Kishore Biyani, group chief executive officer, Future Group, on Wednesday said that equal joint venture with New Zealand-based cooperative dairy giant Fonterra will increase the sale of dairy products in the stores.

Talking on store expansion, Biyani said, "We will be soon reaching three stores a day kind of opening for small stores. Wanting to move up to six stores a day by next year. We are opening around 30 new ‘Big Bazaar’. As a group, we will be touching 118 ‘Brand Factory’ by March from the current 70."

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Future-Fonterra Joint Venture: Will be using three methods to expand dairy business, says Kishore Biyani

In an exclusive interview to CNBC-TV18, Ashni Biyani, managing director of Future Consumer Ltd, said that Future Group will be using small stores, big format stores for distribution and is building new models such as subscription and door-to-door delivery.

Edited excerpts:

Q: Detail us about the partnership with Fonterra and the kind of investment the future group is putting into this partnership?

Kishore: This is a partnership of equal in a way. Fonterra which is a New Zealand company, Future Consumer which is one of the Future Group companies both have come together in a joint venture partnership of 50-50 to build, develop and to scale up dairy business in the country. That is the partnership which we are announcing today.

Q: How the distribution will play out for the company and will you be using several of a stores as touch points, will it be a subscription based model, what is the kind of model that you are working on?

Ashni: Definitely, we will be using this small store reach and the big format reach of our group. Additionally, Future Consumer is also building a general trade model where Future retail stores do not reach. So we will be using all our touch points. In addition to this, yes, we will in general trade as well and we will build model such as subscription and door-to-door delivery.

Q: About 10-12 percent of sales comes from dairy in the stores that you sell your products in, how much with this shift after these product kick-in and what is the kind of medium to long term revenue targets that you have for this business?

Kishore: I think 7-8 percent is the current sale in small stores on dairy. But some very good stores like food oil does 13-14 percent and diary can easily sell 10-12 percent of your sale provided you have a range, assortment, availability all happening. That is what is joint venture will bring in. It will up the sale of dairy products in our stores. Once you have consistency, quality, supplies and supply chain perfection, so that is what we are looking for.

Q: Losses have narrowed to Rs 6.1 crore odd do you think that when can we expect profitability to start kicking in and what is going to be the roadmap towards profitability?

Kishore: I am not giving any guidance on that.

Ashni: At a standalone level we are already profitable and towards the end of this year you will see a better performance for us. We are not specifically talking about Future Consumer results today.

Kishore: I think the growth, we expect to end the growth probably at maybe 40-45 percent level.

Q: You had rolled out the Tathastu strategy at Future Group and store expansion was a big part of this. Run us through what is the expansion plan for this financial years in terms of stores?

Kishore: We will be soon reaching 3 stores a day kind of opening for small stores. Wanting to move up to 6 stores a day by next year. We are opening around 30 new Big Bazaar. As a Group we will be touching 118 Brand Factory by March from currently 70. So there is expansion all around which is happening at the Group. Maybe 2.5 million square feet of addition this year. So, expansion is right on the track.

We think, we have been a little slow on growing up our small stores, so we are increasing our space and making all things come together. So, we are currently at 1-1.5 stores a day kind of a number which we want it to raise it to 3 and then more to six.

Q: By end of this financial year how much will that be?

Kishore: We would be at around close to 1,000 stores. We want to end March 2019 close to 2,000 stores.

First Published:Aug 8, 2018 5:54 PM IST