American breakfast cereal company Kellogg’s is looking to buy a stake in Haldiram’s. But given its stupendous success, should Haldiram’s actually go ahead?
- India’s popular food brand Haldiram’s is reportedly in talks with Kellogg’s for a stake sale, which values it at US$ 3 billion.
- The brand had humble origins with a small bhujia shop in Bikaner in 1937.
- The second generation of founder Ganga Bhishen Agarwal successfully diversified to new cities and set up restaurants.
- The brand has reached iconic heights over the years, giving multinational giants like McDonald’s and Domino’s a run for their money.
Picture yourself on a long drive, miles away from your home on a trip for business or leisure. There are few things on the way that you can count on to keep your journey predictably smooth. One of them certainly would be the Rs 5/10/20 packets of Haldiram namkeens that you are pretty sure of locating, anywhere you go.
We come across several brands in our everyday life. But few command the kind of love and respect that a brand like Haldiram’s does.
Haldiram’s is in the news of late due to the reported negotiations by American breakfast cereal company Kellogg’s to buy a stake in it. Kellogg’s has valued Haldiram’s at US$ 3 billion. It’s been a truly momentous journey for this iconic brand from a small bhujia shop in Bikaner to the snack foods, sweets and QSR behemoth it is today.
AN INNOVATIVE RECIPE FUELS AN EMPIRE
The founder Ganga Bhishen Agarwal got the recipe for the iconic Bikaneri bhujia from his aunt. He joined his family’s snack stall at Bhujia Bazaar, Bikaner. He further adapted his aunt’s recipe to make the bhujia thinner and added moth floor to it. At that time, he branded it Dungar Sev (after Bikaner’s maharaja Dungar Singh) and set up his own venture.
The product was a hit, and an Indian power brand was born. Incidentally, Ganga Bhishen’s mother had lovingly given her son a nickname. You guessed it right – Haldiram!
Over the years, Haldiram expanded the business to Kolkata. His children did not extend the brand much further, but his grandsons Manoharlal and Shiv Kishan expanded the business to Nagpur and Delhi. As the brand scaled newer heights of success, they started setting up manufacturing plants and restaurants in major cities across India and abroad. It has also become a big hit in the Middle East, where it has diversified into frozen foods like kebabs while remaining strictly vegetarian. Today the brand has further expanded its presence to countries like US, UK and Japan. This month, it also signed an exclusive master franchise agreement with French bakery Brioche Dorée.
The company evolved into three distinct operations – Haldiram Snacks and Ethnic Foods (Delhi) for the north, Haldiram Foods International (Nagpur) for west & south and Haldiram Bhujiawala (Kolkata) for the East.
A rather unpalatable chapter in Haldiram’s journey is the battle among Ganga Bhishen’s descendants for the family silver. A dispute over the ownership of the brand and trademark is currently ongoing in the Supreme Court.
BEATING THE BEST IN THEIR GAME
Kellogg’s valuation is for the Haldiram businesses in Delhi and Nagpur, but excludes the restaurant business. Combined sales for the two businesses in 2018-19 are estimated to be Rs 4,500-5,000 crore with profits of Rs 450-550 crore.
Kellogg’s acquisition of Haldiram’s can be viewed as an acknowledgement of the fact that at least when it comes to food, international brands have been unable to uproot homegrown ventures like Haldiram’s in India. The likes of McDonald’s and Domino’s have made several attempts to localise their offerings, but dominating the market is still a distant dream.
In 2015-16 Haldiram’s revenues crossed Rs 4,000 crore, which meant that it was twice the size of Nestle Maggi or Hindustan Unilever’s packaged food business. Moreover, its turnover exceeded the combined turnover of Domino’s and McDonald’s in the country. For the year ending September 2017, Haldiram’s sales (Rs 4,224.8 crore) exceeded those of Pepsico India (Rs 3,990.7 crore) from its snack foods like Lay’s, Kurkure and Uncle Chipps.
A HOUSE DIVIDED, BUT YET INVALUABLE
While the worth of the brand to Kellog’s is unquestionable, the complex ownership structure would make finalisation of the deal quite cumbersome. Unless all three segments of the business come under the Kellogg umbrella and it gets the ownership of the brand and trademark, the acquisition will not make strategic sense.
We may sound a bit ‘nationalistic’, but for Indian customers who are so deeply passionate about the Haldiram’s brand, it will be quite disappointing to see it go into the hands of a foreign player. Some brands need to retain their purity, origins and authenticity, rather than becoming part of a larger ‘portfolio’ of an MNC. Given that the Haldiram’s brand is so successful and is giving global giants a run for their money, one would prefer that it take the India story global, rather than be a part of the American one!