Data Security: The Cornerstone of Successful Food M&A in India

India’s fast-evolving food industry is witnessing a surge in M&A activity, driven by growth, consolidation, and digital innovation. Yet, amid integration pressures, data security often takes a backseat exposing companies to legal, financial, and reputational risks. This article unpacks why data security in Food M&A is non-negotiable and provides strategic guidance for senior leaders, combining insights from management, finance, legal, and technology to ensure safe, compliant, and value-accretive integrations.

Industry Overview: Where India Eats and Grows

India’s food industry, valued at over $500 billion, contributes ~14% to GDP and supports 40 million jobs across agri-processing, packaged foods, QSRs, and online grocery. With rising demand and digital growth, the sector is set to expand at a CAGR of 8–10% through 2030. The food processing segment employs nearly 2 million workers, while QSRs are projected to hit $43.5 billion by 2030, reflecting the industry’s scale and transformation.

Food M&A scenarios vary widely. A large food conglomerate might acquire a regional player to expand market share or access new distribution channels. A packaged food firm could purchase a tech-driven food delivery platform to enhance direct-to-consumer capabilities. QSR chains often acquire smaller outlets to broaden their footprint. In each case, companies inherit not only physical assets and brands but also vast quantities of sensitive data operational, supply chain, and, critically, customer data. Ensuring data security during these transactions is paramount to protect value and maintain trust.

1. Recent Developments: Digital Evolution and Regulatory Scrutiny (June 2025)

India’s M&A landscape is booming, with $61.3 billion in activity in H1 2025, the highest first-half total since 2022. Digital transactions, particularly acquisitions of technology-enabled businesses like cloud kitchens and e-commerce platforms, are driving this growth, amplifying the need for robust data security measures.

The regulatory environment is tightening. Post-Budget 2025, the Union Government increased cybersecurity funding by 20%, signaling a commitment to combat rising cyber threats. The Digital Personal Data Protection Act (DPDP Act) 2023, though awaiting full enforcement rules as of June 2025, imposes strict obligations on data fiduciaries, including consent-based processing and penalties up to INR 250 crore for data security failures. The Food Safety and Standards Authority of India (FSSAI) has also intensified digital compliance for e-commerce platforms, mandating secure data exchange for food safety certifications and supply chain tracking. Additionally, the Reserve Bank of India (RBI) has strengthened guidelines on payment data security, requiring tokenised transactions and compliance with PCI-DSS standards, which directly impact customer data handling in post-merger integrations. These developments underscore the critical role of data security in ensuring compliance and operational continuity.

2. Key Challenges: Navigating the Data Security Minefield in Food M&A

Mergers in the food industry, especially those involving digital assets, present unique data security challenges:

• Integration of IT Systems with Inconsistent Cybersecurity Protocols: Acquired entities often use disparate or outdated IT systems, lacking the acquirer’s cybersecurity standards. This creates vulnerabilities during integration, risking data breaches.
• Data Silos, Unauthorised Access, or Breaches: Merging systems can create data silos or expose sensitive customer data to unauthorised access. Without careful management, integration processes can trigger breaches, compromising operational and consumer data.
• Compliance Misalignment with India’s Data Protection Act: Aligning merged entities with the DPDP Act’s requirements such as consent mechanisms, data retention, and breach notifications is complex. Non-compliance risks legal penalties and reputational damage.

3. Strategic Insights Using a Hybrid Consulting Lens

A multidisciplinary approach to data security in Food M&A integrates management, finance, legal, and technology expertise:

• Proactive Risk Assessments Before IT Integration: Conduct cybersecurity risk assessments of the target’s IT infrastructure and data practices pre-deal. Identify vulnerabilities, assess data security maturity, and evaluate potential liabilities to inform deal structuring.
• Rigorous Cyber Audits and Legal Due Diligence: Perform cyber audits to uncover security gaps and past incidents. Legal due diligence should scrutinise data privacy policies, contractual obligations, and historical breaches to ensure compliance and protect against risks.
• Unified Access Controls and Encryption: Post-acquisition, implement a unified identity and access management (IAM) framework with least-privilege access. Encrypt all customer data, both in transit and at rest, to safeguard sensitive information.
• Strategic Cloud Security Alignment: For cloud-based systems, deploy cloud access security brokers (CASB), secure configuration management, and continuous monitoring to maintain data security across platforms.
• Robust Regulatory Reporting and Liability Mitigation: Establish protocols for DPDP Act-compliant breach notifications. Cybersecurity insurance can mitigate financial risks, while internal accountability frameworks ensure compliance.
• Vendor Risk Management: Assess third-party vendors’ data security practices, as weaknesses in their systems can compromise the merged entity. Implement vendor risk management programs to enforce consistent security standards.

Illustrative Examples: Data Security in Action

• Packaged Food Firm Acquiring a Cloud-Kitchen Chain: A packaged food company acquires a cloud-kitchen chain, inheriting extensive customer data (orders, preferences, payments). During CRM migration, the firm encrypts all data, implements multi-factor authentication, and conducts penetration testing. This ensures data security, prevents breaches, and maintains consumer trust, ultimately boosting customer retention and deal value.
• QSR Chain Integrating Loyalty Programs: A QSR chain acquires multiple independent outlets with disparate loyalty program databases. The chain centralises the system using tokenised data, sanitises and encrypts customer PII, and conducts regular security audits. This strengthens data security, streamlines operations, and enhances customer loyalty, driving revenue growth.

Conclusion

In India’s dynamic food industry, M&A fuels growth and market expansion. However, the success of these deals hinges on more than financial synergies it requires robust data security to protect sensitive customer data, ensure regulatory compliance, and sustain consumer trust. By prioritising data security throughout the M&A lifecycle from due diligence to post-merger integration senior leaders can mitigate cyber risks, align with evolving regulations like the DPDP Act, and unlock sustainable value. Data security is not just a technical necessity; it’s a strategic imperative for long-term success in India’s evolving food landscape.

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