Marico Buys 54% Stake In True Elements

Marico Ltd. has acquired a majority stake in a healthy breakfast brand as it seeks to strengthen its food and digital businesses.

The owner of Parachute and Saffola brands will buy 53.98% in HW Wellness Solutions Pvt., which owns True Elements, through primary infusion and secondary buyouts, according to its exchange filing.

“The transaction will expand Marico’s presence in the healthy foods segment and accelerate its digital transformation journey by adding another digital-first brand with a strong and differentiated proposition in its portfolio,” the company said, without disclosing the cost of acquisition. True Elements’ existing leadership team will continue to run the brand independently and build synergies, it said.

This marks Marico’s third investment in a direct-to-consumer startup. Earlier, it had acquired majority stakes in two new-age brands—an ayurvedic beauty brand Just Herbs and male grooming startup Beardo.

Saugata Gupta, managing director and chief executive officer at Marico, in a post-earnings call had said the company would continue to aggressively invest in digital brands. Also, Marico’s digital play is mostly focused on premium products. “There is higher growth in premium new-age digital brands, which is sold through e-commerce, modern trade and beauty outlets,” Gupta had said. “We are looking for categories, which primarily can be sold through urban food go-to-market, modern trade and e-commerce. We will not get into something which is rural.”

While there is an imminent slowdown in the hinterlands, the e-commerce growth story remains intact. In its attempt to tap e-commerce, Marico has also launched several digital-first brands such as True Roots botanical hair tonic, Saffola FITTIFY Gourmet range, Coco Soul cold-pressed virgin coconut oil, Parachute Advansed Coconut Crème range and Set Wet Global Edition perfume sprays over the last few years.

“Our digital first brands have clocked Rs 180-200 crore in annual run rate on exit basis and we will continue to be aggressive towards building a portfolio of at least three digital brands, either organically or inorganically, with a combined turnover of Rs 450-500 crore by FY24,” Gupta said.

Beardo, according to the company, has crossed the Rs 100 crore annual exit run rate as of March 2022, while Just Herbs “has also met internal targets”.

HW Wellness had a turnover of Rs 54.3 crore in FY22. It offers a wide range of 70-plus products spanning across categories of western breakfast such as oats, quinoa, muesli, granola, flakes, Indian breakfast like poha, upma, dosa and snacks including roasted seeds, seed mixes and raw seeds, among others.

Available on more than 90 online platforms and in over 12,000 retail outlets, True Elements currently garners majority of its business through online marketplaces and plans to significantly ramp up its offline presence over the next few years, the company said in a statement.

“True Elements built its first phase of growth behind a portfolio of innovative clean food and building high consumer trust. While we continue to push the bar on those, our next phase will be focused on long-term brand building and accelerating our entry into newer households,” said Puru Gupta, CEO and co-founder, HW Wellness.