Mother Sparsh, a D2C ayurvedic personal care brand, will be acquired by ITC for a 16 percent share

This is ITC’s first foray into a direct-to-consumer brand. Several significant packaged goods businesses, including Marico Ltd. and Emami of Kolkata, have already made investments in new-age internet brands. Mint has reported that Hindustan Unilever Ltd (HUL), India’s largest packaged goods manufacturer, is planning to expand the online reach of numerous luxury brands through standalone branded sites as well as its multi-brand shopping platform UShop.

The ITC investment demonstrates the clout that direct-to-consumer businesses have progressively developed in the country’s $110 billion fast-moving consumer goods market. Such brands cover the gap between the more mass-market names that domestic packaged goods corporations have spent years developing and the more expensive premium goods.

ITC’s chief executive, personal care products division, Sameer Satpathy, said the investment presents an interesting opportunity in line with the company’s goal of having a substantial presence in both the naturals and ayurveda segments as well as the direct-to-consumer channel.

ITC has amassed a portfolio of 25 consumer packaged goods brands. According to the company’s annual report for FY21, its bright brands represent an annual customer spend of over 22,000 crores. Vivel soaps, Fiama body wash, body sprays under Engage, and Savlon soaps are among the company’s existing personal care items. Dermafique is the brand name for a line of skincare products. In terms of consumer spending, ‘Savlon’ touched approximately 1,200 crores last fiscal.

The investment is part of ITC’s ‘Next’ strategy, which aims to create a future-ready company with a digital-first culture. Accelerating digital transformation through establishing digital-first FMCG brands is one of the strategy’s main pillars. ITC has also been concentrating on developing D2C distribution systems and has built a thriving ITC eStore, according to the company’s release.

“ITC has made this strategic move forward to invest in this market, recognizing the huge potential of naturals and Ayurveda.” “ITC has been engaged with the start-up ecosystem while also exploring alternative distribution channels over the previous few years,” the company added.

According to Abneesh Roy, executive vice president of Edelweiss Securities, ayurvedic goods would continue to acquire market share, allowing the company to extend its market share and product line in the area. “ITC’s strategy is sound… it’s a luxury brand in the Ayurvedic area.”

Because it is premium, it will allow the corporation to increase its ad spending “he stated

He went on to say that purchasing a well-known direct-to-consumer brand made sense. “We continue to like ITC’s aggressiveness under Sanjiv Puri in terms of solid FMCG acquisitions and inventions like Covid’s nasal spray. Many additional companies, including Marico, Emami, Colgate, and others, have acquired D2C businesses. Mother Sparsh’s valuation seemed reasonable as well, given its projected rapid growth and D2C space “Added he.

The cooperation will provide a unique synergy of strengths for Mother Sparsh, according to Himanshu, CEO of Mother Sparsh.

According to projections issued last year by Avendus Capital, the investment banking arm of financial services business Avendus Group, direct-to-consumer (D2C) firms might be looking at a $100 billion addressable consumer market in India by 2025.

According to the report, D2C brands in the personal care category take advantage of product and pricing white spaces in personal care, cosmetics, and men’s grooming products. Margins in the beauty and personal care area, in particular, can reach 70%. According to the survey, 80 brands have appeared in the category in India.

Marico Ltd, a fast-moving consumer goods firm, revealed earlier this year that it had paid an unknown fee for a 60 percent equity stake in Apcos Naturals Pvt. Ltd, which distributes skin and hair care products under the Just Herbs brand. Beardo, a male grooming brand, was previously bought by it.

Emami Limited, a Kolkata-based fast-moving consumer goods company, also owns 45.96 percent of The Man Company, a male grooming product manufacturer.