnership is more of a long-term contract as it takes time to develop categories and the market for a brand, says Ms Jain.

Future Brands bases its revenues on either of three models: a share of revenue, equity or a fee or a hybrid model of either of these.

The deal is expected to be much along the like of the Wal-Mart Bharti deal where both a franchise and a JV arrangement have been forged. In the case of the Future Group there is likely to be a different arrangement for the foods category, the largest category for Carrefour, where the Future Group is expected to float a new company. Carrefour would have categories such as food, fashion, general merchandise, electronics, furniture and would be larger in size compared to the Big Bazaar outlets belonging to the Future Group. “Considering foods comprise nearly 85 per cent of Carrefour’s categories, there would be a different strategy employed in the Indian market. The Carrefour stores would be along the lines of Hypercity with straight line aisles and would have different positioning compared to the Big Bazaar outlets,” said an employee of the Future Group.

However retail analysts claim that unlike a franchise arrangement where no FIPB approval is required as there is no significant investment, in the case of JV a formal clearance would be required from the government. “It is likely to be a 50:50 JV which will be forged in foods,” stated an official of the Future Group. Considering the Future Group is relatively weak in the foods business and continues to source from other players, Carrefour would help in setting up the supply chain and sourcing infrastructure, akin to what it has been doing in other countries. “It is possible that Carrefour will set up its cash and carry operations independently and at the same time also forge a JV with the Future Group for the foods category. Carrefour will be a wholesaler in India and would be working closely with local producers and farmers,” stated an industry analyst. In the case of the Future Group, the Carrefour connection will help it in beefing up its supply chain infrastructure which is currently lacking in the foods category.

Carrefour has 15,000 stores across 33 countries, and in 2007 announced its plan to enter India through the cash and carry route.

Trust Kishore Biyani, the founder of Future Group, to spot new revenue streams before anybody else. The latest from Biyani is Indian-style hotels and schools to train entrepreneurs and help understand consumer behaviour. Both initiatives are expected to go on stream in the next six to eight months.

“Most hotels in the country are designed for business travellers — white-collar workers whose travel expenses are taken care of by their companies,” says Biyani. “We want to cater to the self-employed who travel to different places but are very careful about the money they spend. We will set up hotels in Indian style where people can get indigenous food.” The first such hotel is expected to come up in Raipur within the next six months. Biyani will set up a new company to manage the hotels.

Future Group’s earlier attempt to set up hotels through a hospitality fund managed by its financial arm, Future Capital Holdings, did not fructify, thanks to the collapse of Lehman Brothers which was a major investor in the fund. The fund is not a part of the foray this time. “The fund has nothing to do with our new hotel plans. We will do it separately,’’ Biyani says.

Besides hotels, Biyani has set his eyes firmly on education. Future Group, which already has a venture called Future Learning & Development, now plans to set up training schools. The first will come up in Mumbai’s outskirts. “We feel there is a need for real education — a new way of learning, something akin to what is propagated in 3 Idiots. Somebody has to initiate such learning; we thought we will do it,’’ Biyani says. The group will start three or four training schools in the next six to eight months.

This is not the first time Biyani has come up with a business model that targets India’s large middle class. Its hyper-store chain Big Bazaar, ethnic-wear chain Ethnicity, gold and jewellery brand Navaras, and no-frills store chain KB’s FairPrice are all targeted at the mid-income section of buyers. “Why should we blindly follow western formats and concepts? We should find Indian solutions for our consumers,’’ Biyani often says.

But Biyani, who says he has become a “realist” after the slowdown, is also known for pulling out of ventures that do not work out. He ended ventures with Italian brands Replay and Etam, and also pulled out from the airport retail joint venture with the UK’s Alpha group. He also scaled down expansion plans to save cash during the slowdown.

Industry analysts, however, point out that the hotel business bears little similarity to the retail business. Says a Delhi-based retail consultant who did not want to be quoted: “I am not clear what learning Biyani will take from his existing ventures to the new businesses because running a hotel is an entirely different ballgame. One has to build completely new skill sets. And it is a very strong employee-driven venture unlike retail where apart from the store manager, the rest are not key employees.”

The committee of directors has decided to raise up to Rs 500 crore by way of private placement of shares with qualified institutional placement (QIP), Pantaloon Retail (India) said in a filing to the Bombay Stock Exchange.

Earlier in July this year, the shareholders of the company approved raising funds to the tune of Rs 1,000 crore through one or more placements of equity shares, fully convertible debentures or any securities (other than warrants) which are convertible into equity shares, the filing added.

Shares of Pantaloon Retail (India) were trading at Rs 331 on the BSE, up 0.47 per cent from its previous close.

Biyani is the Managing Director of Pantaloon Retail (India) and the Group CEO of Future Group. The move is expected to aid in reviving the financial services business that failed to pick up because of the initial public offering (IPO) during the boom. It had also planned to collaborate with the nation’s second largest lender, ICICI bank, for launching credit cards but it could not happen.

Biyani said, “The business will go through a virtual integration with retail because of the synergies of a common consumer.”

