Why is Bikaji Foods betting big on The Hazelnut Factory? The Rs 131cr deal explained

Bikaji Foods International Limited, one of India’s top ethnic snack brands, is taking a bold leap into the Quick Service Restaurant (QSR) sector. The company’s wholly-owned subsidiary, Bikaji Foods Retail Limited (BFRL), is set to invest ₹131.01 crore in Hazelnut Factory Food Products Private Limited (THF), acquiring a controlling 53.02% stake in the café and artisanal sweets brand. This acquisition, to be completed in tranches over the next two years, marks Bikaji’s ambitious entry into the high-growth QSR sector.

Bikaji’s management highlighted that this investment aligns with their long-term strategy of developing a ‘House of Brands’ that caters to diverse customer preferences. By incorporating THF’s premium bakery and patisserie offerings, Bikaji aims to enhance its product portfolio beyond traditional ethnic snacks.

Expanding Presence in Premium Bakery & Patisserie

The Hazelnut Factory, established in 2019, has become a renowned name in Uttar Pradesh and Delhi, offering a premium selection of bakery items, artisanal sweets, and café-style meals. With six stores in Lucknow and branches in Kanpur and Delhi, THF’s presence will provide Bikaji with immediate entry into urban QSR markets. According to Bikaji’s officials, this acquisition will offer cross-selling opportunities and help leverage shared resources and facilities for scaling operations.

Deepak Agarwal, Managing Director of Bikaji Foods International, emphasized that this move is part of the company’s effort to diversify beyond its existing portfolio. He stated that integrating THF’s artisanal product range with Bikaji’s manufacturing strengths would enable them to tap into evolving consumer tastes, particularly in the premium café and bakery segments.

Market Potential and Strategic Positioning

India’s QSR sector is booming, driven by increased urbanisation, a growing young population, and the surge of food aggregators like Zomato and Swiggy. The rise of weekend socialisation, along with growing internet penetration, has further fueled the demand for convenient dining experiences. By acquiring THF, Bikaji is positioning itself to capture this market momentum, particularly in Tier-2 and Tier-3 cities, where QSRs are rapidly expanding.

Industry experts agree that Bikaji’s diversification strategy reflects a broader trend in the Indian F&B sector, where established brands are looking beyond their traditional offerings to capture new consumer segments. One analyst mentioned that Bikaji’s existing distribution network and operational efficiency would likely amplify the impact of THF’s product offerings, providing an edge in a highly competitive market.

The Financials Behind the Acquisition

The total investment of ₹131.01 crore will be executed in multiple tranches. The initial investment of ₹61 crore is scheduled for completion by November 30, 2024. BFRL will acquire 40.40% of THF’s equity in this first tranche. The remaining stake acquisition will occur over the next two years based on pre-agreed valuation terms.

Industry Expert Opinion

Market analysts suggest that Bikaji’s entry into the QSR sector is a well-timed move, considering the sector’s growth trajectory. They predict that the acquisition will help Bikaji diversify revenue streams and strengthen its market presence in the premium café and bakery space. Experts, however, also caution that the brand’s success will depend on its ability to integrate THF’s offerings while maintaining the quality and brand identity that consumers associate with Bikaji.