Hindustan Unilever’s (HUL) acquisition of two digital first brands — OZiva and Wellbeing Nutrition — is in line with the premiumisation trend with an increasing number of FMCG players foraying in the high growth wellness and nutrition category, which has gained prominence amongst consumers in the post-pandemic world.
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The move would be line with the trend of bigger FMCG players investing in direct-to-consumer (D2C) brands in India, as companies do not want to miss out the growing online shoppers market. Marico picked up 54% stake in True Elements, another healthy snacking and breakfast brand, while HUL itself has launched some of its own beauty and personal care brands like Dove Baby, Love Beauty and Planet, Simple and Dermalogica. Nestle India and tobacco-to-FMCG maker ITC’s are said to have interest in picking a stake in Sprout Life Foods, the parent company of Yoga Bar.
A fast growing category, H&W has a potential market size of Rs 30,000 crore over the next four to five years. While there are several demand spaces within the category, HUL plans to focus on high growth areas such as sleep & stress, women’s health, gut health, beauty- from-within and plant-based products.
These categories target higher income cohorts and benefit from growing affluence,” said analysts at Jefferies.
“Both of these D2C premium brands cater to millennials, particularly Gen-Z with the right consumer cohort, and complement changing consumer preferences,” said analysts at Nuvama Institutional Equities.
OZiva and Wellbeing have an annual run rate of Rs 100 Crore and Rs 50 crore, respectively. Additionally, both the acquisitions have gross margins—at around 55%, which are higher than HUL’s existing business
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