(HT)
India’s cash-rich makers of staples to shampoos will press ahead with big-ticket acquisitions as they chase high-growth, premium targets to cushion themselves from an urban consumption slowdown.
Dabur India Ltd, Marico Ltd and Emami Ltd will be on the lookout for mergers and acquisitions (M&As) that help them enter new categories such as premium personal care and wellness, build a digital-first portfolio and expand reach in the traditional market, executives said at earnings calls.
“If there is a new brand or a new category to be addressed, that is where M&A comes in and supplements our efforts of organic business with inorganic business,” Mohit Malhotra, chief executive officer at Dabur India said during the company’s post-earnings call on 7 May.
Large fast-moving consumer goods (FMCG) makers built mass-market portfolios of soaps, salt, biscuits, shampoos and more for a broader reach. But new, urban consumers are increasingly buying skin serums, muesli, supplements, pet food, and healthy snacks or beverages. Some new brands, especially online, are even gaining market share from incumbents. This is happening as demand for mass-market products remained under pressure due to heightened inflation.
India’s FMCG industry reported 11% year-on-year value growth in the March quarter, while volumes grew 5.1%, according to data sourced from NielsenIQ. However, rural demand grew four times faster than urban growth, where consumption decelerated, it said.
Rural demand primarily fuelled deals worth $2.1 billion in 2024, according to Jayakrishnan Pillai, partner at Deloitte India. The consulting firm expects 6-8% growth for the sector in 2025-2026 compared with 5-6% in the previous two years, bolstered by improving urban demand, stable rural consumption, reduction in personal income tax, and lower inflation.
FMCG companies have continued their post-pandemic acquisition blitz. Last week, Dabur outlined a seven-pronged approach as part of a strategy refresh with plans to invest in core brands, expand in premium categories, update products and pursue acquisitions to build a “future-fit” portfolio.
The maker of Vatika oils and Real fruit drinks had last year acquired 51% of hair care company Sesa Care Pvt. Ltd, expanding its presence in the ₹900 crore ayurvedic hair oil market. The company cited “substantial revenue and cost synergies.”
Meanwhile, Marico’s investments include Just Herbs, Plix, Beardo and True Elements. All of these are relatively new brands and categories.
