Over the previous 5 years, Hindustan Unilever (HUL), ITC, Marico, and Emami, amongst others have both acquired or taken controlling stakes in not less than a dozen digital-first manufacturers as these fast-moving client items companies moved to use the ecommerce increase. The partnerships helped the manufacturers considerably scale up distribution networks pan-India whereas leveraging the advertising muscle of the fast-moving client items (FMCG) corporations.
Although gross sales accelerated for the acquired startups, they proceed to incur losses, even widening for some, per the newest annual reviews and firm monetary statements.
“Being a part of an FMCG helps in scaling at retail contact factors. Earlier than, we’d have 4-5 warehouses, however now we’ve got entry to 150-200 warehouses throughout the nation and once more, not one thing we’d have achieved alone that simply,” mentioned Avnish Chhabria, founding father of Wellbeing Vitamin, during which HUL took a stake in 2022.
Marico took a majority stake in Plix for Rs 369 crore in 2023 whereas ITC acquired Yogabar for Rs 255 crore. HUL picked up Oziva for Rs 264 crore and extra just lately, acquired 90.5% of skincare model Minimalist for Rs 2,670 crore, its largest D2C wager but.
Longer-term view
“We gained huge share within the metros, and we’re nonetheless working as a tier I model,” mentioned Suhasini Sampath, founding father of Yogabar.
A number of manufacturers clocked robust revenue growth after getting acquired. As an illustration, Plix’s income rose practically threefold to 418 crore in fiscal 2025, whereas Oziva’s income greater than doubled to Rs 257.8 crore. Yogabar too noticed a 50% surge to Rs 197.1 crore post-acquisition.
Some founders additionally underlined that their operations remained impartial even after the acquisition. “Between 2022 and 2025, Marico didn’t intervene in how we constructed True Components,” mentioned Puru Gupta, the model’s cofounder. “We leveraged their ecosystem with out dropping management.”
True Components grew income to Rs 164 crore in FY25 from Rs 76 crore in fiscal 2024.
“When you’re half of a bigger ecosystem, your perspective turns into much less tactical and extra long-term…and that’s the benefit we had,” mentioned Gupta. “A few of these decisions meant slower progress within the brief time period. The investments we made…not simply monetary but additionally strategic, did result in slower progress for the primary couple of quarters. However finally, we noticed hockey-stick progress, and all of it got here collectively in our ultimate yr of growth.”
Most FMCG companies are underneath strain from traders and analysts on innovation pipelines falling brief with reference to competing with nimbler D2C corporations. Consequently, they’re anticipated to proceed the D2C acquisition spree regardless of the strikes yielding blended outcomes to date.
“Within the early levels of constructing an organization, provide chains are typically extra versatile, and startups typically concentrate on area of interest markets which has been an essential issue of their progress,” mentioned Arush Chopra, cofounder and CEO of Simply Herbs, which was wholly acquired by Marico in 2022. “Within the early levels, when corporations obtain enterprise capital, the emphasis is commonly on fast progress and scaling. In distinction, established FMCG corporations sometimes place extra concentrate on effectivity and value administration.”
Emami’s The Man Firm slipped again into losses after briefly turning worthwhile, whereas a number of others, together with Simply Herbs noticed losses widen.
Specialists say merely plugging a D2C model right into a legacy FMCG system shouldn’t be the assure of success.
“The price of buyer acquisition could be very excessive for D2C manufacturers. That’s the place many of the losses come from,” mentioned Arvind Singhal, MD, The Information Firm, a Gurugram-based retail consultancy agency. “Within the subsequent 5 years, most of those acquisitions will develop into fully useless. A lot of them are being purchased at loopy costs however could not ship the expansion anticipated.”
A Crisil Scores report famous that D2C manufacturers grew at 40% compounded yearly between fiscal 2021 and 2024, sharply outpacing legacy FMCG companies’ 9% progress. Nevertheless, fewer than 15% of D2C startups crossed the Rs250 crore income milestone earlier than acquisition, and solely a 3rd had been worthwhile.
“Greater corporations sometimes focus closely on scale, gaining market share, and typically even creating whole classes. For a smaller participant, it’s extra of a day-to-day strategy. Whereas they wish to develop, additionally they preserve an in depth watch on the underside line,” mentioned Ashish Dhir, senior director at client and retail at market intelligence agency 1Lattice.