US-headquartered breakfast cereal giant Kellogg plans to give a desi twist to its Indian operations. More than two decades after setting foot in India, the Michigan based company has kick-started discussions with iconic home-grown snack maker Haldiram’s for a mega alliance, multiple sources familiar with ongoing negotiations told ET NOW on the condition of anonymity. ET NOW was the first to report the story.
“Kellogg is keen to diversify beyond its core breakfast cereal category and enter the ethnic snacks & sweets segment and has initiated talks to invest a ‘significant’ amount in the Delhi & Nagpur arms of Haldiram’s. Deutsche Bank is advising Haldiram’s on this proposed transaction,” said one of the two sources cited above. On 13th June 2018, ET NOW had reported that Haldiram’s had appointed an investment bank and was exploring options to raise around Rs 2500 crores.
” Haldiram’s wants to scale up their domestic business & also improve global presence. The proposed transaction is limited only to the packaged products business of Haldiram’s and the restaurant business is not part of the ongoing talks,” clarified a second source. Earlier, private equity players were also in the race for the proposed transaction but ET NOW could not independently verify whether Kellogg is the solo contender currently.
Top snack maker Haldiram’s has three areas of operations with Haldiram’s Snacks and Ethnic Foods, which clocked Rs 2,136 crore from the north last year, Nagpur-based Haldiram’s Foods International that caters to western and southern Indian markets with annual sales of Rs 1,613 crore and Haldiram Bhujiawala, for the eastern market with revenues of Rs 298 crore in FY16, according to data from company research platform Tofler. The company is also present overseas in 50 countries including UK, USA, Australia, Japan, New Zealand, UAE & others. It is present in the namkeen, savouries, chips, fund foods & frozen foods categories according to the official website.
In the Asia Pacific region, cereal growth was led by India & Korea, according to the 2017 annual report of Kellogg. The Indian operations have been clocking double-digit growth over the past seven years and in a recent interview to the Times of India in February 2018, Mohit Anand, MD ( India & South Asia) was quoted as follows, ” The food culture in India is evolving in a big way. We are getting our teams at the cutting edge of food evolution in the country to understand how the Indian palette is changing. Our strength is in the area of grains. That’s what we do best. How do we match what we do best and what customers are evolving to – that’s where the business will get created.”
