“Sources in the know” reportedly told the Times of India that private equity firm IL&S Investment Managers had offered $35m (Rs crore 175) for Hershey’s share in Godrej.
“Cultural issues” were blamed for the alleged breakup.
However, a Hershey spokesperson has denied the reports to ConfectioneryNews.com.
‘Rumours’
Jeff Beckman, director of corporate communications at Hershey, said: “We do not comment on rumours or speculation about our business relationships.”
“India is a key market for The Hershey Company, and we remain committed to driving growth in this important market.”
“We continue to operate our business in India through our joint-venture partnership with Godrej.”
Past rumours and failed ventures
Current speculation about the Hershey Godrej joint venture, established in 2007, builds upon growing rumours of a rift in the past year.
Hershey was believed to have introduced few products to India through the venture and was said to be looking for a way out. (See here)
Godrej has severed ties on a number of joint ventures in recent years.
Multinationals Procter & Gamble (P&G), Pillsbury, and Sara Lee have all exited from joint ventures with the India group in the last two decades.
Rivals race ahead in India
Hershey is believed to be falling behind its rivals in booming developing markets such as India.
The Indian confectionery market is worth an estimated €1.5bn, according to Euromonitor figures. Chocolate is the largest market worth €760m, which has grown by an incredible 230% since 2007.
Kraft Foods reported sales growth in its 2011 results “fueled by chocolate” with 30% sales gains in India. Meanwhile Ferrero opened its first production site on Indian soil late last year.
International expansion looms for Hershey
But Hershey may still have plans to grow beyond its home market in North America and catch up with its rivals.
The ratings agency Standard & Poor’s said last month that it expected Hershey to make small acquisitions in international markets this year.
Hershey recently said after its 2011 results that the company had a “solid plan” to maintain momentum in China.