InvestorQ : Can you tell me about the Dabur acquisition of Badshah Masala and how it fits into their game plan?
Deepa Salunkhe made post

Can you tell me about the Dabur acquisition of Badshah Masala and how it fits into their game plan?

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Arya Nanda answered.
4 weeks ago
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At a time when for most FMCG players, getting into the spices market is not a preferred strategy, Dabur has made a big foray by buying a majority stake in Badshah Masala Private Limited. While the FMCG players have avoided the spices space due to the huge unorganized segment, Dabur is seeing that as the opportunity. Dabur will buy 51% stake in Badshah Masala for Rs588 crore. The balance 49% will be acquired after 5 years, with current deal valuation of Badshah Masala at Rs1,153 crore. It is an all cash deal and syncs with Dabur’s plans to expand its food franchise to Rs500 crore or annual sales.

In India, the organized spices market is worth Rs25,000 crore and is dominated by players like MDH, Ramdev, Everest, Badshah and Priya and a host of other regional spice brands. Put together, this organized market is around Rs25,000 crore while the overall spices market is around Rs70,000 crore. However, it is not just the size, but the potential for geometric growth that Dabur is targeting. Dabur is betting on higher consumption of spices by Indians as also the big shift to organized segment. It is a Rs45,000 crore market opportunity.

However, Dabur must be cautious that it would not be all that easy as it appears to be. In India, various products like tea, rice and spices have been largely about regional flavours and not about a national level product. Hence, Dabur would have to fine tune and narrow-cast its spice offerings suited to regional preferences. A macro level one-size fits all strategy is very difficult to implement in Indian spices. That is surely going to be tough to crack.

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