LT Foods forms joint venture with Japanese snack maker Kameda Seika

Industry:    2016-11-25

NEW DELHI: LT FoodsBSE 1.98 %, the maker of Daawat branded rice, and leading Japanese snack company Kameda Seika will jointly invest $10 million in a 51:49 joint venture to sell rice-based snacks in India. “Competing with brands such as Pepsi-Co’s Lays is difficult in snacks. So we decided to create a new category through the association with Kameda. The JV will leverage LT Foods’ distribution and logistics network and Kameda has proprietary manufacturing capabilities of rice-based snacks,” Ashwani Arora, managing director of LT Foods, told ET. He said once established in India, the JV will consider exports to markets in South Asia.

“We intend to grow our business across value-added categories. Since our core competence is rice and Kameda is the global leader in rice-based snacks, the opportunity to scale up the business is huge,” Arora said. “Consumers are looking for healthier snacking options and there are limited options in that space.” Kameda Seika’s objective was to tap high-potential markets such as India and become a global foods player, Chairman Michiyasu Tanaka said.

LT Foods forms joint venture with Japanese snack maker Kameda Seika

“Our optimism in India is based on its 1-billion-plus consumers. Slowing down of consumption currently is short-term, India remains a high investment market with a natural potential for snacking,” he said. LT Foods, which makes Daawat and Royal packaged rice, apart from staples and organic foods, will roll out the snacks by April. It will steer clear of entry-level price points of Rs 5 and Rs 10 and instead compete at high-margin points and sell in SEC-A and B markets. The company’s net sales last year was Rs 2,979 crore. Kameda is Japan’s largest producer of rice crackers. Tanaka said for its overseas business, it was looking to strengthen its earnings structure and capabilities of existing businesses, besides scouting for opportunities of mergers and acquisitions and joint ventures.

Last year, LT Foods acquired Hindustan Unilever’s rice exports business under the brands Gold Seal Indus Valley and Rozana. In July 2016, it entered into an agreement to acquire the branded rice business of DSSS Group through its UK subsidiary LT Foods International.


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