Are FMCG Giants Really Acquiring D2C Players to Enhance Premium Offerings and Utilize Digital Insights?
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Synopsis
FMCG companies are strategically acquiring D2C brands to enhance their premium offerings and tap into digital consumer insights. This trend, which has surged post-pandemic, reveals how traditional firms are adapting to changing market dynamics for growth and profitability.
Key Takeaways
- FMCG firms are focusing on premium categories
- D2C acquisitions enhance product differentiation
- Digital insights are crucial for targeted marketing
- Health and wellness segment sees significant interest
- Minimal financial impact on acquirers
New Delhi, Sep 25 (NationPress) Established fast-moving consumer goods (FMCG) companies are increasingly acquiring direct-to-consumer (D2C) brands to penetrate premium markets and harness digital consumer data, a report disclosed on Thursday.
Over the past five fiscal years, approximately two-thirds of FMCG acquisitions have targeted the D2C sector, according to a report from Crisil Ratings.
Through these acquisitions, FMCG firms have gained access to unique products, accelerated innovation cycles, and enhanced targeted marketing strategies, while D2C brands tackle scalability and profitability issues, creating a mutually beneficial scenario.
"FMCG companies have ventured into new premium markets and obtained valuable consumer insights, facilitating quicker feedback loops. Before the acquisitions, less than 15% of the D2C firms in our analysis surpassed Rs 250 crore in revenue, with only a third reporting operational profits," stated Anuj Sethi, Senior Director at Crisil Ratings.
D2C brands, which surged in popularity following the pandemic, experienced revenue growth of around 40% compound annual growth rate leading up to 2024, significantly outpacing the 9% growth of established FMCG players.
The premium pricing of D2C products, which are priced 1.5 to 4.5 times higher than traditional alternatives, fueled this growth.
The acquisitions have fortified the business profiles of traditional FMCG players by granting them access to specialized product categories, as highlighted in the report.
About 60% of these acquisitions were focused on personal care, with the remainder in food and beverages.
Approximately 85% of the acquisitions aimed to penetrate niche and premium sectors, with around 35% focused on the health and wellness category, noted Aditya Jhaver, Director at Crisil Ratings.
The financial impact of these acquisitions has been minimal, with the average deal value being under 5% of the acquirers' net worth, the report concluded.
Point of View
I observe that the ongoing trend of FMCG acquisitions of D2C brands signifies a transformative approach to market adaptation. This strategy not only showcases the evolving landscape of consumer goods but also highlights the importance of leveraging data-driven insights for sustained growth.
NationPress
25/09/2025
Frequently Asked Questions
Why are FMCG companies acquiring D2C brands?
FMCG companies are acquiring D2C brands to access unique products, enhance their premium offerings, and utilize digital consumer insights for improved marketing and faster innovation.
What impact have these acquisitions had on D2C brands?
These acquisitions help D2C brands tackle challenges related to scalability and profitability while benefiting from the extensive resources and market reach of FMCG companies.
What sectors are most affected by these acquisitions?
The personal care sector is the most impacted, accounting for about 60% of acquisitions, followed by food and beverages.
How has the growth of D2C companies compared to established FMCG players?
D2C companies have shown a remarkable growth of approximately 40% CAGR until 2024, significantly outpacing the 9% growth rate of established FMCG players.
What are the financial implications of these acquisitions?
The average deal value for these acquisitions has been below 5% of the acquirers' net worth, indicating minimal impact on their balance sheets.
