IndiaRetailBiz

The organised retail has begun to flex its muscle, as never before!

This became evident when Anand Kripalu, Managing Director of Cadbury India, the Indian subsidiary of the global confectionery giant, decided to call on Kishore Biyani, Chief Executive Officer of Future Group, with his team of executives to sort out perceived differences between the two groups on terms of supply of Cadbury’s chocolates and other products to Future’s retail chains operating under several formats.

As reported earlier, Future group CEO had ordered his retail chains (Big Bazaar, Food Bazaar, among others) to remove Cadbury’s brands from their shelves as the multi-national giant was offering more favourable commercial terms to international chains like Shoprite of South Africa and Metro C&C of Germany that are operating within India. He had gone on to even mention that the global major was treating his companies like ‘paanwalahs.’

Although, perceived anomalies in trading terms, according to an ET report, are still to be sorted out, Kishore Biyani has agreed to call off the boycott of his companies of Cadbury’s products in their retail chains, as a gesture of goodwill.

Although Cadbury officials rejected allegations made by Future Group maintaining that their deals were linked to the contribution made by a retailer to local sales, they were clearly unprepared for the stand taken by Future group. India is an important market for Cadbury both in terms of its market share and future growth prospects, as despite increased competition it still commands over 70% of domestic market. Emerging market are also important as they now contribute around one third of its global sales and offer growth opportunities.

Operating with wafer-thin margins and rising realty costs, organised Indian retailers have begun to demand higher margins and better trade terms as regards fill rates and level of inventories. Many of the modern retailers have also begun to patronise foreign brands like Mars and Snickers, which are growing at a faster pace than indigenously produced brands owned by well-known companies like Cadbury and Nestle.

Even Future group is trying to launch its own “Tasty Treats” brand of chocolates

According to Samar Singh Sheikhawat, Vice-President (Marketing), Spencer’s Retail, as reported in Business Standard, “Sales of imported chocolates has become equal in value to that of the domestic brands put together. Whereas the imported chocolates sales are growing at 100 per cent, made-in-India brands are growing at around 25 to 30 per cent.”