US consumer goods giant Sara Lee, which set up Sara Lee Bakery India (SLBI) in 1998, is quitting the biscuit business in India, mirroring a similar action by Pillsbury last year. Its other joint ventures, one with the Godrej Group for mosquito repellent, and one with TTK Group, will continue. Internationally, Sara Lee has a major presence in foods and beverages, with annual revenues of around US$20bn.

The Indian biscuit industry is dominated by Parle Products, and Britannia Industries Ltd. (for more information on Britannia, click here). Confectionery company Nutrine‘s distribution was very strong in the South of India until another Southern player, Kwality, became a serious competitor. There are a large number of regional players, and some multinationals trying to create a niche for themselves.

This is yet another case of a multinational, attracted by an existing distribution set up, acquiring it, but then being unable to create worthwhile revenue streams. To see Pillsbury Godrej, click here.

Sara Lee had taken over the distribution set-up of Nutrine and is still sourcing biscuits from it. After CEO Harsh Bahadur left a few months ago, M. R. Sunder, GM (Operations) was appointed acting CEO, and the employees allege the management ‘did not follow the global business practices, ethical norms and quality standards of Sara Lee’. SLBI netted a loss of US$1.6m on sales of US$12.7m for 1999-2000. Recent figures are not disclosed, but are believed to have deteriorated further, with unsold, 6-month old stocks of 150 tonnes lying with the C&F Agents.

Three parties contested to take over the unit, and Vasana Agrex and Herbs, an unheard of entity believed to be close to Sunder, who will continue as CEO, has bagged it. The other two prospective buyers were Godrej Group and Nutrine.

Unusually, Vasana has been permitted to continue using the Sara Lee name ‘for a few months.’

By Navroz Havewala, correspondent