Last week, Mars announced that it will acquire Kellanova globally for $35.9 billion. This deal plays well for the maker of Snickers bars even in India, as experts say it benefits from Kellogg’s distribution strength.
While Mars is a larger entity with its pet foods business, in the consumer business alone, it is still smaller than Kellanova’s India business.
Experts say that Mars automatically stands to gain from Kellogg’s rural reach as well and will also have a larger portfolio to offer in modern trade, e-commerce, and quick commerce.
“Mars may stand to benefit from Kellogg’s distribution in the Indian market. While both companies have similar customers and have a presence in cities, this acquisition creates a larger portfolio for Mars, and Snickers stands to benefit from Kellogg’s distribution as they have strong reach and a more direct distribution network and are expanding even in rural areas,” Angshuman Bhattacharya, partner and national leader - consumer product and retail sector, EY Parthenon, told Business Standard.
He added, “The larger the portfolio, the more important it becomes to modern trade and e-commerce, and this works for Mars as Kellanova has a strong hold in e-commerce and modern trade, which is also their core strength.”
Harminder Sahani, founder and managing director at Wazir Advisors, echoed the same sentiment and said that it will be positive for both as their combined brand portfolio will give them a better negotiating position with modern retail, e-commerce, and q-commerce players.
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“Of course, there are synergistic cost savings that they must have considered while valuing this acquisition,” Sahani added.
In India, Mars International India saw its revenue at Rs 2,266 crore (inclusive of its pet foods business) in FY23, while Kellogg India’s revenue stood at Rs 1,530.4 crore.
Mars reported a loss of Rs 38.9 crore in India, while Kellogg India reported a profit of Rs 119.5 crore in FY23.
A source from the industry, speaking on condition of anonymity, said that unless the combined entity expands its operations considerably, given their current scale, there isn’t much that will change on the ground.
The source added that they may also need to bring in more of their global products to the Indian market; if they do so or significantly expand their distribution, it will make a difference.
In India, Kellanova sells its cereal products under the Kellogg’s brand, while Mars sells brands such as Royal Canin, Pedigree, Snickers, Orbit, and DoubleMint, among others.