Evidently, the market growth rate indicates evolving consumer preferences, with Europeans prioritising natural ingredients for a health-conscious diet. Spices figure prominently in the recently concluded EU-India free trade agreement (FTA), implying enhanced global trade and consumption in the coming years, as the FTA opens new markets for exporters and spice producers.

Historically, spice has dominated global trade and international markets, with the maritime spice trade routes preceding the Silk Road.

The policy push towards better market opportunities could give a fillip to fledgling brands that, as evident from trends observed in the past decade, end up either acquired by bigger companies or merged with already established brands. 

In this context, the discussions that have been underway since last year for ITC Ltd's acquisition of Norwegian conglomerate Orkla's MTR Foods Pvt Ltd and Eastern Condiments Pvt Ltd take predominance. According to reports from last year, the potential acquisition bid, which aimed to diversify ITC's portfolio to southern India, was estimated at approximately $1.4 billion.

Acquisition Trail

But what is rather amusing is the trail of acquisitions — of homegrown brands by foreign conglomerates — preceding the ITC bid. And what's even more interesting is that these acquisitions have been happening in the spice sector over a period of time — more than a decade.

Take the case of Orkla itself. Often termed as an industrial investment company, the Nordic region-based conglomerate's interest in Indian ventures has been growing consistently, especially in the spice market. In 2007, it acquired MTR Foods and, subsequently, through the latter's units, substantial stakes (67.8%) of Eastern Condiments (in 2020-21), too, significantly expanding its presence in the Indian market.

Mergers & Reacquisitions

Orkla did not directly acquire Eastern Condiments. It bought the stakes through its MTR units. And prior to the acquisition, over 41.8% of Eastern Condiment's stakes were held by the Meeran Family.

And who owned the remaining stakes of Eastern Condiments that Orkla acquired?

US-based McCormick — another global leader in spice production. In November 2010, McCormick had purchased a 26% minority stake in Eastern Condiments, at about $36 million. As part of a larger deal, Orkla, subsequently, bought this McCormick share in 2020-21. This ultimately resulted in Orkla merging the shares with its MTR units.

This strangely intriguing case of acquisitions, mergers, and reacquisitions brings to the fore the surge of interest, something that has been unfurling over the decades, of global players in India's domestic spice market — among the most well-established of which is in Kerala.

Kerala has been at the forefront of spice production and exports. Several homegrown brands have cropped up in the resource-rich regions of the State over the decades

— Spice exporter based in Kerala

"However, most of them couldn’t compete with the large companies engaged in spice production and export. Therefore, they were either merged with bigger brands or acquired by foreign companies," he points out.

It would have been rather time-consuming for a foreign company had it intended to start its business from scratch in another country.

The reasons? Aplenty, for there are spices galore in Kerala and other States.

Spice Production

In Kerala, for instance, over 83,770 hectares of area is under cultivation of black pepper (as per recent estimates). About 22,000 tonnes of black pepper are produced in Kerala annually, making it one of the spice hubs not only of the country but also in the Global South. 

Now, if a foreign enterprise were to commence spice production in the region, it would have to foremost establish units, hire native employees and, most of all, tap into the rich spice reserves.

That consumes time. And, hence, the acquisition detour.