Oziva, which sells nutrition and fitness products in categories such as women’s health, skin, hair, men’s health and general wellness, competes with Amway, GNC and unbranded supplements from Indian pharmaceutical companies.
People familiar with the deal said Oziva expected a valuation of Rs 400-500 crore which could be a hurdle for a deal with HUL, people familiar with the deal said. Founded in 2016 by Aarti Gill and Mihir Gadani, Oziva has also reached out to other consumer goods companies, including Dabur and Tata Consumer, but those discussions have stalled due to a valuation mismatch.
“They have been in advanced talks with HUL, but their sales numbers have fallen from the peak, which may affect the 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 quadrupled of the previous year and was aiming to exceed Rs 500 crore in the next three years. Sources familiar with developments at 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.
Discover the stories of your interest
“They have been in advanced talks with HUL, but their sales numbers have fallen from the peak, which may affect the valuation and the overall transaction,” a person familiar with the talks said.
The six-year-old startup is backed by venture capital funds like Matrix Partners and Eight Roads Ventures, and in total has raised $17 million in funding. It was valued at $80 million when it raised financing last year, according to Tracxn, a data platform.
When contacted by ET, HUL and Tata Consumer said they cannot comment on the market speculation, while Oziva said the information is “unfounded and inaccurate.”
fmcg Majors Eye D2C brands
An investor in the consumer segment said that traditionally the FMCG bigs, especially in global markets, have been acquirers of D2C brands if the segments are a growth area for them. In India, though, companies like HUL have not made great strides in buying these niche brands, largely because the scale of most online-focused brands is still small.
In fact, a large set of these so-called D2C brands
they have now branched out to sell through traditional channels to increase sales.
fagot, TICand even HUL, have been investing in D2C brands that gained a lot of momentum during the pandemic when online shopping saw a big uptick.
Marico acquired a 54% stake in HW Wellness Solutionsowner of the brand of healthy breakfasts and snacks true elements In May. Last year, Tata Consumer
acquired a 100% stake in Kottaram Agro Foods—The maker of the Soulfull brand of millet-based breakfast cereals and snacks.
ETtechWhile the plant-based food category is a nascent segment in India and estimated to be around Rs 2000 crore, where more than 250 startups have entered in recent years, according to the Industry Association of Plant-Based Foods. Analysts who follow the sector expect consolidation in the overall D2C space, including the health and wellness sub-segment.
“There will be a bigger bloodbath in the consumer D2C space, as large companies will focus on entering niche segments primarily through acquisitions. A Rs 100 crore brand could fetch around 7-8 times the sales multiples, but given the funding winter, the valuation will solely depend on the market potential and the need to be present in the space,” said Abneesh Roy, CEO of Nuvama Institutional Equities, adding. HUL’s previous acquisitions such as Indulekha, V Wash and Aaditya Milk have performed well and Oziva will help them strengthen the clean naturals segment.
“HUL may even consider acquiring the brand gradually rather than outright after evaluating and integrating channel nuances and cultural fit,” Roy added.
Recently, Fashion Aditya Birla
acquired the clothing brand Bewakoof in a rush sale as part of his broader push to create a house of brands.
Nutraceutical segment
According to market research firm Euromonitor, the Indian nutraceutical market is currently worth Rs 47 000 crore with half of the segment dominated by fortified and functional food products followed by dietary supplements accounting for a quarter of the segment.
Major fast-moving consumer goods companies have entered the market, primarily in the functional foods category. HUL had said it could double down on the high-protein and nutritional segments through Horlicks, while Marico launched protein shakes under Saffola Fittify a few years ago. Danone’s Protinex, which was originally in the high-protein nutritional segment niche, entered the ready-to-drink and bars segment a few years ago.
In the last three years, worldwide Unilever has closed a series of acquisitions in the health and wellness space
including Liquid IV, Nutrafola hair wellness brand, Onnit, a holistic wellness and lifestyle company, supplement firms SmartyPants Vitamins and OLLY Nutrition.
.
