The group, which has just announced its entry into processed foods with the acquisition of 70 per cent stake in Innovative Foods from the Amalgam Group, may soon sell a bouquet of food products, including fruit and vegetables and baked food, through a chain of retail stores.
The size of the food retail sector in the country is estimated at Rs 24,546 crore ($6.1 billion), 44 per cent of all fast-moving consumer goods sales, growing at 9 per cent a year. Nearly 60 per cent of an average Indian's grocery basket consists of non-branded food items.
India has the largest number of retail outlets in the world - 12 million - of which no less than 5 million sell food and related products. Apart from a few large players in the market, such as Kishore Biyani's Food Bazar, Mukesh Ambani's Reliance Fresh and Godrej Agrovet, the sector is largely fragmented.
Residency Foods and Beverages - a subsidiary of the Tata Group's hotel arm, Indian Hotels Company - which is the vehicle for acquiring the Innovative Foods stake, last year bought 80 per cent equity in Kochi-based seafood exporter Amalgam Foods and Beverages.
Residency has already entered into an agreement with Jasper Aqua Exports, a Vizag-based seafood company, which will manufacture products exclusively for the Tata company's product portfolio.
While an official comment from the group could not be obtained, R K Krishnakumar, Indian Hotels' vice-chairman, had said at the time of Innovative stake acquisition: "The IFL acquisition and our agreement with Jasper outline the company's strategic intent for the processed foods business. We strongly believe in leveraging our in-house expertise in the group with FMCG, F&B and retail businesses."
The Tata Group is said to be eyeing the food retailing opportunity for the last three years under the Trent name. According to sources, it has been planning to buy a couple of local food companies as well as exploring options with international companies in the areas of seafood, fruit and vegetables and baked food.
It has also been beefing up its presence in retail. Trent, the company behind the Westside chain, three years ago launched Star India Bazaar. Star India Bazaar is a hypermarket, the big brother of supermarkets.
"The group's planned foray into food retail could be in synergy with its TAJ SATS Air Catering and hotel business. The company has expertise in manufacturing of food and, through its acquisitions in Amalgam Foods and Innovative foods, it will be able to serve ready-to-eat food in Ginger Hotel cafeterias, which otherwise serve only snacks," said an analyst.
TAJ SATS Air Catering is a joint venture between Indian Hotels and Singapore Airport Terminal Services, a subsidiary of Singapore Airlines. It has a commanding 60 per cent share of the airline catering market in India. Ginger is the chain of budget hotels operated by Roots Corporation, a subsidiary of Indian Hotels.
The analyst added that the Group could take its ready-to-eat food brand into the international arena, as ITC has done with Kitchens of India.
