ITC To Buy Snacking Brand Yoga Bar
The tobacco-to-noodles maker will buy out the company in one or more tranches over a period of 3-4 years.
ITC Ltd. has increased its bet on nutrition-rich food with the acquisition of eight-year-old direct-to-consumer healthy snacking brand—Yoga Bar.
The tobacco-to-noodles maker will buy out the company in one or more tranches over a period of 3-4 years, according to its exchange filing.
It will buy 47.5% stake in Yoga Bar's parent Sproutlife Foods Pvt. by March. Initially, it will invest Rs 175 crore through primary subscription and secondary purchases for acquisition of 39.4% of the paid-up share capital on a fully diluted basis, which is expected to be completed by Feb. 15.
The company will infuse another Rs 80 crore by March 2025.
"The balance stake will be acquired, basis pre-defined valuation criteria, subject to other conditions agreed to in the binding documents," it said.
This will be done within three months from the date on which Sproutlife declares the audited financial statements for the fiscal ending March 2026.
"We believe that this investment aligns with ITC's food business' aspiration to build a formidable portfolio in the nutrition-led healthy foods space," said Hemant Malik, chief executive officer of the foods division at ITC.
Yoga Bar is expected to be rapidly scaled up, leveraging ITC's enterprise strengths in areas such as sales and distribution, sourcing, product development, and digital to offer healthy consumer choices, he said.
ITC was competing with other consumer goods brands like Nestle India Ltd. and Dabur Ltd., who were also in the fray to acquire Yoga Bar, as its parent was looking to raise funds to fuel its next phase of growth.
The buyout is also in line with the country's largest cigarette-maker's vision to reduce its dependence on tobacco. The Kolkata-headquartered company aims to generate Rs 65,000 crore from packaged foods in order to reach its goal of Rs 1 lakh crore revenue from non-cigarette packaged goods by 2030.
In FY22, ITC's FMCG business, ex-cigarettes, recorded sales of Rs 16,023 crore.
"This acquisition will enable ITC to augment its future-ready portfolio and enhance market presence in the 'Good for You' space, which currently includes Aashirvaad Multi-Grain Atta, Aashirvaad Nature's Super Foods, Farmlite range of biscuits, Sunfeast Protein Shake, B Natural Nutrilite ABC Beverage, among others," the company said in a statement.
Market research firm Euromonitor estimates the nutrition-led healthy foods space to be currently valued at Rs 45,000 crore.
Founded by sisters Suhasini and Anindita Sampath in 2015, the start-up raised a total of $11.6 million in five rounds so far. It is backed by venture capital funds such as Elevation and Fireside Ventures.
Sproutlife Foods’ turnover doubled to Rs 68 crore in FY22 from Rs 32 crore in FY20, as Indians increasingly become health-conscious in their food choices.
Yoga Bar's portfolio includes nutrition bars, muesli, oats and cereals.
It currently has a high salience of online sales, with growing presence in offline stores, according to the company.
The co-founders of Yoga Bar said: "We are confident that this partnership will add to Yoga Bar's competitive advantage and take it to the next level from the current annualised run rate of over Rs 100 crore."