PepsiCo eyes stake in Haldiram: Rs 90,000 cr valuation sparks competition

Haldiram's Rs 90,000 crore valuation has sparked a race among investors, including PepsiCo, Temasek, and others, aiming to capitalise on India's booming ethnic snacks market

PepsiCo has entered the race to acquire a minority stake in Haldiram Snacks, India’s leading ethnic snacks manufacturer, according to a report by The Economic Times. Competing with prominent contenders like Temasek and Alpha Wave Global — both in advanced negotiations with the Agarwal family, founders of Haldiram — PepsiCo’s involvement has sparked interest. Firm offers for a 10-15 per cent stake were reportedly made by these contenders in December last year.

 

Executives from PepsiCo’s New York headquarters have initiated discussions with the Agarwal family in recent weeks. These talks are in a preliminary stage, with funding for the potential transaction expected to come primarily from PepsiCo’s US parent, while its Indian division plays a less prominent role, the report noted.

 

The Agarwal family is seeking a valuation of Rs 85,000-90,000 crore, marking the first time Haldiram has considered onboarding an external investor.

PepsiCo’s market challenges

PepsiCo, known for its Lay’s, Kurkure, and Doritos brands, has faced increasing competition in India’s snacks market. Regional players such as Bikanerwala, Balaji, and listed companies like Bikaji Foods, Gopal Snacks, and Prataap Snacks have eroded its market share with competitive pricing and direct distribution.

 

While PepsiCo leads the western snacks segment with a 24 per cent market share, it lags in ethnic snacks such as namkeen and bhujiya. A partnership with Haldiram could provide PepsiCo with extensive distribution networks and a stronger foothold in this high-growth segment.

 

Jagrut Kotecha, PepsiCo’s India head, was specifically appointed to strengthen its snacks division. This move aligns with PepsiCo’s focus on revitalising its snacks business, as its beverage bottling operations are largely outsourced to Varun Beverages Ltd.

 

PepsiCo has previously acquired brands like Uncle Chipps in 2000 and introduced Doritos nachos in 2016-17. These moves highlight its strategy to expand within the snacks segment.

 

Despite PepsiCo’s interest, analysts believe Haldiram may demand a premium or pursue a majority sale instead of a minority stake. Past discussions with companies like Mondelez, Kellogg’s, and Tata Consumer have not materialised into agreements.

 

Temasek is currently leading discussions for a minority stake, with a reported valuation of over $1 billion. Rival bids from entities like Blackstone and Alpha Wave Global have added to the competition. However, past negotiations indicate that Haldiram’s founders may hold out for higher valuations.

 

The Indian snacks market, valued at Rs 42,695 crore in 2023, is projected to grow to Rs 95,522 crore by 2032, the report said, citing data from IMARC Group.