Dabur India’s acquisition of spices company Badshah Masala will help the FMCG major expand its portfolio to food products and become a complete food and beverage player, CEO Mohit Malhotra has said.
“We have the vision to extend our beverage portfolio to food and beverage portfolio and the acquisition is an attempt in that direction. We have a 70 percent market share in our beverage play but now we want to extend this to food too,” Malhotra said on October 27 during an investor call, a day after reporting second-quarter results.
Dabur India sells beverages under the Real brand.
The company, in an unprecedented move on October 26, announced its entry into the spices segment with the acquisition of Badshah Masala.
The company acquired a 51 percent stake in Badshah Masala for Rs 587.52 crore, with the Badshah enterprise being valued at Rs 1,152 crore.
The company, said Malhotra, would initially focus on strengthening the company in regions of Maharashtra, Gujarat, and Telangana, where the brand already has a strong presence. It would later expand to adjoining states like Rajasthan and then pan-India.
Badshah Masala has 80,000 distributors and Dabur India plans to leverage its larger distribution network for expanding the brand.
According to Malhotra, Badshah Masala would operate as a standalone entity and promoter Hemant Jhaveri would retain the position role of managing director.
Dabur India’s acquisition of Badshah Masala comes at a time when rival FMCG majors such as Tata Consumer Products and ITC, too, are making a bid for the segment through their brands Tata Sampann and Aashirvaad, respectively.
The spices market in India is valued at Rs 70,000 crore, in which branded spices command only a 35 percent share, a report by Avendus Capital said.
A paper released by the investment bank last year estimated that the branded spices market is set to double in size by 2025 to Rs 50,000 crore.
Avendus estimates that by FY30, 15 spice companies will each exceed Rs 1,000 crore in revenue and of these, four would achieve ₹5,000 crore in annual turnover.
FMCG companies have, so far, largely stayed away from the segment due to its commoditised nature. However, earlier this year reports surfaced that FMCG major Hindustan Unilever had made a move to acquire one of the oldest players in the spices segment, Mahashian Di Hatti Pvt Ltd or MDH. MDH and HUL both denied the report .
According to market estimates, Everest, MDH, Sakthi Masala, Aachi, and Eastern Condiments are the top players in the packaged spices market. Dabur India claims that Badshah Masala has a 5-7 percent share of this market.
Dabur reported a 2.85 percent decline in consolidated net profit to Rs 490.86 crore for the second quarter ended September 30.
The company posted a net profit of Rs 505.31 crore in the July-September quarter a year ago, the company said in a regulatory filing. Its revenue from operations rose 6 percent to Rs 2,986.49 crore against Rs 2,817.58 crore in the year-ago period
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