India at cusp of 'snacking renaissance'; L Catterton bets on healthy snacking, branded foods

New Delhi: Consumer-focused private equity major L Catterton remains bullish on India's long-term consumption story and is looking at opportunities in healthy snacking and branded foods as evolving consumer preferences reshape the market, its Executive Chairman Sanjiv Mehta said.

Greenwich, Connecticut-based firm said it is running its first dedicated India fund and has already closed three investments in the past year - foods and agri-commerce platform Farmlink, ethnic snacks major Haldiram, and single-speciality hospital chain Healing Apps.

"L Catterton globally is the largest investment vehicle focused on consumers, with about USD 40 billion of value. In India, for the first time, we are raising an India fund," Mehta told PTI.


The fund's differentiator lies not just in identifying the right categories but also in helping founders to build institutions rather than just scale enterprises.

"We help them transition from a hustle enterprise to the making of an institution. So earlier, I used to focus on creating value for one big company. Now, I am going to help create value with passionate founders in many companies," said Mehta, who had earlier, for a decade, served as Chairman and Managing Director (CMD) of leading FMCG major Hindustan Unilever Limited (HUL).

He said L Catterton looks for a "confluence of more than one trend" before investing - such as the shift from unprocessed to processed food, and from unbranded to branded products - describing these intersections as the fund's "sweet spots..

Beyond category tailwinds, Mehta said backing the right founder remains central to every investment decision, with emphasis on the promoter's passion and values.

Responding to a query on categories of interest within foods, Mehta said healthy snacking is a clear priority as shifts are happening in consumer preferences driven by health and wellness trends.

According to Mehta, India is on the cusp of a "great Indian snacking renaissance", and the country must urgently ramp up investment in food science and research if it hopes to build globally iconic healthy snacking brands, Mehta said.

India's decade-long consumption boom, powered by rising incomes, urbanisation and a young population, presents an unprecedented opportunity for the country to move beyond being a mere consumer market.

"We are standing at the threshold of a new era. I would call it the great Indian snacking renaissance," Mehta said, adding that the "old playbook" of cheap, deep-fried, high-sodium snacks was "staring at a sunset".

Mehta further said with the rise of nuclear families and dual-income households, the "traditional rigid rhythm of three square meals" a day is fracturing, especially in the urban environment..

Packaged foods, currently just 15 per cent of India's total food consumption against 60-70 per cent in developed markets, are set to double over the next decade, he said.

"The snack is the meal. We are seeing the rise of micro meals ready to eat, portable nutrition that can fit into a laptop bag or a car cup holder. This brings us to the future of packaged goods," he said, adding, "Freshly cooked hot food was always the gold standard, but convenience has broken that value. The packaged goods industry in India is projected to double over the next decade, registering phenomenal double-digit growth.

Mehta said the country must move up the value chain from exporting raw spices, tea and rice to creating intellectual property and global brands, leveraging indigenous superfoods such as makhana, ragi and jowar.

When asked about the FMCG segment, Mehta, on the sidelines of the Indian Healthy Snacking Summit, said, "India is a consumption economy. FMCG is a very attractive market. There is no global consumer goods company.

Over the short-term challenges faced by the FMCG industry, he said, "Nothing in life moves in a linear fashion", and it has a long runway for growth.

"55 per cent of the country is still what I would call as featuring below the middle class. So their ability to spend on a similar kind of volume comes down. So they titrate the volume," he said, adding, "India will keep growing. FMCG will keep growing."