Bikaji acquires The Hazelnut Factory

Bikaji Foods International Limited (Bikaji), one of India’s largest ethnic snacks brands, has announced that, Bikaji Foods Retail Limited (“BFRL”), wholly Owned Subsidiary of Bikaji Foods International Limited, will make a strategic investment of INR 131.01 Crores for an acquisition of 53.02% stake in Hazelnut Factory Food Products Private Limited (“The Hazelnut Factory” / “THF”), a Café cum Artisanal sweets brand based in Lucknow.

This investment will be done in tranches and is expected to be completed in next 2 years, the details of which are shared at the last of this article.

Through this acquisition, Bikaji aims to set up a House of Brands to cater to unique customer tastes and preferences and establish Bikaji as a key player in the Quick Service Restaurant (QSR) domain. This acquisition will enable Bikaji to expand its product portfolio into the premium bakery and patisserie segment, while also incorporating various café offerings to meet evolving consumer preferences.

The Hazelnut Factory (first opened in 2019) is an established Café cum Artisanal sweets brand having a retail presence in 6 stores in Lucknow and 1 store each in Kanpur & Delhi. The brand offers Specialty coffee, Artisanal sweets, bakery & patisserie along with a range of café Menu.

The acquisition of The Hazelnut Factory will enhance Bikaji’s ‘House of Brands’ by providing cross-selling opportunities, flexible menu offerings, a diverse customer base, a diversified brand portfolio, shared facilities and resources, and increased market presence.

Deepak Agarwal, MD of Bikaji Foods International, remarked, “This acquisition marks a significant step in Bikaji’s journey to expand beyond traditional ethnic snacks and enter into retail QSR, premium artisanal sweets and bakery segment. This strategic move not only marks our entry into the high-growth QSR sector but also aligns with our vision to build a 'House of Brands'. By integrating THF's premium offerings and Bikaji’s manufacturing capabilities, we aim to cater to unique customer tastes and preferences, establishing Bikaji as a key player in the QSR space.”

Ankit Sahni, Founder of The Hazelnut Factory, said, “We are delighted to join hands with Bikaji and this acquisition marks an exciting milestone for The Hazelnut Factory. With our innovative culinary offerings and Bikaji's strong distribution network along with its operational excellence, we are well-positioned to accelerate our growth. Our vision to blend the rich tradition of artisanal sweets with global coffee culture will now reach a broader audience, creating unforgettable culinary experiences for even more customers. Our combined expertise will allow us to cater to a wider audience.”

The acquisition comes at a pivotal moment, as the Quick Service Restaurant (QSR) segment is witnessing rapid growth and an increased store presence in tier-2 and tier-3 cities and smaller towns, fueled by factors such as increasing urbanization, a growing young population, rising travel and tourism, and expanding internet penetration.

Additionally, the emergence of food aggregators and the trend of increased weekend socialization are driving demand for convenient dining options. This strategic acquisition positions us to leverage the opportunities presented by this dynamic landscape and enhance our reach in these rapidly developing areas.

The business of the THF is not outside the main line of business of the BFRL. This acquisition will not only broaden the portfolio, but also, enhance the market presence of BFRL’s business, and will strengthen the overall business strategy of our QSR segment. 

THF financial overview sheet:

FINANCIAL YEAR	TURNOVER	PROFIT AFTER TAX
2023-24	44.85	2.46
2022-23	39.31	0.83
2021-22	27.32	1.57

(Turnover & Profit in Rs. Crores)

The initial Investment of ₹ 61.00 Crore will be made through primary subscription and secondary purchases for acquisition of 40.40% of the total issued and paid-up equity share capital of THF, which is expected to be completed by November 30, 2024 or such other later date, as may be mutually agreed upon.

Further infusion of ₹ 70.01 Crore will be made through primary subscription, in tranches, over a time period of 2 years from the first tranche of acquisition or such other later date, as may be mutually agreed upon, based on pre-agreed pre-money valuation.

This acquisition is a part of overall strategy to develop and expand our Quick Service Restaurant (QSR) business vertical through a comprehensive House of Brand strategy.