Oziva, which sells nutrition and fitness products in categories including women’s health, skin, hair, men’s health and general wellness, competes with Amway, GNC and unbranded supplements Indian pharmaceutical companies.
People familiar with the deal said Oziva was hoping for a valuation of Rs 400-500 crore which could be a stumbling block for a deal with HUL, people familiar with the deal said. Founded in 2016 by Aarti Gill and Mihir Gadani, Oziva had also approached other consumer goods companies, including Dabur and Tata Consumer, but those talks stalled due to a valuation mismatch.
“They have had advanced discussions with HUL, but their sales numbers have dropped from the peak which could impact valuation and the overall transaction,” a person familiar with the talks said.
In an interview with ET last year, the company said its annualized revenue had quadrupled from the previous year and that it was aiming to top Rs 500 crore over the next three years. Sources familiar with the events of the company said that Oziva was recording around Rs 12 crore in monthly sales and would likely have closed at Rs 100-150 crore in annual sales for the year ending March 2022.
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The six-year-old startup is backed by venture capital funds like Matrix Partners and Eight Roads Ventures, and has raised a total of $17 million in funding. It was valued at $80 million when it raised money last year, according to Tracxn, a data platform.
Contacted by ET, HUL and Tata Consumer said they could not comment on market speculation, while Oziva said the information was “baseless and inaccurate”.
FMCG majors eye D2C brands
An investor in the consumer segment said that traditionally FMCG biggies, especially in global markets, have been D2C brand acquirers if the segments are a growth area for them. In India, though HUL has not made great strides in buying these niche brands, largely because the scale of most web-focused brands is still small.
In fact, many of these so-called D2C brands have now branched out to sell through physical channels to increase sales.
Marico, ITC, and even HUL have invested in D2C brands that have taken off dramatically during the pandemic when online shopping has seen a major surge. Marico acquired a 54% stake in HW Wellness Solutions, which owns healthy breakfast and snack brand True Elements in May. Last year, Tata Consumer acquired a 100% stake in Kottaram Agro Foods, the maker of the Soulfull brand of breakfast cereals and millet-based snacks.
While the plant-based food category is a nascent segment in India and estimated to be around Rs 2,000 crore, where more than 250 startups have entered in the past few years, according to the Plant Based Foods Industry Association. Analysts who follow the industry expect consolidation across the D2C space, including the health and wellness sub-segment.
“There will be greater bloodshed in the consumer D2C space as larger companies focus on entering niche segments primarily through acquisitions. A Rs100 crore mark could fetch around 7 to 8 times the sales multiples, but given the funding winter, the valuation will only depend on the market potential and will have to be present in the space,” said Abneesh Roy, Executive Director of Nuvama Institutional Equities, adding that the HUL’s past acquisitions like Indulekha, V Wash and Aaditya Milk have done well and Oziva will help them strengthen the clean natural products segment.
“HUL may even consider acquiring the brand incrementally instead of a full buyout after evaluating and integrating channel nuances and cultural fit,” Roy added.
Recently, Aditya Birla Fashion acquired clothing brand Bewakoof in a distress sale as part of its wider drive to build a brand house.
According to market research firm Euromonitor, the Indian nutraceuticals market is currently worth Rs 47,000 crore with half of the segment dominated by fortified and functional food products followed by dietary supplements which make up a quarter of the segment.
Large fast-moving consumer goods companies have entered the market, primarily in the functional food category. HUL had said it could double down on nutritional and high-protein segments through Horlicks, while Marico launched protein shakes under Saffola Fittify a few years ago. Danone’s Protinex, which was originally in the niche high-protein nutritional segment, entered the bar and ready-to-drink segment a few years ago.
Over the past three years, Unilever has completed a series of global health and wellness acquisitions, including Liquid IV, Nutrafol, a hair wellness brand, Onnit, a holistic wellness and lifestyle supplement companies SmartyPants Vitamins and OLLY Nutrition.
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