ITC to acquire 16% stake in D2C Ayurvedic personal care brand Mother Sparsh

The move is in line with the company’s strategy of ‘ITC Next’, which will see it grow more digital-first FMCG brands.

Makers of Bingo Chips and Blessings “The said acquisition will, inter alia, enable access to the rapidly growing consumer (D2C) space in the personal care category, which has been identified as an area of ​​interest by the Company.” Atta informed the exchanges on Friday.

Mother Sparsh, a premium Ayurvedic and personal care brand comprising of products like baby wipes, hair oils, skin creams for mothers and babies, was launched in 2016 by Himanshu Gandhi and Rishu Gandhi.

This is ITC’s first such investment in a direct-to-consumer brand. Several large packaged goods companies such as Marico Ltd and Kolkata-based Emami have already invested in new-age online brands. Mint had earlier reported that Hindustan Unilever Limited (HUL), India’s largest packaged goods manufacturer, is set to expand the online reach of several premium brands through standalone branded sites as well as its multi-brand shopping platform UShop.

ITC’s investment underscores the dominance of fast-growing direct-to-consumer brands in the country’s $110 billion fast-growing consumer goods market. Such brands fill in the blanks between the more mass-market brands that household packaged goods companies have spent in manufacturing and higher-priced premium goods.

Sameer Satpathy, Chief Executive, Personal Care Products Business, ITC said that this investment provides an exciting opportunity in line with the company’s aspiration to play a key role in the natural and ayurvedic segment as well as the D2C channel.

ITC has built a portfolio of 25 packaged consumer goods brands. The company’s vibrant brands represent an annual consumer spend of more than 22,000 crore, it said in its annual report for FY 2011. The company’s current range of personal care products includes brands like Vivel soap, Fiama body wash, body spray under Engage and Savlon soap. It also has a range of skincare products under Dermafic. Last fiscal year ‘Sevlon’ came to a close 1,200 crore in terms of consumer spending.

This investment is in line with the ‘ITC Next’ strategy, which aims to create a future ready organization with a digital first culture. One of the identified pillars of this strategy is to accelerate digital transformation by developing a digital first FMCG brand. The company in its announcement said that ITC is also focusing on strengthening the D2C platform of distribution and has created a vibrant ITC eStore.

Given the significant potential of natural and ayurveda, ITC has taken this strategic step forward to invest in this segment. Over the years, ITC has been exploring innovative distribution channels along with the start-up ecosystem,” the company said.

Avneesh Roy, Executive Vice President, Edelweiss Securities, said ayurvedic products will help in gaining market share, which will help the company expand its market share and product line. “This is the right strategy by ITC… It is a premium brand and is in the Ayurvedic sector. Being premium, it will allow the company to increase advertising spend.”

It makes sense to buy an established D2C brand, he added. “We continue to like ITC’s aggressiveness under Sanjeev Puri in terms of good acquisitions in FMCG, innovations like nasal spray for COVID. Several other companies like Marico, Emami, Colgate and others have already made acquisitions in D2C. Mother Sparsh’s valuation also seems fair considering the potential high growth and D2C space.

Himanshu, CEO, Mother Sparsh said that for Mother Sparsh, this partnership will provide a unique synergy to further strengthen the brand.

Direct-to-consumer (D2C) brands could see a $100 billion traceable consumer opportunity in India by 2025, according to estimates by Avendus Capital, the investment banking arm of financial services firm Avendus Group, released last year in the region.

In the personal care category, D2C brands exploit the product and price white space in personal care, cosmetics and men’s grooming products. In the beauty and personal care category, in particular, the margin can go up to 70%. The report estimates that 80 brands have appeared in this category in India.

Earlier this year, fast-moving consumer goods company Marico Ltd announced the acquisition of 60% equity stake in Apcos Naturals Pvt Ltd. Ltd. which sells skin and hair care products under the Just Herbs brand for an undisclosed amount. It had previously acquired male grooming brand Beardo.

Kolkata-based fast-moving consumer goods company Emami Ltd also holds a 45.96% stake in The Man Company, a men’s grooming products maker.