Godrej Hershey may put Jumpin and Xs on block
GODREJ Hershey Foods & Beverages, a joint venture between Godrej and Hershey’s, is debating a proposal to put its two fruit drink brands, Jumpin’ and Xs, on the block. The development comes within four months of the US confectionery maker acquiring controlling stake in Godrej Foods (GBFL). Sources say the two beleaguered brands find little fit with Hershey’s overall brand strategy in India. While Adi Godrej, chairman, GBFL, that still holds 43% in the Hershey’s-controlled company, denied it, another company executive said, “It would not be pertinent to comment on the development at this stage.” An email query to Godrej Sara Lee MD A Mahendran, who also heads Godrej Hershey’s, went unanswered. Instead, a Godrej Foods media relations executive informed ET that Mr Mahendran didn’t want to “comment on the rumours.” Industry sources, however, maintain that the two fruit drink brands are underperformers and have little to offer either in terms of market share or distribution muscle to Hershey’s foray into the Indian market. “This looks like a clear case of acquired brand’s status as a burden rather than a support to the company that bought them. Hence, this debate of offloading them,” an industry veteran told ET. In April this year, Hershey’s had acquired 51% stake in GFBL for $60 million, that included buying out stakes and also capital investment. Hershey’s had bought 40% stake in GBFL held by IL&FS, which has now exited from the company. GBFL, on its part, sold 5%, and now holds a 43% stake in the company. Similarly, GBFL director A Mahendran sold 6%, and is now left with 6% in the company. GBFL, which has two manufacturing plants in Bhopal and Chittoor in Andhra Pradesh, is opening a third eclairs manufacturing plant in Himachal Pradesh. The company had also acquired Nutrine Confectionery last year. Hershey, which makes candies, including Kit Kat and Almond Joy, has been cutting jobs in the United States, but expanding in Asia. Chocolate makers hope that a tiny per-capita consumption of their products in Asia may translate into fast growth later. Hershey’s will now compete with Cadbury and Nestlé in India.