Why FMCG Companies Are Aggressively Acquiring D2C Brands

Over the last five years, India’s fast-moving consumer goods (FMCG) sector has quietly undergone a strategic shift. Established FMCG companies, traditionally built on mass distribution and wholesale-led models, are increasingly acquiring digital-first direct-to-consumer (D2C) brands at early stages of their lifecycle.

This is not opportunistic investing. It is a deliberate and structural change in how large FMCG companies are thinking about growth, consumer engagement, and long-term relevance.

The Rise of D2C Acquisitions in FMCG

Historically, FMCG acquisitions focused on:

• Expanding manufacturing capacity
• Entering new geographies
• Consolidating competition

The current wave of acquisitions is different.

D2C brands are typically built around a single product category, a narrow but loyal customer base, and strong digital engagement. They rely less on physical distribution and more on data-driven customer relationships.

For large FMCG companies, this model offers something they have traditionally lacked: direct, real-time consumer insight.

Big D2C Deals in Recent Years

Several large FMCG players have made D2C acquisitions a central part of their strategy.

• Hindustan Unilever (HUL) has acquired brands such as Minimalist, Oziva, and Wellbeing Nutrition, strengthening its presence in premium personal care and health-focused categories.
• Marico has built a diversified D2C portfolio through acquisitions including Satiya Nutraceuticals, True Elements, Beardo, and Just Herbs.
• ITC has recently acquired Yoga Bar, Mylo, and Mother Sparsh, expanding beyond traditional packaged foods and personal care into premium and niche segments.
• Emami has added Trunativ, Brillare, and The Man Company to its portfolio, targeting wellness and men’s grooming categories.

Across these transactions, the buyers are profitable FMCG companies with strong cash flows, while the sellers are young, single-brand businesses built around a focused consumer proposition.

Why D2C Brands Dominate FMCG Acquisition Lists

In the last five years, nearly 70% of acquisitions by large FMCG companies have been in the D2C space. This dominance reflects a clear shift in acquisition priorities.

Three factors stand out.

1. Direct Consumer Access

The D2C model enables brands to interact directly with consumers, collect feedback, and respond quickly to changing preferences. This is difficult to achieve in the traditional wholesaler–retailer model.

2. Faster Growth Profiles

While large FMCG companies typically grow top-line revenues at 8–9%, many D2C brands have been growing at 40–45% annually. Even though this growth comes from a smaller base, it demonstrates the scalability of the model when supported by capital and distribution.

3. Replicability with Capital

Once the product-market fit is established, D2C brands can scale faster with additional capital, marketing spend, and supply-chain integration. This is where large FMCG companies have a clear advantage.

A Win-Win Transaction Structure

These acquisitions work because they address the core limitations of both sides.

For FMCG companies:

• They have strong balance sheets and stable cash flows.
• They lack granular, real-time consumer insights.
• Organic innovation cycles tend to be slower.

For D2C companies:

• They have rich customer data and brand loyalty.
• They often struggle with scale, profitability, and supply-chain efficiency.
• Funding constraints can limit growth beyond a point.

An acquisition allows FMCG companies to marry their financial strength with the consumer intelligence of D2C brands. At the same time, D2C companies gain immediate access to scale, operational expertise, and distribution infrastructure.

What CRISIL Data Reveals About FMCG Strategy

CRISIL data offers useful insight into how FMCG companies are deploying capital in the D2C space.

• Around 60% of D2C acquisitions have been in the personal care segment.
• The remaining 40% have been in food and beverage.
• Nearly 85% of these acquisitions were aimed at entering or strengthening presence in premium segments.

The preferred categories include:

• Health and wellness
• Organic and herbal products
• Men’s grooming

This pattern highlights two strategic objectives. First, FMCG companies are using acquisitions to diversify their product mix. Second, they are actively premiumising their portfolios to protect and enhance valuations.

The Strategic Endgame for FMCG Companies

These acquisitions are not just about buying growth. They serve multiple long-term strategic goals.

• Expansion of total addressable market (TAM) by moving into higher-value niches.
• Faster innovation cycles driven by direct customer feedback.
• Reduced time-to-market compared to building brands internally.
• Stronger brand portfolios that appeal to urban and premium consumers.

In many cases, acquiring a D2C brand is more efficient than launching a new one from scratch, both in terms of time and capital.

Why This Trend Is Likely to Continue

The fundamentals driving these acquisitions remain firmly in place.

• FMCG companies continue to generate surplus cash.
• Consumer preferences are shifting toward premium, personalised products.
• Digital-first brands are better positioned to capture these shifts.

As a result, D2C acquisitions are likely to remain a core pillar of FMCG growth strategies rather than a temporary trend.

Key Takeaways

• FMCG companies are increasingly acquiring D2C brands to access direct consumer insights.
• Nearly 70% of FMCG acquisitions in recent years have been in the D2C space.
• D2C brands offer faster growth rates compared to traditional FMCG businesses.
• CRISIL data shows a strong focus on personal care, food, and premium segments.
• These acquisitions solve scalability and profitability challenges for D2C companies.
• D2C acquisitions are reshaping how FMCG companies pursue growth and innovation.

Disclaimer: This article is for general information and educational purposes only. It does not constitute investment advice, a recommendation, or an offer to buy or sell any securities. Please consult a qualified professional for guidance specific to your situation.