 "Kellanova acquisition likely to be a sweet truth for Mars in India")
Mars’ acquisition of Kellanova, earlier Kellogg’s, globally for $35.9 billion will play out well for the manufacturer of Snickers bars in India, say experts.
It benefits from Kellogg’s’ distribution strength.
While Mars is a larger entity with the pet-food business, it still is smaller than Kellanova’s India operations.
Experts say Mars stands to gain with Kellogg’s’ rural reach as well and also have a larger portfolio to offer in modern trade, e-commerce, and quick commerce.
“Mars stands to benefit from Kellogg’s’ distribution in the Indian market. Both companies have similar customers and have a presence in cities. This acquisition creates a larger portfolio for Mars,” Angshuman Bhattacharya, partner and national leader (consumer product and retail sector), EY Parthenon, told Business Standard.
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He added: “When the portfolio is large, it gets more important to modern trade and e-commerce and this works for Mars because Kellanova has a strong hold in e-commerce and modern trade is also its core strength.”
Harminder Sahani, founder and managing director at Wazir Advisors, is of the same opinion. He said it would be positive for both because their combined brand portfolios would give them a better negotiating position with modern retail, e-commerce and q-commerce players.
“There are synergistic cost savings that they must have considered while valuing this acquisition,” Sahani added.
Mars International’s India revenue was Rs 2,266 crore (including what came from its pet food business) in FY23 while Kellogg India’s stood at Rs 1,530.4 crore.
Mars’s loss in India was Rs 38.9 crore in FY23 while Kellogg India reported a profit of Rs 119.5 crore.
An industry source said unless the combined entity expanded its operations considerably, given their current scale, not much would change.
The source said they might have to bring more of their products to the Indian market. Only then will it make a difference or they need to expand their distribution, the person added.
In India, Kellanova sells its cereal products here under the Kellogg’s brand, while Mars sells its Royal Canin, Pedigree, Snickers, Orbit, DoubleMint, etc.