| Tatas have realised that ready to eat segment provides a big opportunity. India Hotels has formed a new 100% subsidiary Residency Food & Beverages, as the flagship company to convert processed food business into a billion dollar arm, reports NDTV Profit.
Company officials say the acquisition of Innovative Foods and the Sumeru brand portfolio is the beginning and more domestic acquisitions are already in the pipeline.
Sources say that Tatas want to expand in frozen, ready to cook and dairy products, baked foods, fruits and vegetables and seafood through greenfield ventures and acquisitions as well. At least three mid size food brands have been identified as buyout targets with each deal size around Rs 65-100 crore.
"We are examining several options because in some there are good targets, in some you need to go back to the greenfield and build the project up. It could be abroad as well. But we are hoping to build the economy here as well. We are also looking at several Japanese companies," said Shiela Nair, CEO, Innovative Foods.
Japan will be a natural market for expansion. Recently acquired Innovative Foods has had business relationships with a number of Japanese companies including Nissen Foods, Itochu and the food arm of Mitsubishi.
In India too, investment bankers say, the local foodscape is dotted with small regional brands like Temptations and Garden Foods offering great scope for consolidation. ITC, Godrej and MTR are the big brands in the same space.
What is interesting is that the Tatas food foray is very similar to that of ITC's. Both have their hotel businesses and are exploring synergies between the two, both are looking at the ethnic markets overseas to expand. ITC's kitchen's of India is a flagship brand while Tatas too have similar ideas.
From food the next step will be retail and the company's top brass told NDTV that they would continue to offer the Sumeru portfolio to franchise through domestic and global retailers. As the Tatas finalise their retail play one thing is for sure they will have in-house resources for all the private food labels.
Source: http://www.ndtvprofit.com
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