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Candico explores global confectionary market with African acquisition

28-October-2004
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Candico explores global confectionary market with African acquisition

Indian confectionary major Candico today announced its venture into the $ 100-billion global confectionary market with its first overseas acquisition in Africa.

The Rs 125-crore company has invested in a $ 1-million plant in Tanzania (Africa) in October last year and has ramped up its capacity from 1,800 tonne to 3,900 tonne per annum. The company will further increase the plant capacity by 40 per cent within a year. Candico’s acquisition of the Tanzania plant makes it the only Indian confectioner to set up a manufacturing unit overseas and is the first phase of its global expansion strategy aimed at generating 50 per cent revenues from international operations in the next five years.

The company’s I,nternational expansion plans include a combination of organic and inorganic strategies, through strategic acquisitions and mergers, joint ventures or setting up of independent manufacturing facilities in individual markets.

Candico is also setting up a 6,000 tonne manufacturing plant in Johannesburg (South Africa) at an investment of $ 5 million for catering to seven countries in the South African region.

“The second Candico plant in South Africa will be followed by two more strategic acquisitions for catering to North and West African markets. We are steadily gaining a firm foothold in the global confectionery market,” said Karan Gupta, Executive Director, Candico.

The company will follow a strategy of offering its own brands in the international market, in addition to promoting the acquired brand portfolio, he said. Brand Candico will be introduced in markets to which the company currently exports. The exporting domains include Dubai, Baharain, Oman in the Middle East and Nepal, Sri Lanka and Bangladesh in the SAARC belt.

The company has planned an equally aggressive domestic expansion strategy. Candico currently holds eight per cent share in the Rs 1,500-crore Indian confectionery industry.

On the future growth, Gupta said, “We have identified specialty candy retail as one of the potential segments for future growth and are actively exploring the opportunity. Currently, the project is in the planning stage but when implemented, it will be the first of its kind initiative by any confectionery company in India.” According to him, the company is targeting a growth of 10- 15 per cent for the domestic operations.

Asked whether the expansion plan was only an Africa-specific strategy, he said: “This is not an Africa specific strategy, but is a Third World specific strategy. As we have all ready set-up for our operations in South Asia and Middle East. The idea is to tap the developing countries and penetrate the market.”

On customisation of products, he said: “There is large amount of customisation that is required for each market and we have done massive research to find out the taste of Africa. So there are a number of innovations that would be done for each market depending on the preferences.”

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