Amul may buy Kochi-based Vanilco

Acquisition to help dairy major gain toehold in South, access natural vanilla for ice-cream.

Cooperative dairy products manufacturer Amul plans to buy Kochi-based Vanilla India Producers Company (Vanilco), which processes and markets natural vanilla.

The acquisition will help the dairy major gain a foothold in the southern markets and secure natural vanilla stocks ahead of a launch of natural vanilla-based ice creams in March.

Vanilco Managing Director Paul Jose said the companies had received in-principle approval for equity participation. Further rounds of discussion will take place after the launch.

"There is strong possibility for the equity participation leading to a merger of the two companies. The amount of investment and other details will be decided later. I don't think that there are many hurdles to this as Amul is one of India's top consumer companies," Jose said in a telephonic interview.

Vanilco, a company formed in 2003 by 2,500 vanilla growers, already has an agreement with Amul to supply it 20 tonnes of natural vanilla essence annually, mainly for the Real Vanilla ice cream range.

Vanilco produces 24 vanilla-based products, including some for the pharmaceutical and brewery industries.

Amul, which lacks a production base in Kerala, is keen on entering the Kerala market and the association with Vanilco will be a part of the strategy. Amul needs vanilla and cocoa for its ice cream and a south Indian base will serve the purpose of the dairy cooperative.

Amul sources said the company had switched over fully to natural vanilla to benefit consumers and to help sustain the livelihood of 500,000 vanilla growers in Kerala, Karnataka and Tamil Nadu.

The company, which had earlier introduced Vanilla Royal, is planning to launch another range of vanilla ice creams in the domestic market by the second week of March.

Amul accounts for about 45 per cent of the domestic ice cream market share.