Scoop: HUL, other FMCG majors in sale talks with nutrition firm Oziva

Oziva, which sells nutrition and fitness products across categories such as women’s health, skin, hair, men’s health and general wellness, competes with the likes of Amway, GNC and unbranded supplements from Indian pharma companies.

People privy to the deal said Oziva was hoping for a valuation of Rs 400-500 crore that could be a stumbling block for a deal with HUL, said people familiar with the deal. Founded in 2016 by Aarti Gill and Mihir Gadani, Oziva had also approached other consumer goods companies including Dabur and Tata Consumer, but those discussions have stalled due to a valuation mismatch.

ETtech

“They have been in advanced discussions with HUL, but their sales numbers have dropped from the peak which may impact the valuation and overall transaction,” said a person familiar with the talks.

In an interview with ET last year,
the company said its annualised revenue grew fourfold from the previous year and it was aiming to top Rs 500 crore in the next three years. Sources aware of the goings-on at the company said Oziva was clocking around Rs 12 crore in monthly sales and would have likely closed at Rs 100-150 crore in annual sales for year ended March 2022.

Discover the stories of your interest

“They have been in advanced discussions with HUL, but their sales numbers have dropped from the peak which may impact the valuation and overall transaction,” said a person familiar with the talks.

The six-year old startup is backed by venture capital funds like Matrix Partners and Eight Roads Ventures, and has in all picked up $17 million in funding. It was valued at $80 million when it raised financing last year, as per Tracxn, a data platform.

When contacted by ET, HUL and Tata Consumer said they cannot comment on market speculation while Oziva said the information is “baseless and inaccurate.”

FMCG majors eye D2C brands


An investor in the consumer segment said traditionally FMCG biggies, especially in global markets, have been acquirers of D2C brands if the segments are a growth area for them. In India, though the likes of HUL have not made big strides by buying these specialised brands, largely because the scale of most online-focussed brands is still small.

In fact, a large set of these so-called D2C brands
have now diversified to sell through brick and mortar channels to rack up sales.

Marico, ITC, and even HUL, have been investing in D2C brands that gained huge momentum during the pandemic when online shopping saw a major uptick.
Marico picked up a 54% stake in HW Wellness Solutions, which owns healthy breakfast and snacks brand True Elements in May. Last year, Tata Consumer
acquired a 100% stake in Kottaram Agro Foods—the maker of Soulfull brand of breakfast cereals and millet-based snacks.

ETtech

While the plant-based food category is a nascent segment in India and estimated to be about Rs 2,000 crore strong where more than 250 startups have entered over the past few years, according to Plant Based Foods Industry Association. Analysts tracking the sector expect consolidation in the overall D2C space, including health and wellness sub-segment.

“There will be a larger bloodbath in the consumer D2C space as large companies will focus on entering niche segments mainly through acquisitions. A Rs100 crore brand could fetch around 7-8 times sales multiples but given the funding winter, the valuation will purely depend on the market potential and need to be present in the space,” said Abneesh Roy, executive director at Nuvama Institutional Equities, adding that HUL’s past acquisitions like Indulekha, V Wash and Aaditya Milk have fared well and Oziva will help them strengthen clean natural product segment.

“HUL could even look at acquiring the brand gradually instead of a complete buyout after they evaluate and integrate the channel nuances and cultural fit,” Roy added.

Recently, Aditya Birla Fashion
acquired apparel brand Bewakoof in a distress sale as part of its wider push into creating a house of brands.

Nutraceuticals segment


According to market research firm Euromonitor, the Indian nutraceuticals market is currently worth Rs 47,000 crore with half the segment dominated by fortified and functional food products followed by dietary supplements which account for a quarter of the segment.

Mainstream fast-moving consumer goods companies have entered the market, mostly in the functional food category. HUL had said it could double down on the 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 into the niche high protein nutritional segment, entered bars and ready to drink segment a few years ago.

Over the past three years, globally Unilever has closed a spate of acquisitions in the health and wellness space
including Liquid I.V, Nutrafol, a hair wellness brand, Onnit, a holistic wellness and lifestyle company, supplement firms SmartyPants Vitamins and OLLY Nutrition.