LT Foods to set up snacks facility in JV with Japan's Kameda

The maker of Daawat basmati rice LT Foods will set up a manufacturing facility for rice-based snacks in association with Kameda Seika of Japan in Sonepat, Haryana. Two companies have formed a joint venture to manufacture and market rice based snacks in India.

Kameda is the global leader in rice based snacks and it commands about 30 percent market share in Japan and has a prominent presence in the gluten-free cracker market in the US. LT Foods and Kameda believe the large and expanding urban middle-class in India are ripe for a healthy and tasty alternative to fried potatoes and wheat based snacks.

Through this partnership, the JV will introduce rice based snacks with proprietary Japanese technologies developed over 30 years. These products have been highly successful in South East Asia and the US. The joint venture plans to launch four different flavours customized for palate of Indian consumers. Once JV has cultivated and established a stable position enough in Indian market, it will look at exporting the product to regional markets in South Asia.

LT Food’s existing strong distribution network and supply chain was a key attraction for its partner Kameda. The JV, which aims to create a rice-based snack food category in the country, will start manufacturing the snack range in Sonepat later in the next financial year. 

Apart from investing equity, Kameda will help the joint venture in technical matters relating to the manufacturing, flavour development and package design as well as lend its experience in marketing rice based snacks globally.

As per Mckinsey report, in 2014 Indian sweet & salt (S&S) snacks market was estimated to be Rs 15,000 crores. As middle class income expands, consumption of S&S snacks is expected to more than double from current levels over the next five years to Rs 38,000 crores. With increase in volume and price, the non-branded segment of the market which constitutes for 33 percent is expected to shrink further.

Research has shown that in the last 2 years, only 5 new variants have been introduced by pan-India snack food players. Leveraging on this, a few new entrants are expected to capture meaningful portion of the market. With a completely differentiated set of products, the LT Foods-Kameda JV is aiming to be a leading new entrant. Both companies believe that health and wellness are among the primary drivers of such new category.