A quiet revolution is brewing in Kerala’s packaged food industry. Changing consumer preferences and the relentless expansion of e-commerce are reshaping the landscape, setting the stage for a fresh wave of acquisitions. From spices and curry powders to snacks and breakfast cereals, small and mid-sized players are struggling to scale up as financial constraints limit their ability to innovate and reach a wider audience.
The Covid-19 pandemic proved to be a turning point for the sector, as movement restrictions and the shift to remote work fuelled a surge in demand for convenient, ready-to-use food products. While that initial boom has tapered off, local brands continue to adapt, finetuning their offerings to meet the evolving tastes of Kerala’s consumers.
Annie Vinod Manjila, associate director at Manjilas Food Tech, which owns the Double Horse brand, points out that the pandemic has significantly influenced consumer behaviour in Kerala's packaged food sector. ``The demand for ready-to-cook and ready-to-eat foods is rising, with a focus on quick, hassle-free meal solutions and consumers prefer clean-label, and immunity-boosting foods, with greater concern for traceability. Besides, e-ommerce/quick commerce and D2C sales are expanding rapidly, making online platforms crucial for packaged food brands,’’ she said.
Despite the market being largely dominated by the unorganised sector, the rise of e-commerce and food delivery apps has galvanised the organised segment. This shift is opening doors for national and multinational corporations, eager to carve out a slice of Kerala’s dynamic food industry. As competition heats up, the question remains: can homegrown brands hold their ground, or will deep-pocketed giants redefine the flavours of Kerala’s packaged food market?
The trend that began with the acquisition of the Melam brand of spices by Chennai-based AVA Group a decade ago strengthened after the pandemic. First came the Norwegian company Orkla which acquired major shares of Eastern Condiments. Then the IT major Wipro bought Nirapara and Brahmins, two major package food companies in the Kerala market.
The market is likely to see more such takeovers as specialty products such as instant masalas and ready-to-eat foods are finding more takers with the young generation spending less time on cooking. The production of specialty products requires higher investment which smaller companies may find difficult to raise.
Ashok Mani, MD and CEO of Intergrow Foods and Beverages which produces Kitchen Treasure brands of products, reckons that midsize local food brands will be on the radar of big corporates for acquisition. ``They will always be on the lookout for brands having Rs 50 to 100 crore turnover,’’ he said.
Small players may find it difficult to sustain operations without sufficient financial backing funds as technological advancements are upending old methods in processing, packaging, and preservation.
``They will always be on the lookout for brands having Rs 50 to 100 crore turnover.’’
Ashok Mani, MD and CEO of Intergrow Foods and Beverages
``The packaged food industry in the state is getting more organised after the pandemic. More big companies will enter the fray and smaller players may find survival difficult,’’ said Sreenath Vishnu, vice chairman of Vishnu Namboothiri group which sold the Brahmins brand to Wipro.
However, the evolving scenario could also provide opportunities for contract manufacturing and private labelling business as the bigger companies target the national market by enlarging their online presence, Vishnu said. The e-commerce and food delivery apps have facilitated delivery of food products to even remote regions in the country, thus encouraging mass production.
Unlike the traditional spice and curry powder products, the specialty innovations provide better margins, said A V Anoop, managing director of AVA Group which acquired Melam brand. ``We have products like fish and chicken instant masalas and we export specialty products. These products yield better margins. The market has expanded in the state and ready-to-eat products are in demand,’’ he said.
One company that has benefitted significantly from the growth of e-commerce is Tierra Food India Pvt. Ltd. which popularised branded cassava and banana chips in the state. Founded by Alex Thomas one and a half decades ago, the company ran into financial difficulties after its initial success. But its sales have rebounded after the pandemic with its products finding market across the country as the company started contract manufacturing for different brands.
``The snack food demand increased during the Covid pandemic period and the people began to look for hygienic products. Our products are now widely available online through different brands, ‘’ Alex Thomas said. The company’s strategy of selling chips in smaller packets when it started operation did not yield the expected results. With contract manufacturing, it has moved to bigger packets.
As packaged food products become popular in the state, health experts cite it as one of the causes of the rising number of lifestyle diseases. To tackle the issue, the focus should be on healthy ready-to-eat products without use of harmful ingredients according to Sreenath Vishnu.
Such consolidations can lead to synergies such as enhanced distribution networks, increased investment in R&D, and broader market reach.
Annie Vinod Manjila, associate director at Manjilas Food Tech
The recent acquisitions and consolidations indicate a strategic move towards strengthening market positions and expanding product portfolios, noted Annie Vinod Manjila.
``Such consolidations can lead to synergies such as enhanced distribution networks, increased investment in R&D, and broader market reach. Given the competitive nature of the packaged food industry and the benefits of economies of scale, it's plausible that this trend will continue as companies aim to bolster their presence both regionally and nationally. However, consolidations and carve-outs run in cycles where significant consolidation affects agility,’’ she said.
