Britannia Industries is working on initial plans to set up a separate entity and team over the next six months to invest in startups and emerging companies across categories and platforms. “We will consider looking at infusing small investments in startups across platforms; the details are being worked out,” Britannia managing director Varun Berry said. The entity could be on similar lines as other consumer goods makers Unilever Ventures and Marico, both of which have dedicated arms to invest in emerging companies.
While Unilever Ventures is the venture capital and private equity arm of Unilever, Marico Innovation Foundation invests in startups through a scale-up programme.
Over the last two years, the startups space has been a hunting ground for established consumer goods companies. While oral care giant Colgate Palmolive Asia Pacific invested in men’s grooming products maker The Bombay Shaving Company mid last year, Parachute hair oil maker Marico acquired stake in another men’s grooming brand Beardo in 2017. Emami too picked up stake in BrillareScience, an Ahmedabad-based startup that makes hair and skin care products and sells them to professional salons. Analytics and technology firm Tracxn said in a report that funding for FMCG startups went up to Rs 240 crore in 2017, fuelled by an exploding base of people shopping online and higher disposable incomes.
Berry said while the company witnessed a slowdown post Diwali, demand has returned and the slew of measures announced in the interim budget on February 1is expected to trigger rural consumption over the next two quarters. “We expect double-digit volume growth with consumption picking up as we are in an election year. We hope inflation will be under 5% as we head towards elections, but it will depend on the government’s policies.”
For the third quarter ended December 2018, Britannia announced net profit growth of 14% year-on-year at Rs 300 crore, and a 7% rise in volume growth, marginally lower than street expectations, after three quarters of double-digit volume growth. However, on a three-year average which includes the demonetisation year, growth has been higher than Dabur(6.8%) and HUL (5.7%).
Berry said expansion in rural markets, accelerating innovation, portfolio premiumisation and bridging gaps in its bakery and snacking businesses would be core focus priorities.
Industry experts said a slew of startups which have emerged in areas such as supply chain logistics, distribution and financial technology to ensure seamless transactions between trade channels, are also attractive buys for consumer goods companies. A new report by Bain & Co said India, China and South Korea are leading global online retail expansion across sectors on the back of increased consumption, with the Asian region growing at three times the global rate. The report says that between 2013-2017, India grew at a compound annual growth rate of 53%, in comparison to China’s 33% and the US which grew 12%.
Source: Economic Times
