Tata Consumer Products on 12 January said it has signed definitive agreements to acquire up to 100% of the issued equity share capital of Organic India, one of the strongest ‘better for you’ organic brands spanning food & beverages and herbal & traditional supplements.
Also on January 12, the company said it had acquired a complete 100% stake in Capital Foods, renowned for marketing products under the brands Ching’s Secret and Smith & Jones. The transaction, valued at ₹5,100 crore, will be an all-cash deal.
Media reports said Tata Consumer Products is likely to announce a Rs 3,500-crore rights issue to fund its Rs 7,000-crore acquisitions of Capital Foods and Organic India. The Organic India deal is also an all-cash deal, at an enterprise value of Rs 1,900 crore, media reports said.
Tata Consumer Products says the move to acquire Organic India is consistent with its strategic intent to expand its product portfolio and its target addressable market in fast-growing/high-margin categories. This acquisition will create a Health & Wellness platform for Tata Consumer Products.
Organic India is an established brand with a geographical footprint covering over 48 countries, substantially from India and the US. Its product portfolio spans premium and high-growth categories focused on sustainable living – herbal supplements, tea & infusions, and organic packaged foods.
Organic India has strong, long-standing relationships with more than 12,000 farmers and unparalleled end-to-end organic certifications across the supply chain. It pioneered commercial cultivation of tulsi and introduced high-value medicinal crops for farming in India. It has a portfolio of over 100 products in the health and wellness space.
The total addressable market for the categories that Organic India is present in is Rs 7,000 crore in India and Rs 75,000 crore in international markets where Tata Consumer has a strong presence. This acquisition will provide significant synergy benefits in distribution, logistics, and overheads apart from driving portfolio premiumization and unlocking additional channels and new markets. Structural growth drivers for this portfolio include increasing demand for Health & Wellness products, growing consumer awareness around wellness, and changing consumer preferences.
Sunil D’Souza, MD & CEO, of Tata Consumer Products, said, “We are excited about bringing Organic India into Tata Consumer Products. This transaction aligns well with Tata Consumer’s overall strategic objectives and presents exciting market opportunities in the rapidly growing Health & Wellness segment. In addition, Organic India has built very strong relationships with farmers to create a robust organic supply chain with a trusted brand and a loyal consumer base. Organic India’s differentiated products and robust supply chain together with Tata Consumer’s distribution strength across channels in India and specific geographies globally makes us confident of accelerating momentum in the business while improving our margin profile.”
William Bissell, managing director of Fabindia said, “Tata is India’s most venerated and dynamic brand. For over a hundred and fifty years, it has stood as the visionary exemplar of Indian values: fairness, preservation of civilizational traditions, harmony with the natural world, and social uplift for all. That is why we are immensely excited that they will be guiding Organic India through its next chapter and stewarding the vital mission for which Organic India stands.
We at Fabindia echo Jamsetji Tata’s vision that ‘The community is not just another stakeholder in business but is in fact the very purpose of its existence.’ Organic India works with a community of tens of thousands of farmers who work only with socially and ecologically sustainable methods. We are confident that Organic India will continue to thrive with the Tatas’ leadership.”
Kotak Investment Banking, Trilegal, and Sidley Austin have been TCPL’s exclusive financial and legal advisors for this transaction respectively.
Tata Consumer Products Limited’s portfolio of products includes tea, coffee, water, RTD, salt, pulses, spices, ready-to-cook and ready-to-eat offerings, breakfast cereals, snacks, and mini meals. Tata Consumer Products is the second-largest branded tea company in the world. Its key beverage brands include Tata Tea, Tetley, Eight O’Clock Coffee, Tata Coffee Grand, Himalayan Natural Mineral Water, Tata Copper+, and Tata Gluco+.
Its food portfolio includes brands such as Tata Salt, Tata Sampann, and Tata Soulfull. In India, Tata Consumer Products has a reach of over 201 million households. The Company has a consolidated annual turnover of ~Rs. 13,783 crore with operations in India and the international markets.