DS Group Readying To Enter Confectionery Segment

New Delhi: | Updated: Dec 25 2002, 05:30am hrs
After retail and entertainment, cash-rich tobacco major Dharampal and Satyapal (DS) Group is readying for its next diversification. This time round it has set its sight on the highly fragmented confectionery industry. In its first move towards that, DS is believed to have signed a collaboration with a Japanese confectionery major.

While the name of the company DS has collaborated with is not known, sources say that it could be Lotte Korea. A confectionery major in the Far East, Lotte Korea, in addition to confectionery, deals with leisure towns, theme parks, shopping malls and indoor recreational areas.

DS spokesperson, when contacted, without naming the company confirmed that it was in talks with a big player in confectionery, retail, entertainment and theme parks but at the same time maintained that the talks were at a nascent stage.

Industry sources, however, maintain that the two may have even signed the deal and are preparing themselves for local manufacturing in the country. In the meantime, DS is also believed to have commissioned market research major ORG to conduct a feasibilty study for the proposed project.

As reported by FE, the DS Group has evaluated a number of diversification options including retail and real-estate led entertainment business. The company is, however, most likely to enter the emerging multiplex business which is currently seeing fast growth.

As part of this process, DS has already bid for several properties including ITDC properties and is also actively looking at more acquisitions in the hotel and food retail segment. Its moves to take-over Delhi-based south Indian food chain Sagar have, however, fallen through.

In the recent past, the group has already diversified into the food and beverages business. Starting with Catch natural spring water, the company currently markets brands like Catch Spices, Catch Snack foods like roasted grams, cashew nuts, jumbo corn, and Pass Pass the natural mouth freshener. And more recently, the company has launched Catch Club Soda, which marks the entry of the group into the carbonated drinks segment.

The company has also announced its decision to enter the commodities market with the launch of staple foods like rice, atta, tea, salt and sugar.

In addition, the company is also eyeing new segments/categories of the food processing industry and is currently in the process of finalising the launch plans of the proposed products.

Refusing to divulge details, the company spokesperson, however, admitted that an enhanced focus on the foods business and expansion of the product portfolio is on the anvil.

Clearly, DSs diversification moves are a step to move away from its core business of tobacco which is increasingly coming under flak and regulation. Sooner or later, they have to get out of it (tobacco), hence investments in parallel businesses are happening at a faster pace, says an industry analyst requesting anonymity.

Whether the company can manage to carry forward the DS brand strength to categories as consumer-centric as confectionery is doubtful. The confectionery industry is geting overcrowded and can everyone play the game is a big question, says an industry observer.