Great deals on everything from beauty to health to food

NEW DELHI: India’s consumer industry is witnessing an increase in deal deals and mergers and acquisitions (M&A) as companies look to strengthen their positions and enter emerging sectors.

The consumer sector has seen more than $2.5 billion in private equity funding and acquisitions over the past three years, according to data from investment bank Avendus. This trend is likely to continue as larger companies acquire smaller companies and enter new categories.

“Even the companies we’ve acquired in the last two years haven’t said we’re going to pause and consolidate and then do more M&A. As we speak, they’re all opening their wallets. We are open to acquiring more in the future,” said Abha Agarwal, Managing Director, Avendus Capital.

Sudhir Sitapati, managing director and CEO of Godrej Consumer Products Ltd (GCPL), said in an earnings call on Wednesday that the company continues to explore opportunities in the health and beauty space while building its core portfolio. Ta. Last year, GCPL acquired the rapidly developing consumer products business of Raymond Consumer Care Ltd. INR282.5 billion.

“Our top priority is to master existing categories. When we find true ways to solve health and beauty problems, our vision is to focus on health and beauty in emerging markets. We are evaluating opportunities in health and beauty as we see them, especially in India. Our thesis is largely based on the development of the categories we are involved in, including liquid detergents,” said Sitapati. he said.

Sunil D’Souza, MD and CEO, says Tata Consumer Products will continue to pursue opportunities as it builds a large FMCG business in India and abroad. said the day after acquiring Capital Foods. INR$5.1 billion and Organic India INR190 billion.

“Our biggest focus is India. The growth is in India and we aim to be a major company here, but what is even better is that if we win something in India and it becomes international If you have the legs, it’s a great opportunity,” D’Souza said.

The coronavirus pandemic has led more consumers to buy branded food and wellness products. With the entry of direct-to-consumer brands, Hindustan Unilever and Marico are also attracting attention.

Avendus’ Agarwal said companies chasing growth will acquire businesses that fill gaps in their portfolios.

“Each company has a high-double-digit market share in their core areas. All the M&A that has happened to date has been primarily to expand and enter newer areas,” she said. Ta. Companies have a lot of capital and existing sales force, she said. Growth in growth categories will help,” said Agarwal, who is also co-head of the investment bank’s consumer and financial institutions group (FIG) and business services.

Dipanjan Basu, co-founder of Fireside Ventures, a venture capital (VC) firm that backs early-stage consumer startups, said there will be more M&A as consumer companies look to expand and build their product portfolios. I predict that. “We are seeing more deals in the consumer health and wellness space, Gen Z-focused brands in innovation-driven fashion and beauty, and regional food brands building packaged food for rural and home India. “I guess so,” Bass said.

Anand Ramanathan, partner, consumer products and retail sector leader, Deloitte India, said acquisitions are a cheap way for companies to acquire innovation. “But companies may be looking at more niche areas than just mass categories. “You’re always looking for brands,” he said.

“One of the key drivers of M&A for buyers is to fill critical gaps in their product portfolios.Globally, the majority of M&A for most independent brands is for companies with revenues between $50 million and $75 million. USD,” said Sakshi Chopra, managing director, Peak XV Partners. “It’s profitable, it’s profitable, it’s generating free cash flow. The acquirer sees the value of the acquired company as accretive to the overall business,” Chopra added.

In 2022, Hindustan Unilever, India’s largest consumer goods maker, will expand the maker of Ojiva and Wellbeing Nutrition health and wellness products, in line with its “strategic priorities” to tap into fast-growing demand segments. Acquired.

FMCG company Dabur India will continue to explore strategic fits in the healthcare, home and personal care and value-added food sectors, CEO Mohit Malhotra said in an interview in August. Stated. “We have INR600 billion yen remains on the balance sheet. It is intended for acquisition. We continue to look for strategic fits. That said, we have profitability guardrails. So anything that increases the margin for us is what we get,” he added. In 2022, Dabur acquired a majority stake in spice maker Badshah Masala. INR587.52 million.