The Hindu Business Line : Godrej to enter confectionery segment with Nutrine buy

The imminent acquisition of the Rs 180-crore Nutrine Confectionery Co Pvt Ltd by Godrej Foods and Beverages will mark the entry of the Godrej group into the sugar-boiled confectionery segment. The all-cash deal, worth approximately Rs 270 crore, will see the exit of the Reddy family, led by the uncle-nephew combine of Dwarakanath Reddy and Vikram Reddy from Nutrine, the market leader in the category with a 28 per cent volume market share. IL&FS will partner Godrej and invest Rs 90 crore in the company.

Confirming the deal to Business Line, Mr Vikram Reddy, Managing Director, Nutrine, said that the family, which founded the company in 1953, had been on the lookout for the right partner to acquire the company for a long time. "We know the Nutrine brand will be safe in Godrej's hands. As a family-run business we had our limitations. Earlier, it was a level-playing field with only Indian players in the confectionery business but now there are mostly MNCs in the field, with the exception of a few like Parle. It's a totally changed environment and we cannot spend like the MNC players on advertising and promotion," said Mr Reddy.

The deal involves a takeover of the brand and all the company's assets. The company has the capacity to produce approximately 2,000 tonnes of confectionery a year. Around 1,350 employees of the company will come under the new management. Mr Reddy said that while he would continue in an advisory capacity, the Godrej group has assured that the management would continue undisturbed. Mr Reddy said that Godrej was keen to grow its foods business and was confident that spends on Nutrine's advertising and marketing would be stepped up now. The Nutrine acquisition, he explained, right away makes Godrej a market leader in the segment. The Nutrine brand is distributed directly through four lakh outlets. Godrej Foods' portfolio includes fruit drinks, edible oil and tea and now, confectionery. The organised market for confectionery, chocolates and gums is around Rs 1,600 crore of which the sugar-boiled confectionery segment is Rs 750 crore, in which Nutrine leads. Almost 80 per cent of this market comprises products at the 50-paise price point.

Nutrine sold its 1,000 tonnes-a-month biscuits business to Sara Lee around eight years ago and Britannia subsequently acquired it.

Mr Reddy said that the family would continue with its business of fruit bars under the brand Naturo, apart from a few other businesses.

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