Eveready to Reorganise Packet Tea Business
Eveready Industries India on Monday officiallydecided to reorganise their packet tea business examining and evaluating all alternatives. "The board has authorised Managing Director Amritanshu Khaitan to examine and evaluate all relevant aspects and alternatives for the reorganisation, including the option of continuing with packet tea operations through a wholly owned subsidiary," a company statement said here.
Bengaluru: Eight years after India’s biggest cookies maker lost its taste for partnerships in foods, Britannia Industries invited Greek baker Chipita to make rolls, croissants, and other dough products in a joint venture to meet the demands of a rapidly urbanising home market. “We’ve signed a non-binding MoU and are working towards formalising a joint venture. We see immense scale through this partnership, since the categories are highly scalable and are bridge products between biscuits, chocolates and fresh bakery, at competitive prices,” Britannia managing director Varun Berry told ET in an exclusive chat, ahead of the formal announcement, which is expected over the next couple of weeks. The maker of Good Day and Tiger cookies will likely hold the majority stake in the venture that will involve an initial manufacturing investment of about $11 million. Berry said Britannia will set up facilities next to its existing plants to optimise logistics costs, and leverage its existing strengths of supplychain and distribution networks.
The tie-up with Chipita is the first JV the Nusli Wadia-promoted Britannia will formalise after its tie-up with New Zealand’s Fonterra Dairy was dissolved in 2009 on account of lukewarm market response and losses. Britannia’s venture with French food and dairy giant Groupe Danone SA was also terminated the same year after a protracted legal battle.
“This partnership gives us a long runway for aggressive growth in a completely new category,” Berry said. The rollout across markets including modern trade stores as well as tier-two markets is expected early next year.
According to a Euromonitor report, savoury snacks in India are expected to register a 12% compounded annual growth rate over until 2020, with sales reaching ₹ 445 billion. This growth, the report said, will be driven by increase in consumer's purchasing power, product innovation and expansion in lower tier cities and rural areas.
Spyros Theodoropoulos, chief executive of the 800-million Chipita said that outside of Europe, in every country the company operates through joint ventures. “The diversity and young population of the Indian market makes us very optimistic about growth here.” Chipita has had a minor presence in India: Over the past four years, it has been selling its confectionery brand Feniti.
The over three-decade-old company has joint ventures in the Middle East with the Almaraih group (with which PepsiCo too had an existing partnership), and operates in Egypt as Edita Food Industries through a joint venture with the Berzi group. In Saudi Arabia, Chipita operates as Modern Food Industries (MFI) through a partnership with the Almarai group and the Olayan Group.