Tata is eyeing to acquire a controlling stake of more than 51% in BigBasket, the biggest player in the Indian e-grocery market covering close to 40% of online grocery demand in India. The thrust that the COVID-19 pandemic has brought in the e-grocery sector has turned the surging players of the industry into a goldmine and now, even the biggest conglomerates want a piece of the action.

About Tata: Tata, incorporated by Jamsetji Tata in 1868, is a 153-year-old conglomerate which is involved in several business verticals viz: information technology, steel, automotive, consumer and retail, infrastructure, aerospace, defense, tourism and travel, telecom, media, trading and investment and lastly financial services. The total revenue of the group stands at $113 billion for the year 2019. The conglomerate is present in more than 100 countries with a total employee count of more than 750k. The group’s current chairman is Mr. N Chandrasekaran and the chairman emeritus is Ratan Tata.

The group handles the aforementioned business verticals under different company names. There are in total 17 companies under the group and Tata Consumer Products Limited (NSE: TATACONSUM) is the listed company operating in the consumer retail industry. The company stands at a revenue of $1.4 billion in 2020, with a reach of over 200 million households. The group’s major consumer product brands include Tata Tea, Tetley, Tata Salt and Tata Sampann. Tata Sampann is focused on selling Indian spices, lentils, chickpea powder and ready mixes of various Indian dishes.

About BigBasket: The unicorn startup BigBasket registered as Innovative Retail Concepts Private Limited is India’s largest online food & grocery store offering the best quality products at the lowest prices. The business is headquartered in Bangalore, Karnataka. Mr. Hari Menon is the founder and CEO of the company. With regards to the products offered, they include fruits and vegetables, rice and lentils, spices, seasonings, packaged products, beverages, personal care products and meat.

Over the last 18 months, BigBasket launched morning subscription-based deliveries called BB-Instant, vending machines and on-demand deliveries. It has also expanded into beauty products, milk and fresh meats, along with a slew of private brands, while in parallel running an accelerator for emerging brands.

Amidst the pandemic, Mr. Hari Menon proudly announced that the company expanded its customer base, resulting in a threefold increase in sales both in terms of value and number of new orders and lastly also witnessed 2.6 times increase in the number of members as compared to pre-covid figures. The sale process of BigBasket is led by Goldman Sachs, but both Morgan Stanley and Goldman Sachs are acting as advisors for the company.

E-grocery sector and the companies under its arena

Globally, the size of the online grocery market is estimated to be around $198.5 billion which is projected to grow at a tremendous pace of 15.7% year over year, implying that the size of the market will reach a whopping $550 billion by 2027 according to the latest forecasts. Digital buying experience offered by companies such as Amazon, Walmart Stores, FreshDirect, Target and BigBasket has really helped a lot to cope with the pandemic by providing an online grocery service from the comfort of homes and ensuring adequate safety. The key players in the global e-grocery market are Carrefour, Kroger, Tesco, Walmart, Amazon, Target, ALDI, Coles Online, BigBasket, Longo, Schwan Food, FreshDirect, Honestbee, Alibaba.

As per Bain & Company, the penetration rate for e-grocery has increased significantly in many regions. To quote a few, penetration rate in UK has increased from 8.1% to 12.1%. In France, the same has increased from 6 to 10.2%. Italy, US, China, India, all have witnessed significant growth in the penetration rates. To emphasize, just in US, Germany, France, UK and Italy, the number of orders were estimated to be 350 million more in 2020 than in 2019.

According to the KPMG report analyzing the M&A activity in consumer and retail industry, there has been a decline in both deal value and deal volume from 2016 to 2019. However, M&A advisors of Hampleton Partnersclaim that the sector saw a renewed impetus in merger & acquisition deals in 2020 as the COVID-19 drove rapid adoption of online shopping.

Source: KPMG Mergers and Acquisition Report Consumer and Retail 2020

For the period between 2016 and 2019, the total number of deals in the Consumer and Retail sector has amounted to 23,637 resulting in a deal value of $1,264 billion. If we look at the regional analysis over the same time period, the Asia-Pacific region has topped the charts with 36% share in deal volume and 31% share in deal value.

Source: KPMG Mergers and Acquisition Report Consumer and Retail 2020

Who’s going to be the future industry leader remains uncertain as all key players are trying to capture as much market share as they can, generating a cut-throat competition worldwide. Amazon is trying to maintain its largest market share but focusing on a few countries it leaves space for new competitors. In UK, Ocado has become the most valuable online grocer. Similarly, DoorDash has come up with a new type of convenience stores called DashMart, which offers household essentials along with local restaurant favorites at customer doorsteps. Walmart, however, is the company that’s carrying on the most critical action. The Arkansas based company has been able to record a tremendous increase in sales by offering curb side pickups. It has also been in talks with Tata to invest $25 billion in its Super App which is expected to be launched by January 2021. Tata, for its part, plans to use this App to market its retail products. The below graph shows the online retail market trend in India specifically.

