Japanese processed foods makers Toyo Suisan Kaisha Ltd and Ajinomoto Co are establishing a joint-venture company in India for instant noodle businesses in the country. Toyo Suisan will hold 51 per cent with Ajinomoto owning the rest in the venture which is expected to absorb investment of around $10 million (Rs 62 crore).
The business would be headquartered in Chennai with Ajinomoto providing marketing support and Toyo Suisan involved in development and production. The partners will create a new brand which would be shared by both the firms.
The firms expect sales in India to commence in 2016 and are aiming to reach sales of 500 million servings with a market share of 15 per cent in the four states of south India within 10 years of starting up.
According to the World Instant Noodles Association, Indian market size is pegged at 4.4 billion servings comprising around 4.4 per cent of the global market. However, growth in India at 22 per cent is manifold compared with global growth of around 3 per cent making it a lucrative market.
The market is currently dominated by Nestle’s Maggi, which has a near monopoly status in the industry. Several small players have tried their hands to break into the market including brands like Top Ramen (Indo Nissin), Wai Wai (CG Foods), Tasty Treat (private label of Future Group), Yipee (ITC) and Foodles (Glaxo).
In a parallel move, the two Japanese partners are also forming a similar venture in Nigeria where Ajinomoto will hold a 51 per cent stake with Toyo Suisan controlling the remaining 49 per cent.
Ajinomoto, which had global revenues of over $14 billion for the year ended March 31, 2013, is into the business of seasonings, amino acids and other products in more than 130 countries and regions. It entered India in 2003.
Toyo Suisan is into instant noodle business and holds a strong market share in the US and Mexico. It had global sales of around $3.5 billion in the last financial year.
(Edited by Joby Puthuparampil Johnson)