Hindustan Unilever Ltd (HUL), the country’s leading fast-moving consumer goods (FMCG) player, is boosting its health & wellness products portfolio by picking up stakes in two home-grown companies—Zywie Ventures and Nutritionalab—for Rs 334 crore. HUL plans to acquire a 51 per cent-stake in Zywie Ventures for Rs 264 crore, while the rest of the shares will be acquired by it after three years based on a pre-agreed valuation criteria. And the FMCG major will pick up 19.8 per cent in Nutritionalab for Rs 70 crore.
Founded in 2016—the maker of premium lifestyle protein, and hair & beauty supplements under the OZiva brand name—Zywie has an annual revenue run rate of over Rs 100 crore, with more than 3 million consumers in its fold. And Nutritionalab’s annual revenue stands at Rs 50 crore, while it serves over 2 million consumers in the vitamins, minerals and protein supplements market.
According to Sanjiv Mehta, CEO and MD of HUL, apart from its entry into the fast-growing health & well-being category, the move is well aligned with its strategy of expanding in the segment. HUL—that leads the home and beauty & personal care markets in India—is betting aggressively on the health & wellness category for its future growth. Mehta, in an earlier interaction with Business Today, had said that the company’s focus is on premium offerings in the segment.
HUL’s latest bid is significant, coming in the backdrop of its acquisition of the food business from GSK Consumer Healthcare in 2018. Armed with the Horlicks brand, it has already created a strong foothold in the health & wellness market. And the two new additions to its portfolio would help it grow in the premium segment. Per estimates by financial research and advisory firm Prabhudas Lilladher, HUL’s realisations from a premium brand like OZiva compared to a mass product like Horlicks may be 8x more, resulting in a net profit CAGR of 16.6 per cent between FY22 and FY25.
Per the report, as a significant share of the domestic population continues to suffer from nutrients deficiency (over 50 per cent suffer from anaemia, 80 per cent have vitamin-D deficiency, 67 per cent are zinc and/or micronutrient deficient), HUL’s bet on the category is not without reason. While the premium pricing of these products may restrict their scalability compared to Horlicks, they have ample scope of growth among millennials, say analysts from Nuvama Wealth Management.
And a recent report by consultancy firm EY says the health supplements market in India is growing at a CAGR of 15 per cent and is believed to have grown beyond Rs 33,000 crore already. The advent of the Covid-19 pandemic has only drawn more Indians towards the category with many taking up fitness classes and activities, consuming naturally-sourced foods, health supplements and following specialised diets. As the saying goes, health is wealth.
@arndutt