Source: Times of India Newspaper Article dated December 10th, 2020

Major acquisitions in the E-grocery space

The firms under e-grocery have been able to ride the wave of Covid-19 but Ernst & Young clearly notifies in its retail mergers report that the pace of change is so fast that the major players are trying to capture greater market share by investing in more distribution channels, warehousing facilities, delivery startups and technology that can help them automate a big chunk of repetitive processes. 

Below listed are some major transactions as per Duff and Phelps:

Source: Duff and Phelps report on M&A activity in food-retail industry 2020

Focus on the Indian market and synergy between Tata Consumer Products Limited and BigBasket 

Before diving into the synergies between Tata Consumer Products Limited and BigBasket, let me state some relevant facts about and the competitive market scenario in India.

BigBasket as of now is a loss-making business but is expected to soon reach the break-even point. The unicorn has huge funding needs to keep up with the competitive online grocery market. To add to the competition factor, JioMart, Amazon and Flipkart (77% stake owned by Walmart) are actively competing in the market now and have already gained a huge chunk of market share. JioMart, the fastest growing retail brand in India, is owned by Reliance Industries, which is well known to disrupt the existing market players by giving deep discounts. For example, in the telecom industry, Jio gave free sim card and 4G service for more than a year to become the largest telecom player in India. Since Reliance, Amazon and Flipkart are well-equipped with funding needs, they are going to give a tough competition to BigBasket. Therefore, BigBasket will also have to offer discounts to customers to sustain the growth and consequently it will need additional capital to sustain this growth strategy. Also, the company is planning to come up with cashless, cashier-less stores in Bangalore, where it is headquartered.

India, being a developing country, has witnessed a huge surge in the number of internet users and the trend is still growing. Google Pay, PhonePe and other UPI services have made online payment systems extremely user-friendly and this has made online purchasing even for small values an irresistible temptation. The below graph represents the growth in the internet penetration rate in India. The 50% penetration rate makes India the 2nd largest country as per active internet users. To give a number, 50% penetration represents 687 million users. Furthermore, 5G is soon to arrive in India, which will further support the trend.

Source: Statista on increasing number of internet users in India

Now that we know the facts pertaining to the Indian market and BigBasket, it can clearly be seen that the product offerings of both Tata Consumer Products Limited and BigBasket are in close relation to each other. Both companies offer grocery products, and the product range of Tata will get additional distribution channels through BigBasket’s cloud infrastructure and warehousing facilities. The current focus of BigBasket is to acquire more and more customers as fast as possible and also to be able to bear the initial losses due to the discount policy. Tata’s backing will increase BigBasket’s reputation and Tata’s financial strength gives BigBasket the possibility to sustain its growth rate and better fight the price wars with large players such as JioMart, Amazon and Flipkart.

Current Backers of BigBasket and the expected deal value 

BigBasket is majorly backed by Alibaba, which has around 28% stake in the unicorn. But with the approaching sale process, Alibaba plans to take an exit. Other existing backers include Abraaj Group, Ascent Capital, Helion Venture Partners, Bessemer Venture Partners, Mirae Asset Naver Asia, International Finance Corporation, Sands Capital, and CDC Group. As Tata plans to acquire a majority stake in BigBasket, it will be interesting to see which other backers will be taking an exit.

According to the latest article by Mint, Tata nears the deal to acquire the largest Indian online grocer i.e. BigBasket for $1.3 billion at a valuation of $1.6 billion. This means that after about 6 months of negotiation Tata is eyeing to hold an 80% stake in BigBasket. Tata will get 50-60% ownership from existing investors mentioned above and thereafter, infuse fresh money in BigBasket to get additional 20-30% ownership stake in the company. The deal is expected to come through in a few weeks. If this deal is completed, Tata will get a one-shot large market share in the e-grocery space and align the acquired online infrastructure with its super app as well.


With the pandemic’s effect, there is definitely a huge change in consumer adoption pace of online shopping experience. Both the penetration rates and customer retention rates have seen a significant surge across the world. The overall situation with more people online, better payment services and the adoption of online grocery shopping due to pandemic promotes the growth of online grocers and fast forward the growth in size of the entire industry.

Also, it is definitely difficult to overlook BigBasket after the 84% growth in new customers they witnessed in 2020 and their high customer retention rate of 50%. The unicorn was expected to make a revenue of $1.2 billion in 2020, but the official numbers have not been released yet. The competition is on the rise with new small entrants and large players trying to dominate the industry by acquiring more and more market share. This is however an opportunity for Tata to join the growing space by investing in BigBasket and use its pioneering strengths to become a major player in the Industry. BigBasket will also be able to benefit from Tata’s financial well-being and existing 200 million household reach and on the other side Tata will receive better online infrastructure and distribution channels for its products. The deal with BigBasket and the launch of Tata’s super app in collaboration with Walmart’s $25 billion investment might become one of the largest e-grocery industry disrupting transaction.


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  3. Thornton

    The Competition Commission of India (CCI) has approved acquisition by Tata Digital Limited of up to 64.3% of the total share capital of Supermarket Grocery Supplies Private Ltd (SGS) and its sole control over Innovative Retail Concepts (IRC), the company that runs BigBasket.


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