Godrej foods arm to snap pact with Karnataka co-op

The foods division of Godrej Industries is set to snap its nearly an year old alliance with Karnataka Co-operative Milk Producers Federation (KMF) for distributing the latter's Nandini brand of ghee.

It had also recently severed ties with the Oman-based Bakers Pride for distributing its range of biscuits.

Godrej group executives said Karnataka Co-operative has decided to concentrate on distribution of its products to its primary markets ""Karnataka and Andhra Pradesh.

Their move to restrict from expanding it to other markets is because of the shortage of milk supply caused because of drought that has hit production.

As per the agreement, Godrej Foods was to handle the distribution of Nandini ghee in Maharashtra, Goa, Tamil Nadu, Kerala and the eastern region, except West Bengal.

Nandini Ghee enjoys a market share of around 70 per cent in Karnataka. Godrej group executives added that sales of Nandini Ghee increased after the alliance with Godrej Foods.

KMF is the third largest dairy co-operative in the country. It is a federation of 13 milk unions in Karnataka consisiting of a network of 8,672 dairy co-operative societies.

After entering into a arrangement with KMF, the FMCG major later entered into arrangement with the Middle East based company for importing and selling Bakers Pride range of biscuits.

"We recently stopped distributing Bakers Pride biscuits because of the huge grey market competition which was impacting margins," they added.

Godrej Foods entered into distribution agreement with FMCG companies to synergise its existing edible foods division of oils & fats and fruit drinks.

As part of the restructuring, the loss making Godrej Foods' manufacturing, marketing, sales and distribution rights of its brands was merged with Godrej Industries.

Godrej Foods division main brands include Jumpin and Xs fruit beverages, Godrej refined sunflower oil, Godrej Vanaspati, Zesta Palmolein among others.

Meanwhile, Godrej Industries has terminated a processing agreement with Godrej Consumer Products (GCPL), effective April 1, 2004.
As per the pact, Godrej Industries was manufacturing soaps for Godrej Consumer.