New Delhi/ Mumbai: India Hospitality Corp, the owner of Mumbai eateries Jazz by the Bay and All Stir Fry, has bought UK's Adelie Food Group, which supplies quiches, salads, sandwiches and assorted ready-toeat food to retail chains such as Starbucks coffee and Sainsbury's supermarkets, for $350 million from PE firm Duke Street Capital.
The transaction, the largest overseas acquisition by an India-focused company in the food and beverages segment since Tata Tea bought vitamin water maker Glaceau in 2006, will enable India Hospitality Corp (IHC) to spread its wings internationally.
IHC had made a failed attempt to acquire London's famous noodle chain company Wagamama two years ago.
The deal will also make IHC India's largest food services company and help strengthen its presence in the rapidly growing out-of-home food market in the country.
The company is a supplier to Cafe Coffee Day and Costa Coffee, and plans to expand this business aggressively.
"We have signed the deal. The acquisition makes us India's largest food services company. We will make packaged food readily available for Indian consumers to buy from supermarkets and even from some mom-and-pop stores," said IHC Chairman Ravi Deol.
Deol, who was Barista coffee chain's first chief executive officer, said a decade ago only the affluent went to coffee shops in India, but now the middle class is willing to pay a premium for ready-to-eat food if it is fresh and packaged neatly.
According to Euromonitor, Indians spend $64 billion annually on eating out, which includes $13 billion on eating in quick-service restaurants (QSRs) such as McDonald's and Costa Coffee, propelling the industry to grow at 25-30% annually.
"QSRs are reaching a critical mass," said Debashish Mukherjee, partner and head of foods at consulting firm AT Kearney.
India Hospitality Corp to gain from Adelie
"There i s a need for food companies which can supply to large QSR chains instead of them depending on fragmented purchases," said Debashish Mukherjee, partner and head of foods at consulting firm AT Kearney.
Adelie will help IHC create cold food manufacturing facilities and distribution chains in the country and provide the Indian company with consumer insights that can be suitably tailored for the local market.
The $350-million Adelie Group employs over 3,000 people across its seven manufacturing locations and distribution network in the UK. It supplies packaged food to supermarkets, cafes and airlines.
In addition to Starbucks and Sainsbury, its marquee customers include Asda, Costa Coffee and Gate Gourmet. The group consists of six companies and the existing structure of Adelie as the umbrella parent company is expected to continue with group firms such as Food Partners and Buckingham Foods maintaining their local identities.
Registered in Cayman Islands, IHC was set up as a blank cheque firm in 2006 with the specific mandate of making investments in the restaurant and hospitality sector. At present, Deol, Sandeep Vyas, a former Yum Restaurant executive, and Jason Ader, the founder of a New York-based hedge fund, own two-thirds of IHC with Goldman Sachs and Fidelity being the other shareholders.
In 2007, the company acquired airline catering firm Skygourmet and Sanjay Narang's Mars Restaurants, a multi-brand restaurant chain with particular focus on western India.
In addition to Jazz by the Bay and All Stir Fry, it owns a string of restaurants and food outlets including Birdy's, Dosa Diner, Roti, Pizzeria & Pasta Bar, and Tendulkar's. In the hospitality sector, it owns Gordon House Hotels.
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