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LT Foods to enter JV with Kameda Seika to manufacture rice-based snacks
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Monday, 05 December, 2016, 08 : 00 AM [IST]
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Our Bureau, Mumbai
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LT Foods, a global specialty foods company whose brands include Daawat, Royal and Devaaya, is entering a joint venture with Japan’s Kameda Seika to manufacture and market rice-based snacks in India.
LT Foods has a presence in over 65 countries. In financial year 2016, its revenue was approximately Rs 3,000 crore. Daawat and Royal registered strong volume growth of 25 per cent, both in the Indian and international markets in financial year 2016.
Kameda Seika, the global leader in rice-based snacks, commands a market share of about 30 per cent in Japan and has a prominent presence in the gluten-free cracker market in the United States. LT Foods and Kameda Seika believe the large and expanding urban middle-class in India is ripe for a healthy and tasty alternative to fried potatoes and wheat-based snacks.
Through this partnership, the joint venture will introduce rice-based snacks with proprietary Japanese technologies developed over 30 years. These products have been highly successful in Southeast Asia and the United States. The joint venture plans to launch four different flavours customised for the palates of Indian consumers.
Once the joint venture has cultivated and established a stable position in the Indian market, it will look at exporting the product to regional markets in South Asia.
LT Food’s existing strong distribution network and supply chain was a key attraction for Kameda Seika. The joint venture, which will start manufacturing the snack range in Sonepat later in the next financial year, is expected to become a pioneer in the rice-based snack food category.
Apart from investing equity, Kameda Seika will help the joint venture in technical matters relating to manufacturing, flavour development and package design, as well as lend its experience in marketing rice-based snacks globally.
As per McKinsey’s report, the Indian sweet and salty (S&S) snack market was estimated to be worth Rs 15,000 crore. As middle-class incomes expand, the consumption of S&S snacks is expected to more than double from current levels over the next five years to Rs 38,000 crore. With the increase in volume and price, the non-branded segment of the market, which accounts for 33 per cent, is expected to shrink further.
Research has shown that in the last two years, only five new variants were introduced by pan-India snack food players. Leveraging on this, a few entrants are expected to capture a sizeable portion of the market. With a completely differentiated set of products, the joint venture aims to be the leading new entrant. The company believes that health and wellness are among the primary drivers of such a new category.
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