The group had hired Goldman Sachs Group Executive Sameer Jain as the Vice Chairman and CEO of Future Capital holdings and economist Roopa Purushothaman to pursue its financial services but the plans were not materialized due to the global meltdown. These plans are being reconsidered.

A common group, Retail Financial Services, with members from Future group, Future capital Holdings (FCH) and Centrum Capital has been formed. The group would be responsible for integrating credit and personal investment products offered by FCH such as consumer loans, stock investing, forex and wealth management products from Centrum Capital and insurance products from the group’s joint venture, Future Generali on a common platform.

Even as we find our bearings after the economic storm of the last year, the Indian economy seems to be well on its way to a recovery and reaching pre-crisis levels. The scope and potential of the Indian economy, in general and the domestic consumption sector in particular, is characterized by some irreversible trends. This augurs well for the future, but it is crucial that we understand these trends so we use our resources in the most efficient manner possible.

When India’s economic progress and development are discussed, what you typically encounter is a barrage of numbers. What is rarely discussed, and what should be of most concern to people, are the underlying dynamics behind those numbers. During the next decade the Indian economy will cross the USD 2 trillion threshold. The largest contributor in our GDP will continue to be our domestic private consumption. Unlike other emerging economies, the fundamental strength of the Indian economy has been the fact that domestic consumption is the single-biggest contributor to economic growth. And over the last couple of years, the scope and extent of India’s domestic consumption is going through a rapid change.

With the growth in income and aspirations and backed by a younger demographic profile, Indians consumers are moving away from basic consumption to consumption of value-added products. Whether it is food, furniture or fashion, Indian consumers are increasingly opting for value-added products and brands. Catalysing this trend for value-added products has been the growth of modern retailing in India.

Modern retailing deals almost exclusively with value-added products. The transformative change that value-added products bring to the economy is in the number of jobs, income generation and wealth creation that takes place at every stage. This in turn creates new opportunities and possibilities for value-creators and entrepreneurs across the country.

As we move towards the next decade, I believe the biggest transformation we will see is the emergence of a new breed of Indian entrepreneurs and enterprise that cater to the growing demand for value-added products. These entrepreneurs will not necessarily come from Mumbai, Delhi or any of the large-metros. Instead, you will find them setting up their enterprise and emerging from the hundreds of smaller towns spread across the country. They will be based closer to the source of production and they will create jobs in each of these locations.

Modern retail stands to be one of the biggest catalysts of this change. Not only will it create the demand for value-added products, but also act as a platform for small entrepreneurs and producers to connect with the big consumers.

In my recent travel in smaller towns and interactions with entrepreneurs there, I was very enthused by them and their ideas. The new generation of young entrepreneurs represents the future of this country and they are far more confident than the earlier generation. I believe it is important for every generation of entrepreneurs to rebel against the convention and create something new that benefits consumers, employees and society at large. And that has started happening across every town and city in India.

The author, Kishore Biyani is the Group CEO of Future Group and the MD of Pantaloon Retail (India) Limited.

Indian home in celebrating this year’s festival of lights. While families gathered to pray to the Goddess of wealth, manufacturers and retailers alike breathed a sigh of relief, after the tumultuous last few months. Kishore Biyani’s claims of a “bumper season” with electronics and consumer durables flying off the shelves, further added to the buoyancy of the economic environment. Consumer durables companies like Samsung and Godrej Appliances spoke of 40 per cent and 30 per cent expected growth over the same period last year. Some business dailies reported that retailers were witnessing a 45 per cent increase in footfalls and 30 per cent increase in sales! And finally, as results from the second quarter rolled in, one after the other, there was ringing in of hope and optimism that the festivities will end the dry spell retailers have been facing since the end of last year.

There were several indications of the confidence that everyone was restoring in our economy. Automobile manufacturers led the way with the release of two new cars, Chevrolet Cruze and Tata Indigo Manza. In fact, riding on the Diwali crest, Maruti Suzuki posted its highest ever sales in a month! Luxury brands such as Jimmy Choo unveiled expansion plans in India, while Mont Blanc released a television campaign, a first for the prestigious writing instrument legend in India. New spenders such as furniture and interiors emerged. Other such as DTH saw resurgence.

Advertising toed the line celebrating the renewed spirit of giving. In evidence was marketers’ generosity with a plethora of offers, contests and discounts. Vodaphone’s consumer competition to win painting their houses by Dulux became a charming, much-talked about piece of communication. Cadbury’s campaign, Iss Diwali Kyun ka kuch Mithas ho jaye spoke, in altruist tones, of spreading the mithaas and festive joy beyond your intimate circle touched several chords. The campaign rightly questioned, Iss Diwali Aap Kise Khush Karenge? Kurkure’s Muh kurkure kare was a clever take on a new gifting suggestion. Titan timed its launch of a ladies collection of watches, Titan Raga Floras, with a bang in the run-up to Diwali. Reliance Big TV revealed a 360 degree campaign on the ‘Joy of ownership’ with customer testimonials as the communication medium. Clearly engines have revved up for the next few months, where media companies are pegging the industry will continue to see an upward spend and an upward trend.

(The author (K V Sridhar), better known as Pops, is National Creative Director, Leo Burnett)