HUL Acquires D2C Brands OZiva, Wellbeing Nutrition
Both these transactions are expected to be completed in 1-3 months, subject to customary closing conditions, HUL said.
Hindustan Unilever Ltd. is set to expand its nutrition as well as beauty and personal care businesses with two new acquisitions.
The country's largest fast-moving consumer goods maker has cumulatively invested Rs 334 crore in two digital-first start-ups—OZiva and Wellbeing Nutrition, it said in an exchange filing on Thursday.
This marks its foray into the Rs 30,000 crore health and wellness market that is "fast-evolving" post the pandemic.
Founded in 2016, OZiva is a plant-based nutrition and clean beauty brand, which sells products across categories including protein supplements for men and women's health, as well as clean beauty products for skin, hair and general wellness.
It competes with the likes of Amway, Tata GoFit, General Nutrition Centers, HealthKart, and other unbranded supplements from pharma companies.
HUL will acquire 51% equity stake for Rs 264 crore, through a combination of primary infusion and secondary buyouts, in Zywie Ventures Pvt. which sells OZiva brand, it said in the regulatory filing. The balance will be acquired after 36 months based on pre-agreed valuation criteria.
As of March 31, 2022, the company's turnover from operations stood at Rs 124.17 crore, up from Rs 72 crore in FY21 and Rs 21 crore in FY20.
Separately, HUL will also acquire a 19.8% stake in Nutritionalab Pvt.—which owns the brand Wellbeing Nutrition—for Rs 70 crore, through a combination of primary infusion and secondary buyouts. Wellbeing Nutrition was founded in 2019 and deals in health and wellness products.
The current OZiva team led by Aarti Gill and Mihir Gadani, as well as the Wellbeing Nutrition team led by Avnish Chhabria, will continue to operate all functions of the business, HUL said, adding that it will be represented on the board of the companies.
Both these transactions are expected to be completed in 1-3 months, subject to customary closing conditions, it said.
"These strategic investments [in OZiva and Wellbeing Nutrition] give us an entry into the fast-growing health and wellbeing category," said HUL's Chief Executive Officer and Managing Director Sanjiv Mehta. "They align strongly with our mission to improve the health and well-being of consumers and empower people to take charge of their health through solutions that they can trust."
HUL is "well-positioned" to support further scale-up of these businesses through R&D, market development, distribution capabilities as well as the parent Unilever Plc’s health and well-being expertise, he said.
HUL has scaled up its smaller acquisitions in the past sharply, said Abneesh Roy, executive director at Nuvama Institutional Equities.
"Indulekha, a special haircare brand that it bought in 2016, has grown six times while the female hygiene brand VWash it acquired in 2020 is also gaining traction among consumers. We like HUL's strategy of acquiring and ramping up small brands to fill white spaces, thereby strengthening its portfolio."
The deal is in line with the trend of mainstream FMCG brands investing in D2C brands in India, particularly in the health and nutrition segment.
Marico Ltd., for instance, picked up a 54% stake in True Elements, a healthy snacking and breakfast brand. In the clean beauty space, Lotus Herbals acquired 20% in D2C brand Yogi Secrets and Marico acquired Just Herbs.
In fact, the country's clean beauty brands attracted $332.7 million in 2021 —quintupling over the previous year.
According to data from Tracxn, at least 127 companies are vying for a slice of the $0.84-billion industry.
According to Roy from Nuvama, there could be further consolidation in the space favouring large companies, as start-up capital dries up for small D2C players.
FMCG companies are also betting big on protein as a growth area. Recently, Tata Consumer Products Ltd. launched Tata GoFit, a plant protein powder catering to health supplement needs of women.