Nestle SA., the world’s largest fast moving consumer goods (FMCG) player by revenue and the parent of Indian F&B major Nestle India, is eyeing to acquire an Indian brand – Ching’s Secret. While the company is yet to disclose its plans, the deal, if successful, has the potential to change the dynamics of the local market.
As per sources, the acquisition bid that has been placed by the global parent could fetch close to $ 1 billion (over Rs 8,000 crore) for Capital Foods that owns the Ching’s Secret brand. Started in 1995, the brand has been instrumental in developing the Indian form of Chinese in the country’s ready-to-cook (RTC) category. It has established itself as a ‘Desi Chinese’ brand with varieties of Indianised forms of noodles, masalas, sauces, pickles and soups.
While Nestle already owns the largest instant noodles brand in the country – Maggi – with over 60 per cent of the Rs 5,000 crore branded instant noodles market in India, its bid to acquire Ching’s is not without a rationale, says experts. With the growing popularity of ‘desi Chinese’, Nestle of late has tried to place its bid with its own Maggi ‘fusion’ instant noodles range, in a segment that is dominated by Ching’s. Additionally, the Ching’s portfolio could also help Nestle accelerate its expansion of the Maggi portfolio into categories beyond instant noodles – like Chinese sauces, masalas and pastes. Overall, the branded RTC category in India is growing at a double-digit rate and is estimated to be well over Rs 12,000 crore.
Over the last few years, Nestle has already tried to expand its masala and sauces with newer variants and ventured into new categories like RTC pasta, poha, upama, among others.
When asked, a Nestle India spokesperson declined to comment.
According to Abneesh Roy, executive director, Nuvama Institutional Equities, if the deal goes through Nestle India’s addressable market will expand. Products like Ching’s Secret Schezwan Chutney, Instant Soups, Chinese Masalas, Chinese Sauces, Hakka Noodles, Instant Flavoured Noodles and Smith & Jones Ketchup, Pasta Masala, Paneer Masala, and Ginger-Garlic Paste, could help boost Nestle’s consumer base.
“It (Capital Foods) also sells Smith & Jones cooking pastes and masala mixes. The cooking paste and condiments categories are largely unorganised and Capital Foods compete with the likes of Mother’s Recipe, Dabur and ITC in the branded space,” said Roy, adding that Capital foods have been the first to identify and label the unique cuisine ‘desi Chinese’, which is native to India and loved across the USA, Canada, Australia, the UK, and Singapore.
In FY22, the Mumbai-based Capital Foods had a revenue of Rs 580 crore with a net loss of Rs 7.4 crore. The company has own manufacturing plants in Vapi, Nashik, and Gandhidham, apart from a range of co-packers. While its Ching’s Secret brand is endorsed by Bollywood star Ranveer Singh.
As per sources, the three major shareholders of Capital Foods Pvt Ltd have decided to put the company up for sale, in what could turn out to be one of the largest buyout of a home-grown consumer brand. Its key stakeholders are private equity group General Atlantic (35 per cent share), European family office and investment arm Invus Group (40 per cent share) and former ad executive turned food entrepreneur and founder chairman Ajay Gupta (25 per cent share).
Also Read: Swiggy Instamart head goes on a sabbatical; cites compromises on ‘physical & mental well-being’