Navigating the Palate: Managing Consumer Perception During Food M&A in India

India’s $900 billion food industry is evolving rapidly, shaped by health trends, premiumisation, and clean-label demand. As M&A activity intensifies, maintaining consumer perception becomes vital to safeguard brand reputation and trust. This article offers a hybrid consulting strategy blending management, finance, legal, and tech insights to help senior leaders manage perception and ensure post-merger success.

Industry Overview: India’s Food Sector in Context

India’s food industry thrives on a complex value chain, from agriculture and processing to distribution and retail. Key verticals include:

• Packaged Foods: Forecasted to reach $220 billion by 2025, driven by convenience and premium products.
• QSRs: Expanding rapidly in urban and Tier-2 cities, with global and local brands competing fiercely.
• Beverages: Growing demand for functional, low-sugar, and plant-based options.
• Nutraceuticals: Gaining traction as consumers prioritise wellness-driven products.
• Food Delivery: Urban e-grocery and delivery platforms are projected to capture 25% of consumer purchases by 2025.

Regulatory bodies, including the Food Safety and Standards Authority of India (FSSAI), the Ministry of Food Processing Industries (MoFPI), and State Food and Drug Administrations, consistently enforce compliance to ensure safety, quality, and transparency in the food sector. Meanwhile, consumer behavior is rapidly evolving. By 2030, India will have over 370 million Gen Z consumers, who are increasingly demanding sustainable, health-conscious, and transparent brands. Consumer behavior is shifting, with 370 million Gen Z consumers by 2030 driving demand for sustainable, health-focused, and transparent brands. These trends amplify the importance of managing consumer perception during food M&A, where trust is a key determinant of success.

1. Recent Developments Shaping Consumer Perception (June 2025)

• PLI 2.0 Updates

The Production Linked Incentive (PLI) Scheme 2.0 for processed and functional foods has spurred investments in nutraceuticals, sustainable packaging, and value-added products. As of June 2025, the scheme supports innovation in clean-label and health-focused offerings, aligning with consumer preferences and enhancing consumer perception of quality and sustainability.

• Post-Merger QSR Integrations

Recent QSR mergers, such as those involving global chains acquiring regional players, clearly highlight the importance of localised branding in maintaining customer trust. For example, post-merger integrations have strategically focused on retaining regional menu items to preserve consumer loyalty. As a result, brands have been able to mitigate negative consumer perception related to excessive standardisation.

• FSSAI’s AI-Led Traceability Tools

FSSAI’s recent adoption of AI-driven traceability tools, such as blockchain-enabled supply chain tracking, significantly enhances transparency in the food sector. As a result, consumers benefit from greater visibility into product journeys. For instance, they can now verify product origins instantly via QR codes. Consequently, this increased transparency strengthens consumer trust particularly during food M&A transitions, when brand credibility is most vulnerable.

• Urban E-Grocery and Packaging Transparency

Urban e-grocery platforms are implementing trust initiatives, such as detailed sourcing disclosures and eco-friendly packaging. These efforts address consumer demands for transparency, particularly in Tier-1 cities, and help maintain positive consumer perception post-M&A.

2. Key Challenges in Managing Consumer Perception During Food M&A

M&A in the food industry can trigger consumer concerns that erode brand reputation. Key challenges include:

• Fear of Product Changes: Consumers often worry about ingredient shifts, quality dilution, or altered recipes post-merger, especially for legacy brands with strong regional ties.
• Social Media Backlash: Misinformation and negative narratives on platforms like X can amplify fears of job losses or product standardisation, damaging consumer perception.
• Trust Variability Across Segments: Tier-1 urban consumers, with greater access to information, may demand transparency, while Tier-3 consumers may rely on brand familiarity, requiring customise approaches to sustain customer trust.

3. Strategic Analysis: A Hybrid Approach to Consumer Perception

Managing consumer perception during food M&A demands an integrated strategy across multiple disciplines.

• Brand Strategy: Communicating Continuity

The decision to retain or rebrand an acquired entity is pivotal. For brands with strong regional equity, communicating continuity through consistent packaging, messaging about unchanged recipes, or highlighting shared values reassures consumers. For example, retaining a legacy brand’s name in rural markets can preserve customer trust. If rebranding is necessary, a phased approach with clear messaging about enhanced quality or expanded reach mitigates negative consumer perception.

• Post-Merger Marketing: Crafting a Compelling Narrative

Effective post-merger marketing shapes consumer perception by emphasising merger benefits, such as improved product innovation or wider availability. Collaborate with local influencers to amplify positive narratives, particularly on social media platforms like X, where real-time sentiment monitoring is critical. Packaging cues, such as familiar logos or regional design elements, maintain consumer familiarity and reinforce customer trust. Transparent communication about sourcing and quality further strengthens brand reputation.

• Legal & Regulatory: Ensuring Transparency

Compliance with FSSAI’s Front-of-Pack (FOP) labeling requirements is non-negotiable. Transparent disclosure of any ingredient changes prevents accusations of deception. Proactive recall management, with swift and consumer-centric responses, mitigates risks to consumer perception. Legal teams must also ensure compliance with advertising claims to avoid regulatory penalties that could harm brand reputation.

• Technology & Operations: Leveraging Traceability

Implementing traceability systems, such as QR codes or blockchain-based batch tracking, enhances transparency and builds customer trust. AI-driven tools can monitor social media sentiment, enabling rapid responses to emerging concerns. Consistent quality across merged production facilities is critical to avoid perceptions of dilution, which can erode consumer perception.

• Finance & Compliance: Investing in Perception

Allocate budgets for post-merger marketing and rebranding to safeguard consumer perception. Monitor ROI on perception-building campaigns to optimise resource allocation. Compliance with financial regulations and ethical practices reinforces the merged entity’s integrity, positively influencing consumer perception.

Illustrative Examples

• FMCG Acquisition of a Regional Brand

A leading FMCG acquired a legacy spice brand popular in South India. To maintain consumer perception, the company retained the brand’s name and packaging, publicly committing to preserving traditional recipes. They engaged local influencers to share stories of continued community involvement, resulting in sustained market share and enhanced customer trust in Tier-2 and Tier-3 markets.

• QSR Merger with Ingredient Transparency

In a QSR merger, a global chain acquired a regional player known for healthy offerings. Post-merger, the company launched a transparency campaign, using QR codes to provide sourcing details and nutritional information. This initiative addressed consumer fears of quality dilution, improving consumer perception and driving a 15% increase in customer retention in urban markets.

Conclusion

Managing consumer perception during food M&A in India’s dynamic food industry is a strategic imperative. By communicating continuity, crafting compelling post-merger marketing narratives, ensuring regulatory compliance, leveraging technology for transparency, and investing in perception-building, leaders can mitigate risks and unlock M&A potential. Integrated leadership across marketing, legal, operations, and finance is essential to sustain brand reputation and customer trust, ensuring long-term success in this vibrant sector.

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