Indian food products maker, Capital Foods, attracts interest from major FMCG players
Capital Foods, a leading Indian food products maker, is up for sale and has attracted the attention of several major global and Indian fast-moving consumer goods (FMCG) companies. The company is known for its popular brands like Ching's Secret and Smith & Jones, which offer a range of "desi Chinese" cuisine.
According to sources, the shareholders of Capital Foods, including General Atlantic and Invus Group, decided to put the company up for sale last year. The estimated value of the company is around $1-$1.25 billion . Potential buyers include Nestle, Kraft Heinz, Hindustan Unilever, Tata, ITC, Orkla, and Nissin Foods . Non-binding bids are expected in early May.
While the acquisition of Capital Foods could be a game-changer for any buyer due to its unique positioning, negotiations could stall over price. Capital Foods is expected to close FY23 with a Rs 900 crore top line and an EBITDA margin of 25%. Its core business is growing at a compounded annual growth rate of 30%.
Attracting global players like Nestle and Kraft Heinz, as well as local FMCG giants like Hindustan Unilever and Tata, indicates the growing interest in ethnic food products in India and beyond. The Indian ethnic food market is expected to grow at a CAGR of 12.5% during the period 2021-2026 [2].
The potential acquisition of Capital Foods by a major FMCG player could signal a strategic move towards catering to the growing demand for ethnic food products in India and beyond. The acquisition of Capital Foods could help FMCG companies expand their portfolio of food products, which are in high demand due to the growing trend of consumers looking for healthy and convenient meal options.
The race for Capital Foods is expected to be highly competitive, with several FMCG companies vying for the acquisition. While the acquisition could be a great move for any buyer, negotiations over price could be a stumbling block. The final buyer of Capital Foods has yet to be determined, and it will be interesting to see which of the contenders emerges as the winner.
In conclusion, the potential acquisition of Capital Foods highlights the growing demand for ethnic food products in India and beyond. It could also be a strategic move for FMCG companies looking to expand their portfolio of healthy and convenient meal options. The outcome of the race for Capital Foods remains to be seen, but it is clear that the competition will be fierce.
