THE NEW BETS OF FMCG'S OLD GUARD

Legacy firms are turning to D2C brands to tap into shifting consumer tastes, mitigate slide in their core portfolio

- Suneera Tandon

For decades, they ruled the shelves of kirana shops and supermarkets. But since the advent of direct-to-consumer (D2C) brands, which sell directly to consumers through their own sites as well as through e-commerce and quick commerce apps, often creating categories that did not exist before, large fast-moving consumer goods (FMCG) firms have found themselves on the back foot.

Their sales and revenue have taken a hit, and they have found themselves scrambling to create and launch products in many emerging categories, including wellness, premium beauty and pet care, which sit outside core mass and value segments but are growing faster.

In an effort to catch up, in recent times, legacy companies have taken the "if you can't beat 'em, then join 'em" approach. And so, they have stepped up investments in these upstart D2C brands, leveraging their balance sheets and distribution capabilities to buy them outright or get a foot in the door. Simply put, the legacy companies want skin in the game and to gain market share in emerging categories.

Early last year, for instance, Hindustan Unilever Ltd (HUL) acquired D2C skincare brand Minimalist for nearly ₹3,000 crore, giving it a presence in the actives-led science-based category. It also moved to 100% ownership of breakfast and snacks brand True Elements.

Parachute oil maker Marico Ltd has invested in companies such as male grooming brand Beardo, skin and hair care brand Just Herbs, and D2C supplement brand Plix in a bid to diversify beyond its core oils business. In 2024, homegrown FMCG company Emami Ltd fully acquired Helios Lifestyle Pvt. Ltd, which operates The Man Company, an outfit that sells men’s grooming products.