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Heinz scouts for more acquisitions in India

24-August-2005
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Heinz scouts for more acquisitions in India

Having registered healthy growth rates at nearly 25 per cent in the first quarter of this year, Heinz India Pvt Ltd now intends building adequate scale in its operations before it starts scouting for acquisitions. Speaking to Business Line, Mr Nilesh Patel, Managing Director, Heinz India, said, "We are actively looking at other food brands since we intend growing our food portfolio in India."

In India, the company has a three-pronged strategy for growth. Elaborating on the strategy ofthe company, Mr Patel said, "In India, we are looking at accelerating the growth in our base business along with getting growth through innovation and, where appropriate, through strategic acquisition."

Besides, Heinz has been using the route of acquisitions to grow worldwide, and become profitable in the markets where it has set up its subsidiaries. It started operations in India by acquiring Glaxo's consumer brands, and has adopted a similar strategy in countries such as Indonesia (acquired the ABC food brand), China (bought out two companies in sauces and frozen food) and Philippines (set up a JV). In India, it recently sold one of Glaxo's brands — Farex — to streamline its operations in the foods business.

"We have been profitable since the time we came to India due to the acquired businesses. As long as we can find the right partners and people with like-minded thinking, we do not mind making strategic acquisitions. In fact, there may be opportunities where we can either acquire expertise or food brands that we can take further as we cannot stick to the portfolio that we already have," said Mr Patel, who is open to acquiring food brands in any category.

Realising the complexities of marketing food brands in the country, he said, "Indians are fussy eaters and we have to deliver the right taste, nutrition and price. The biggest challenge in India is to take the housewife away from her home to go and buy packaged food."

Meanwhile, the company intends having a mix of locally produced as well as imported products in its portfolio here. In the recent past, it has imported a chilly tomato sauce from its South-East Asian subsidiary company and there are plans of introducing more ethnic sauce brands soon. "We will continue to bring in products from outside to test the market and if necessary build the ingredient base and approach suppliers here as well," added Mr Patel, who has been heading the company for the past 15 months.

Today, its flagship brand, Heinz Tomato ketchup, is inching up with a 6.7 per cent share in the sauce market, behind Kissan and Maggi. Heinz plans to introduce more `Indian' versions of sauces in local flavours.

In fact, India is getting treated as a key market for the Pittsburgh-based foods major. "India is the fourth market which is important for us after China, Indonesia and Russia," said Mr Patel who has served at most of Heinz's subsidiaries abroad.

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