Product Portfolio Rationalisation: Driving Synergy in India’s Food Industry Post-M&A

India’s food industry, a $900 billion-plus juggernaut, fuels nearly 10% of the nation’s GDP and employs millions across diverse verticals like agri-processing, packaged foods, quick-service restaurants (QSRs), food delivery, cold chain logistics, and nutraceuticals. For senior leaders navigating Food M&A, product portfolio rationalisation serves as a pivotal post-merger strategy to streamline operations, enhance brand alignment, and thrive in competitive hubs like the Mumbai market. This article explores the industry’s landscape, recent developments, challenges, and strategic approaches to product portfolio rationalisation, offering actionable insights for decision-makers.

Industry Overview & Context

The Indian food industry spans a complex value chain, from agricultural production to processing, packaging, distribution, and retail. Key verticals include:

• Agri-processing: Transforming raw produce into value-added products like spices, dairy, and edible oils.
• Packaged foods: Driving urban consumption with ready-to-eat meals, snacks, and beverages.
• QSRs and food delivery: Booming in metros like Mumbai, powered by digital platforms.
• Cold chain logistics: Ensuring freshness for perishables.
• Nutraceuticals: Growing due to health-conscious consumer trends.

Regulatory bodies like the Food Safety and Standards Authority of India (FSSAI), Ministry of Food Processing Industries (MoFPI), Agricultural and Processed Food Products Export Development Authority (APEDA), and GST Council enforce compliance in quality, labeling, and taxation. Industry trends include soaring demand for clean-label products, rapid growth in QSRs and direct-to-consumer (D2C) brands, and digitised supply chains leveraging IoT and AI, particularly in the Mumbai market.

1. Recent Developments (as of July 2025)

The food industry evolves rapidly. The Production-Linked Incentive (PLI) Scheme 2.0, revised in 2024, incentivises domestic food processing and exports. QSRs and e-grocery platforms report 20% year-on-year growth, driven by urban demand in cities like Mumbai. FSSAI’s adoption of compliance technologies, such as blockchain for traceability, enhances transparency. Sustainability regulations push eco-friendly packaging, while Budget 2025 introduces tax incentives for green supply chains and export subsidies for organic products. These shifts underscore the need for product portfolio rationalisation to align offerings with market and regulatory demands.

2. Challenges in Product Portfolio Rationalisation Post-Food M&A

Food M&A drives consolidation and growth but creates complexities in portfolio management. Without deliberate product portfolio rationalisation, merged entities face:

• Overlapping SKUs: Redundant products compete for shelf space, confusing consumers.
• Cannibalisation: Similar offerings erode brand value and market share.
• Supply chain inefficiencies: Fragmented logistics networks inflate costs.
• Regulatory redundancies: Disparate compliance requirements burden operations.
• Regional preference mismatches: Products popular in one region may fail elsewhere, causing inventory waste.
• Brand identity dilution: A cluttered portfolio blurs brand alignment, weakening consumer trust.

These challenges highlight the need for a robust post-merger strategy centered on product portfolio rationalisation.

3. Strategic Analysis Using a Hybrid Consulting Lens

Effective product portfolio rationalisation demands a multi-faceted approach, blending management, finance, legal, and technology expertise.

• Management: Centralise Decisions, Harmonise SKUs, Streamline Brands

Centralise portfolio decisions to align the merged entity’s strategy. Conduct a comprehensive review to identify and eliminate duplicate or underperforming SKUs. Streamline brand architecture by retaining high-value brands, integrating complementary ones, and sunsetting redundant ones. This ensures clarity and coherence, strengthening brand alignment in markets like Mumbai.

• Finance: Evaluate Margins, Working Capital, and SKU Contribution

Assess product margins, working capital impact, and the contribution of long-tail SKUs. Often, a small percentage of products generate most revenue and profit. Identify these “cash cows,” divest underperformers, and optimise inventory levels. This financial rigor drives efficiency in product portfolio rationalisation, boosting profitability post-M&A.

• Legal: Ensure Compliance, Manage Withdrawals, Update Labeling

Ensure all retained products comply with FSSAI regulations and protect intellectual property (IP) rights. Manage product withdrawals in line with consumer protection laws and update labeling for unified or rebranded products to avoid misrepresentation. Partnering with experts like LawCrust ensures seamless legal navigation during product portfolio rationalisation.

• Technology: Leverage Analytics, ERP, and AI Tools

Use predictive analytics for accurate demand forecasting, reducing waste. Implement ERP systems for real-time insights into production, distribution, and sales. Employ AI tools for SKU-level profitability analysis, identifying hidden costs and optimisation opportunities. These technologies empower data-driven product portfolio rationalisation decisions.

Example Scenarios

A Mumbai-based packaged food company, post-merger, faced a cluttered portfolio and logistical inefficiencies. Through product portfolio rationalisation, they used predictive analytics and ERP systems to identify 30% of SKUs as overlapping or underperforming. They streamlined logistics by consolidating warehousing and transportation networks and rebranded their unified product line across retail and e-commerce channels. The result? A significant EBITDA boost, improved shelf efficiency in the Mumbai market, and stronger brand alignment. This case underscores how product portfolio rationalisation delivers tangible benefits.

Conclusion

In India’s competitive food industry, particularly in dynamic markets like Mumbai, product portfolio rationalisation is a strategic imperative for post-merger synergy. It eliminates redundancies, optimises resources, enhances brand alignment, and drives sustainable growth. By adopting a hybrid consulting approach—integrating management, finance, legal, and technology expertise—senior leaders can navigate Food M&A complexities, unlock value, and secure a leading position in this vibrant sector.

About LawCrust

LawCrust Global Consulting Ltd. delivers cutting-edge Hybrid Consulting Solutions in Management, Finance, Technology, and Legal Consulting to ambitious businesses worldwide. Recognised for our cross-functional expertise and hybrid consulting approach, we empower startups, SMEs, and enterprises to scale efficiently, innovate boldly, and navigate complexity with confidence. Our services span key areas such as Investment Banking, Fundraising, Mergers & Acquisitions, Private Placement, and Debt Restructuring & Transformation, positioning us as a strategic partner for growth and resilience. With an integrated consulting model, fixed-cost engagements, and a virtual delivery framework, we make business transformation accessible, agile, and impactful.

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