Bengaluru: Orkla India, the listed maker of MTR Foods, is revamping the sales and distribution network of Eastern Condiments, nearly five years after acquiring the southern company, as it focuses on modern trade, quick commerce and convenience foods.
This restructuring comes after years spent understanding a business whose strengths were deeply tied to Kerala’s unique retail landscape, highlighting the complexities large consumer goods companies often face when integrating regional brands built around deeply local distribution networks and consumer habits.
Orkla first entered Eastern Condiments in 2021, when its subsidiary MTR Foods acquired a 67.82% stake in the Kerala-based spices maker for about ₹1,356 crore, valuing the company at roughly ₹2,000 crore. The transaction was later followed by a merger of Eastern with MTR Foods, increasing Orkla’s ownership in the combined business to 90.01%, with the Meeran family, the founders, retaining the remaining 9.99% stake.
“When we acquired Eastern, we secured the culture and secured the people first. We did not understand Kerala, we did not understand Eastern's sales system, and if we had gone in and changed it on day one, it would have been a disaster,” Sanjay Sharma, chief executive officer (CEO) of Orkla India, said in an interview with Mint.
Eastern currently holds a 41.8% share in Kerala’s packaged-spices market, 31.2% in Karnataka and 15.2% in Andhra Pradesh and Telangana. It has 18.6% share in India’s ready-to-cook and ready-to-eat convenience food market.
Analysts covering Orkla India’s initial public offering (IPO) highlighted several of the priorities now underpinning the Eastern restructuring. In an October 2025 note, Anand Rathi’s Manan Goyal said “continuous innovation, category expansion and premiumization” are key growth drivers.
Nirmal Bang’s Priyanka Ghadigaonkar highlighted the need to “expand household penetration and market share in core regions,” “drive international expansion and export growth” and “broaden and premiumize” the company’s product portfolio.
Orkla India reported fiscal year 2026 (FY26) revenue from operations of ₹2,509 crore, up 4.8% year-on-year, driven by 5.9% volume growth. Net profit rose 11.7% to ₹286 crore during the same period. Its shares have fallen about 2% year-to-date, outperforming Tata Consumer Products, whose shares have declined 5.4%, and broadly tracking the weaker sentiment in consumer stocks. The Nifty FMCG index has fallen about 8% in the same period.
A different challenge
Unlike MTR, which Orkla had acquired in 2007 and gradually integrated into its operations, Eastern presents a very different challenge.
For one, the company operated through a distribution model that was unlike anything else in Orkla’s portfolio. While most packaged food companies rely on traditional distributor networks, Eastern had built a direct-to-retail system over decades, allowing it to develop deep relationships with retailers across Kerala.
“We spent years understanding how the sales network worked because Eastern's sales model is unique. It has been built over decades and is deeply connected to how trade functions in Kerala,” Sharma said.
The integration process was also slowed by leadership instability. According to Sharma, Orkla went through two chief executives in quick succession before finding the right fit to lead the business through its next phase of growth.
“We appointed a CEO. It did not work. Then we got another CEO,” Sharma said.
The current CEO, Girish Kumar Nair, was appointed in January 2025. Sharma said it took nearly a year for the new leadership team to fully understand the business, build internal alignment and develop a roadmap for the structural changes now being implemented.
"Even after the new CEO came in, it takes time. You cannot understand a business like Eastern in three or six months. It took almost a year for the team to get ready and understand where the opportunities and challenges were," Sharma said.
The leadership transition delayed some of the transformation plans but also gave the company more time to understand where growth opportunities lay beyond Eastern's traditional spices business.
While Eastern continued to enjoy dominant market shares in traditional retail channels, Orkla found its performance in modern trade and open-format retail outlets lagging significantly.
Split in sales and distribution operations
Despite changing consumer preferences and growing demand for ready-to-cook and convenience foods, Eastern remained overwhelmingly dependent on spices and masalas.
The company’s convenience-food portfolio had struggled to gain meaningful scale. “The convenience-food business could never really develop because the organization was geared towards selling masalas.”
A single sales structure could no longer effectively serve all of Eastern’s businesses. The model, which had worked well for decades, was increasingly ill-suited to a retail landscape being reshaped by modern trade, convenience stores, quick commerce and emerging digital channels.
“The problem with Eastern’s distribution was that one system was delivering everything to the market,” Sharma said. “That was a very good system 20 years ago. But the Indian retail environment has changed dramatically.”
The company has since begun separating its sales and distribution operations. A dedicated network has been created for convenience foods, while separate structures are being built for modern trade and the core masala business.
“We now understand the business much better than we did when we acquired it,” Sharma said. “The next phase is about unlocking opportunities that the old structure could not fully capture.”
The restructuring also forms part of a broader effort to reduce Eastern’s dependence on spices and masalas and build a larger presence in adjacent food categories.
Spices still account for roughly two-thirds of Orkla India’s revenue, while convenience foods contribute about one-third. Sharma said the company sees significant opportunities in convenience foods, where changing lifestyles are creating demand for products that reduce preparation time without compromising on traditional tastes.
“Our aspiration is not to remain only a masala company. Our aspiration is to become a food company,” he said.
