Heartening to Heartache: Global Indian Brands Remains A Pipedream?

Date: 16th February 2022

Publication: Avenue Mail

The news of cola beverage Thums Up crossing $ 1 billion in sales is heartening and also a heartache. Founded in 1977 by the Chauhan brothers, the beverage major has launched a post-departure of Coca-Cola from India. Known for its macho brand image and distinct taste, Thums Up became the top brand in beverages beating the market shares of Coco-Cola and Pepsi by miles. When Coca-Cola returned to India in 1993, it brought Thums Up from the brothers, effectively ending the chance of Thums Up of becoming a global Indian brand owned by Indians. Apart from Thums Up, Coca-Cola also brought one of India’s most popular orange drinks, Gold Spot which was the household beverage in the 80s and 90s generation. India lost a golden opportunity to build potential global behemoths of Indian origin and ownership in beverages with Thums Up and Gold Spot by selling off a multinational corporation.

Mergers and acquisitions are a common economic activity across the world, but Indian brands which have the potential to become multi-billion-dollar brands are often taken over by behemoths based out of superpower nations. Once an Indian company becomes a rising star with proven financials, turnover, and EBITDA, a foreign company through its Indian subsidiary often bids and wins the ownership to the Indian company. The idea of Indian companies taking over the world like Mc Donalds, Coca-Cola, HUL, KFC, P&G by operating presence in more than 100 countries remains a stunted dream. Indian companies lack the strength to fend off mouth-watering deals offered by foreign multinationals and hence sell their high potential brands to global MNC out on shopping sprees.

A subsidiary of the Tata group, Lakme created a revolution in the cosmetics industry after its launch in 1952, at the request of Prime Minister Jawaharlal Nehru. Becoming a market leader in the beauty industry, Lakme was sold off to Hindustan Unilever in 1996 after Tatas divested their stake in the company. A cosmetic brand of Indian origin and ownership could have given the country a massive influence in the world of fashion, beauty, and cosmetics.

In recent times, India founded and owned E-Commerce player Flipkart had caught the imagination of millions of Indians when it was launched by the Bansals in 2007. Taking on global giant Amazon on the Indian turf, Flipkart generated billion-dollar business turnover taking on global and local E-Commerce players head-on. However, the party for Indian origin brand ended when US retail giant Walmart’s acquired Flipkart for $16 billion in the biggest ever in India in 2016. The one Indian brand in the online space which could have challenged the world order was now owned by a foreign multinational. Walmart also took ownership stake into another Indian company via Flipkart, India-born Phone Pe which was challenging the likes of Google Pay in the digital payments space.

In the FMCG space, critical acquisitions by foreign companies of India-born MTR foods and Havmor Ice-creams had created a buzz during their respective takeovers. Instant food giant MTR Foods (Mavalli Tiffin Room) was taken over by the Norwegian conglomerate Orkla ASA in 2007 while South Korean giant Lotte Confectionery took control of India bred Havmor Ice-creams a decade later in 2017. The acquisition of health drink brand Complan and soya-based drink Sofit also reflects the growing shopping cart of foreign companies.

In the pharmaceutical industry, Japan’s pharma giant Daiichi Sankyo Co. Ltd. acquired the entire shareholder's stake of India-born Ranbaxy Laboratories Ltd, for $4.5 billion in 2008 (though acquired by an Indian multinational Sun Pharma in 2013). The sale of Dabur Pharma, Shanta Biotech, Piramal Healthcare, Matrix Lab, and Orchid Chemicals raised eyebrows in the Indian government when they were acquired by foreign companies.

The future will present more challenges as Indian unicorns rise in power, revenue and potential. To become a superpower, India needs over 50 homegrown mega brands which can transform into billion-dollar companies spread across 120 countries and more. Not only for the usage to showcase India as an economic power but also to utilize these brands for soft foreign policy. Till then potential Indian mega brands must resist the charms of global multinationals and retain ownership and control in Indian hands.