Family-owned rice suppliers Surya Foods and Veetee have been courting potential buyers after hiring advisors to explore strategic options.
The Grocer has learned Surya engaged Grant Thornton and Veetee hired Goldman Sachs last year.
It is understood both processes are still ongoing, with the bankers involved holding talks with a number of trade players and private equity firms. However, macroeconomic volatility in the wider market means there is no certainty either deal will reach a conclusion, City sources said.
Kewal Dulai founded Surya in 1971 before passing control to sons Harry and Suki, who lead the business today. The wider group, which also owns construction services and hotels, boosted revenues by 23% to £248.1m in 2023, with sales at the foods part of the business – which includes rice, sauces and snacks – growing 22% to £214m.
Veetee founder Moni Varma started the business with a small rice mill in London in 1987 and grew it into one of the largest rice suppliers to the UK retail market by 2001, launching its steam-filtered microwave rice innovation in 2005. Turnover surged 23% at Veetee to £84.5m in 2023, pushing the company out of the red to an operating profit of £3.2m.
Surya CEO Harry Dulai said: “This is an exploratory discussion for planning the future growth of our business.”
Veetee MD Rajiv Varma told The Grocer: “There has consistently been external interest in the business. However, my Dad, myself and our teammates are far too focussed on the incredible growth opportunities that we have within our grasp. Certainly from us as the family owners, there has never been a desire to sell.”
Veetee is transitioning from a commodity-driven business to a branded added-value one, pivoting towards ready meals with the launch of its new HungryHead range. After launching a market first in 2023 with its noodle pouch meal, Veetee expanded the offering considerably in 2024, with 27 lines across five product categories (Noodle Head, Soup Head, Ramen Head, Pasta Head and Mac ‘n’ Cheese Head) going into Tesco as part of the supermarket’s ‘easy meal’ category reset.
“Veetee has good IP with the microwavable rice, but it was a low-margin commoditised business,” one dealmaker said. “Much more exciting is the new range of Heads. Rate of sale is good, and Tesco has gone big on it. Potential buyers of the business are weighing up how well that new operation is doing before committing, so a deal may happen later in the year.”
The company also has ambitious plans in the US and is set to build a $36m production facility in North Carolina to distribute the HungryHeads range.
Surya recently expanded its global snacking portfolio with the acquisition of bagged snacks brand Karma Bites, deepening its presence in the category.
Meanwhile, its Laila brand made the largest absolute volume gain in supermarket rice last year, adding an extra 9.2 million kilos, according to the Grocer’s Top Products Survey.
Laila is the third biggest brand in UK retail, while Veetee also boosted value by 37% to £23m and is the fourth biggest player.
“Surya have quietly done a brilliant job of building one of the most important rice businesses in the UK, with its Laila brand well recognised and well distributed,” another City source added. “But the family have high valuation expectations, which is difficult in the current economic environment.”
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