Why are PE investors biting into India’s snacks market?

What deal is Temasek stitching up in India?

Balaji Wafers, a major competitor to Pepsico’s Lay’s, is attracting Temasek’s attention for its strong market presence. In March, Temasek bought a 10% stake in iconic namkeens and snacks brand Haldiram’s alongside global investment firm Alpha Wave Global, which also took a small stake.

The fund had earlier invested $180 million in cloud-kitchens and quick-service restaurant operator Rebel Foods.

What dealmaking action is happening in India’s food sector?

Investor interest is rising across the board, from venture capital (VC)-backed startups to regional legacy brands.

This week, Mint reported that bakery brand The Baker’s Dozen has appointed advisers to explore a sale; the company is backed by Fireside Ventures and Wipro Consumer Care’s venture arm. Coffee and baked goods chain Blue Tokai also raised $25 million from existing investors including Belgian family office Verlinvest.

Last month, private equity (PE) firm ChrysCapital acquired baked goods chain Theobroma in a ₹2,000 crore deal.

So why are investors going crazy over food companies?

Most deals fall into two buckets: urban, premium brands targeting affluent Indians, and high-volume, mass-market products for everyday consumers. Legacy regional companies like Haldiram’s, as well as well-funded independent brands, are seeing brisk business.

VC-backed independent brands give investors exposure to affluent urban consumers, while regional, family-owned brands such as Balaji Wafers allow funds to tap into low-margin but high-volume businesses catering to India’s massive consumer base.

PE firms find food companies attractive due to strong growth rates and overseas expansion potential, particularly in regions such as West Asia. Additionally, as India’s largest listed consumer companies and conglomerates continue to invest steadily in packaged food brands, investors see multiple exit options for their stakes.

In recent years, Reliance Consumer Products and Tata Consumer Products have invested hundreds of crores in acquiring both legacy and “new-age” brands, while Hindustan Unilever, Marico, Emami, Dabur, and others have been acquiring VC-backed companies.

Several food companies have also listed via initial public offerings (IPOs), including Prataap Snacks (maker of Yellow Diamond Chips) and Mrs Bector’s (2020), with more expected soon—Cure Foods (cloud kitchens operator), Milky Mist (dairy products), and Captain Fresh (B2B meat supplier).

But isn’t there a slowdown?

Yes—but even amid a broader slowdown, pockets of India’s consumer economy are powering ahead, particularly among rural consumers and the urban elite.

India’s packaged foods and beverages industry was valued at $33.7 billion in 2023 and is projected to grow more than 37% to $46.3 billion by 2028, according to the Federation of Indian Chambers of Commerce and Industry (Ficci). In a joint report with Deloitte in May, FICCI noted that while ‘premium’ foods and other high-end consumer products make up only 27% of the FMCG market, they account for nearly half of its total growth.

Rising household incomes are also driving higher spending on packaged, higher-margin consumer goods.

Given these trends, investor interest in consumer companies is likely to continue. India’s latest GDP figures show private final consumption expenditure grew an “impressive” 7% in Q1FY26, supported by recovering rural demand and easing inflation. In addition, recent cuts in the Goods and Services Tax on packaged foods—from 18% to largely 5% or nil—are expected to further boost long-term demand.

Are these investments a new trend?

Not exactly—but they happen in waves. During the pandemic, PE firms and FMCG companies invested heavily in spice makers: Dabur acquired Badshah Masala in 2023, and ITC bought Sunrise Foods in 2020.

Earlier this year, Mint reported ITC Ltd is in talks to acquire ready-to-eat brand MTR Foods and spice brand Eastern Condiments. Marico and Tata Consumer have also acquired VC-backed brands such as Yoga Bar (ITC), True Elements (Marico), and Soulfull (2021).

There were similar deals in the 2010s as well, and some of those companies went public. Elevate Capital (then SAIF Partners) invested in mass juice maker Manpasand Beverages and took it public, where it ultimately went bust after allegations of cooking the books. Peak XV (then Sequoia India) invested in chips maker Prataap Snacks before exiting last year. PE firm Everstone bought bread brand Modern Foods from Hindustan Unilever Ltd in 2017 and later sold it to Brazilian conglomerate Grupo Bimbo in 2021.