The consumer division of the Tata Group is currently engaged in negotiations to acquire a substantial 51% stake in India’s iconic snack food giant, Haldiram’s. This potential deal has the potential to bring about significant changes in India’s snack food industry. However, sources familiar with the matter have revealed to Reuters that Tata is facing a challenge in meeting Haldiram’s proposed valuation of $10 billion.
Haldiram’s, a household name in India, is also exploring the possibility of selling a 10% stake to private equity firms, including Bain Capital, as per insider information.
If these negotiations come to fruition, it would place the Indian conglomerate directly in competition with global giants like Pepsi and Mukesh Ambani’s Reliance Retail in the fiercely competitive Indian consumer market. Tata Consumer Products, the arm of the conglomerate responsible for a diverse portfolio that includes the UK-based tea company Tetley and a successful partnership with Starbucks in India, is actively involved in discussions to secure its desired stake, sources informed Reuters.
While Tata has shown interest in acquiring more than just a 51% stake, they have also conveyed to Haldiram’s that the proposed valuation is quite steep, according to insiders. The potential acquisition presents an exciting opportunity for Tata, as one source noted, “Tata (Consumer) is primarily known as a tea company, whereas Haldiram’s holds a significant market share in the consumer space.”
This isn’t the first instance of interest in the family-run business. In 2019, Kellogg’s from the United States expressed interest in acquiring a stake in Haldiram’s to diversify beyond the cereal category. However, those discussions did not materialize. Additionally, there were reports of the private equity firm General Atlantic considering a 10% stake in the food brand.
Haldiram’s has a rich history dating back to 1937 when it started as a modest shop, renowned for its delectable “bhujia” snack, which is available at mom-and-pop stores across India for as little as Rs 10. Over the years, the company has carved out a substantial niche for itself, holding nearly 13% of India’s $6.2 billion savory snack market, as reported by Euromonitor International. In this competitive market, Pepsi, known for its Lay’s chips, also holds a comparable 13% market share. It’s worth noting that Haldiram’s snacks are not only popular in India but are also sold in overseas markets like Singapore and the United States. The company further expands its reach through approximately 150 restaurants offering a range of local delicacies, sweets, and Western cuisine.