According to a statement, SAIF Partners India has invested US$10m into Manpasand Beverages Pvt Ltd, a Gujarat-based juice manufacturing and marketing company, for a minority stake.
Manpasand Beverages is best known for Mango Sip, a brand with a strong presence in semi-urban and rural India, and will use these funds to expand its marketing and manufacturing presence.
“We believe that the fruit drink market in India is underpenetrated and there is great growth potential in this industry,” said Vishal Sood, partner at SAIF.
According to a an official at a rival beverage maker, which is also in the business of fruit juices, the sector has witnessed 10 per cent annual growth for the past five years and is expected to grow further. The official asked not to be named.
“However, there are concerns in the segment, especially with consumption patterns. Indians are not as fond of juices as westerners are. To change this pattern, Manpasand will have to invest a lot into marketing,” she said.
However, the company is rightly placed with its semi urban and rural presence, according to the official, whose company is trying to break into the market.
A security analyst - who also asked to remain anonymous - had said earlier in a note that the purchasing power of these segments is bound to grow with the surging Indian economy, and thus will bring higher revenue for these smaller brands.
The SAIF Partners India investment is one of many in recent months to concentrate on smaller and mid-sized Indian brands.
In July, US-headquartered Sequoia Capital India announced that it had bought a stake in Indore-based Prakash Snacks Pvt Ltd for US$30m. Prakash Snacks is the maker of Yellow Diamond brand potato chips, and a supplier of private label brands with a semi urban and rural footprint.
US-based buyout firm Carlyle Group also invested US$22 m in Tirumala Milk Products Pvt Ltd in June last year. Tirumala was started as a small town enterprise in South India.
The same year, a fund backed by securities firm Motilal Oswal Ltd picked up 20 per cent of Bector's Food Specialties Pvt Ltd, maker of the Cremica brand of biscuits and breads, for an undisclosed amount.