Berkshire Hathaway talks to Reliance Retail for India foray

MUMBAI: Billionaire investor Warren Buffett’s Berkshire Hathaway wants a big scoop of India’s consumption story. Berkshire-owned Dairy Queen (DQ), an international softserve ice cream and frozen food retailer, is holding talks with Reliance Retail for joint venture in India, said multiple sources directly aware of the matter. A potential deal could also see the Mukesh Ambani firm making a big move into the quick service restaurant business, as DQ operates close to 6,000 outlets worldwide selling grilled products like burgers and hot dogs.

India with the highest per capita consumption of milk has seen robust growth in premium processed dairy products in recent years. But with per capita ice cream consumption estimated at 300ml, which is just 1.4% of that in the US, the domestic consumption offers a huge growth story for global soft-serve retailers. The $2.5-billion DQ wants to expand aggressively in Middle East and Asian markets.

Top Reliance executives visited south east Asian markets like Thailand in recent weeks to understand DQ’s operations . The Mukesh Ambani firm has reasonable presence in the domestic dairy market processing half a million litres of milk everyday, with 3,000 collection points nationwide. A tie-up with DQ would see Reliance Retail becoming serious player in the frozen foods market , and scaling up its dairy operations in the process. It is learnt that DQ had mandated consultancy firm Technopak to chart its India plans, which may be finalized by early 2012. A Reliance spokesperson said the company would not comment on speculation as a matter of policy. Sources said DQ’s deal with Reliance Retail was still in the making and not yet clinched. Minnesotta-based DQ may be keeping options open with other potential Indian partners even as Reliance evaluates a tie-up .

Berkshire Hathaway, which entered India last year by becoming a corporate agent for Bajaj Allianz General Insurance , has been screening the Indian market for a while and is excited about the emerging fast-food restaurant opportunity . Some of Dairy Queen’s rivals such as Baskin-Robbins already have a presence in India. Baskin-Robbins operates through a franchise arrangement with the Ghais of Graviss Group in India.

The Rs 276-crore Reliance Retail has once again turned active in striking alliances with global retailers after hitting the pause button for almost two years. TOI earlier reported that it had signed a non-disclosure agreement with beauty retailer and LVMH group company Sephora. But unlike in the past, the retail juggernaut of the elder Ambani has turned cautious in burning cash on alliances with global retailers.