American breakfast cereal maker Kellogg is counting on acquisitions to grow its India business at a time when rivals are getting aggressive in the space.
Speculation is rife about Kellogg acquiring Haldiram’s to grow its India sales. If talks fructify, Kellogg can enter the Indian snacks market. The company has been eyeing a 51 per cent stake in the north and west factions of Haldiram’s, while the Agarwal family, who are promoters of Haldiram’s are willing to divest only around 25 per cent.
In December, Anglo-Dutch major Unilever said it was acquiring the health food drinks portfolio (including the Horlicks brand) of GSK Consumer in a Rs 31,700 crore deal. The transaction would see GSK Consumer merging with Indian unit Hindustan Unilever (HUL), making it the largest food company in the country at Rs 10,700 crore. The merger of GSK Consumer with HUL was approved by the Competition Commission of India last month and the deal is likely to be sealed by the end of this calendar year. Kellogg, in fact, was amongst the initial bidders for Horlicks along with a clutch of other MNC majors including Coca-Cola, PepsiCo, Reckitt Benckiser, Nestlé and Unilever.
At Rs 1000 crore, which is Kellogg’s India turnover, according to industry estimates, its sales are only 10 per cent of HUL’s food revenues (post the GSK Consumer transaction).
Kellogg, under new India MD Mohit Anand, who joined the company in July 2017, has been expanding its portfolio and going beyond its core category of corn flakes into larger grain-based products such as muesli, oats and granola.
The larger breakfast cereals market has also become competitive with Nestlé entering the category in 2018.
Source: Business Standard