ITC India has announced that it is all set to acquire Sunrise Foods Private Ltd, a Kolkata- based spice maker. The company has entered into a Share Purchase Agreement (SPA) to acquire 100% equity of Sunrise Food Pvt Ltd (SFPL) which has a legacy of over 70 years. This move is aimed at strengthening the FMCG portfolio of the company and significantly scale up their spices business across the country. Following this news of the acquisition, in the Tuesday morning trade, ITC’s market share has increased by nearly 4% on the BSE.
ITC’s spice brand Ashirvaad is very popular among the Andhra and Telangana markets and is also said to be the market leader with high export quality. Sunrise also shows a far-reaching presence in the eastern part of India operating across UP, Delhi, Rajasthan, Bengaluru, Bangladesh, and Nepal too, maintaining the position of being a market leader in packaged spice category. Sunrise has received many such merger-acquisition proposals from global private entities, which speaks volumes about their market position. This acquisition will briskly scale-up FMCG business in a lucrative manner by leveraging synergies – Sunrise Foods’ consumer connect, distribution network, and ITC’s agri-commodity sourcing, rural linkages, packaging techniques. ITC has set a turnover target of Rs 1 trillion from its FMCG business and expand its revenues beyond the cigarettes business by 2030. Its FMCG product line includes Ashirvad, Bingo!, B Natural, Vivel, Yippee!, all of these having a pan-India recognition and brand awareness.
The pandemic has brought about a change when it’s come to buying FMCGs. With the urban consumers buying in large packs and rural consumers opting for value packs, bringing out the right packaging is important. And ITC is currently evaluating the trends that have gained momentum during this extended period of lockdown.
According to Abneesh Roy, senior VP at Edelweiss Securities, “This is a positive development for ITC, as among its diversified portfolio, we are most excited by ITC’s food business because of synergy with its agri-business and a strong understanding of consumer taste due to its Hotel business,” According to him, it makes much more sense to buy a leader than creating a brand from scratch and that branded spice is a high growth segment as consumers are shifting from unbranded to branded due to higher focus on safety, trust, and quality.
