Colour and bling: Aditya Birla Group eyes $25 bn rev from consumer ops in 5 years as it enters crowded jewelley market | Mint

New Delhi: Aditya Birla Group expects its consumer business to surge to $25 billion over the next five years as it bets on its new segments such as paints and jewellery. 

The group announced its entry into the branded jewellery business on Friday, marking the presence of yet another large conglomerate in India’s ₹6.7-trillion jewellery market. It has earmarked an investment of ₹5,000 crore for the jewellery business, which will be housed under Novel Jewels with the brand name ‘Indriya’.

“This year, we have redoubled our bet on the dynamism of the Indian consumer, by launching two major new consumer brands—in paints and jewellery,” Kumar Mangalam Birla, chairman, Aditya Birla Group, said in a statement.

“Entering the jewellery business is compelling due to the ongoing value migration from informal to formal sectors, the rising consumer preference for strong, trusted brands, and the ever-booming wedding market, all of which present substantial growth opportunities,” he added. “We will be among the top 3 national jewellery retailers over the next 5 years, and will continue to grow at a 50% CAGR.”

The Aditya Birla Group already earns about 20% of its revenue from its consumer businesses.

“I believe this will increase to over 25% over the next 5 years to reach about $25 billion of revenue from consumer businesses,” Birla said at an event in New Delhi. “One of the key drivers for this will be, of course, the successful ramp-up of our newest consumer businesses, paints and jewellery retail.”

The group’s revenue from its consumer business, which includes lifestyle retail, financial services, and telecom, in 2023-24 was $13 billion.

Colour and bling

Earlier this year, Aditya Birla Group entered the decorative paints business under the ‘Birla Opus’ brand under its flagship company, Grasim Industries Ltd, targeting ₹10,000 crore in gross revenue within three years of full-scale operations.

The entry into jewellery is a “natural extension” for the group, which has been in the fashion retail and lifestyle industry for over 20 years, the company said in a statement.

Initially, the group will open four Indriya stores in Delhi, Indore, and Jaipur, and plans to expand to more than 10 cities within six months. The brand will offer an initial assortment of about 15,000 curated jewellery pieces with more than 5,000 exclusive designs.

To be sure, Aditya Birla Group’s Novel Jewels will have to compete with the likes of Tata Group’s Titan Co. Ltd, Kalyan Jewellers India Ltd, Joyalukkas, and Reliance Jewels. In the paints sector, Birla Opus faces tough competition from Asian Paints Ltd and Berger Paints Ltd.

Also read | Grasim’s entry sparks caution but fund managers also favour Asian Paints 

India’s organised jewellery sector has grown from 22% of the overall market in 2018-19 to 36-38% in 2023-24. In that period, the sector’s revenue grew at a compound annual growth rate of 8%, reaching a market value of ₹6,400 billion, brokerage Motilal Oswal said in a report in June. 

The organised jewellery market clocked an 18-19% revenue CAGR in those five years, while Tata Group’s Titan Co. Ltd, Kalyan Jewellers India Ltd, and Senco Gold combined recorded a 20% revenue CAGR, it added.

Also read | Titan slips on dull Q1 update; competition clouds loom

India’s jewellery market already sees the presence of large local and national retail chains that are trying to capitalise on the shift from the unorganised to the organised market. 

“The shift from unorganized/local players to organized players has been significant and augured well. We believe that some of the pent-up demand has already subsided during FY23-FY24. Therefore, those benefits have already been captured,” Motilal Oswal said in its report. 

“However, the underlying shift towards consumers purchasing from branded retailers, upgrading to studded products, and increasing their frequency of visits (for normal wear, etc.) will continue to benefit the category over the medium term,” it added.

However, elevated gold prices continue to remain a challenge for organised jewellery retailers.

Titan and Kalyan’s latest business updates have disappointed with slower revenue growth, as their jewellery operations face increasing competition and elevated gold prices.

Shopping for designer labels

The Aditya Birla Group has been ramping up its consumer business in recent years. 

In 2018, the group set on a path to create an ethnic-wear portfolio after having primarily operated in the market for western clothing. 

Over the past few years, its apparel and lifestyle arm, Aditya Birla Fashion and Retail Ltd, has made a series of investments in homegrown apparel makers, picking up majority stakes in designer brands such as Sabyasachi, Shantnu & Nikhil, House of Masaba, and the artisanal brand Jaypore. 

Additionally, it has developed in-house brands such as Tasva with Tarun Tahiliani and Marigold Lane. 

In FY22, the group acquired the India business of American footwear and clothing brand Reebok. In September 2023, it acquired a 51% stake in TCNS Clothing, giving it access to brands such as W, Aurelia, and Wishful.

For 2022-23, Aditya Birla Fashion and Retail reported a 53% surge in revenue to ₹12,418 crore.

The Aditya Birla Group is a $65-billion global conglomerate operating in 36 countries with more than 187,000 employees.