PepsiCo has entered the contest to acquire a minority stake in Haldiram Snacks, India's top ethnic snack company. PepsiCo's presence has piqued curiosity, as it competes with prominent candidates such as Temasek and Alpha Wave Global, both of which are in advanced negotiations with the Agarwal family, the founders of Haldiram. These candidates apparently made firm proposals for 10-15% stakes in December of last year.
Executives from PepsiCo's New York headquarters have begun talks with the Agarwal family in recent weeks. These discussions are in their early stages, with finance for the possible sale expected to come mostly from PepsiCo's US parent, with its Indian business playing a supporting role, according to the report.
The Agarwal family is seeking a valuation of Rs 85,000-90,000 crore, which is the first time Haldiram has considered bringing in an external partner.
PepsiCo's Market Challenges
PepsiCo, known for its Lay's, Kurkure, and Doritos brands, is facing increased competition in India's snack sector. Regional players such as Bikanerwala and Balaji, as well as publicly traded companies such as Bikaji Foods, Gopal Snacks, and Prataap Snacks, have reduced the company's market share through competitive pricing and direct distribution.
While PepsiCo dominates the western snack segment with a 24% market share, it falls behind in ethnic snacks like namkeen and bhujiya. A collaboration with Haldiram might provide PepsiCo with substantial distribution networks and a better footing in this fast-growing market.
PepsiCo's India head, Jagrut Kotecha, was especially chosen to develop the company's snacks segment. This decision is consistent with PepsiCo's focus on revitalizing its snacking business, as its beverage bottling activities are primarily outsourced to Varun Beverages Ltd.
PepsiCo previously bought trademarks such as Uncle Chipps in 2000 and introduced Doritos nachos in 2016-17. These measures illustrate the company's ambition to expand in the snack segment.
Despite PepsiCo's interest, analysts predict Haldiram will seek a premium or a majority sale rather than a minority stake. Past conversations with corporations such as Mondelez, Kellogg's, and Tata Consumer did not result in deals.
Temasek is now leading discussions for a minority share with a stated value of more than $1 billion. Rival offers from Blackstone and Alpha Wave Global have increased the level of competitiveness. However, previous conversations suggest that Haldiram's founders may hang out for higher sums.
According to the analysis, the Indian snacks market will be worth Rs 95,522 crore by 2032, up from Rs 42,695 crore in 2023.
