WHY ARE FMCG GIANTS ADDING D2C TO ITS CART?

According to a Mordor Intelligence report, the total addressable D2C market in India is forecast to hit $100 billion by 2025. The opportunity is so lucrative that traditional FMCG companies such as Dabur, ITC, Marico, Wipro Consumer Care & Lighting, Parle Agro are trying their luck in the space either by acquisitions or starting their own digital first brands

- SHRABONA GHOSH

We had a Flipkart moment,” said Suhasini Sampath, cofounder, Yoga Bar, describing the euphoria when the acquisition deal with legacy brand ITC was finalized. “I believe the ITC acquisition of young brands will become a defining moment in the history of startups and corporates just the way the Flipkart-Walmart deal opened a lot of doors for the entire ecosystem,” she added. ITC is set to acquire Directto-Consumer (D2C) snack brand Yoga Bar and the company is aggressively scaling young brands to amp up the D2C offerings. A relationship can thrive only if feelings are mutual, and that precisely is the point of a report by McKinsey which states that startups can benefit from corporate funding, resources and customer access, whereas corporations need to innovate to stay ahead of competitors and access new technology. “This makes it an important time for collaborations between corporates and startups,” noted the report. While this might be an old report, the essence remains: A symbiotic relationship between startups and corporations.

The D2C space is one such area where FMCG companies have been trying their luck with either acquisitions of startups or investments…but is it symbiotic? Over the years large conglomerates have evolved their ways of dealing with startups. While some corporates believe in taking minority stakes in startups and helping founders with industry expertise, for other conglomerates, acquisition is an option only if the value system aligns and therefore be a mutually beneficial relationship.“With any acquisition, the first priority of Marico is to look at companies that align with its values and would therefore be a mutually beneficial relationship,” said Saugata Gupta, managing director & CEO, Marico Ltd.