What ITC’s latest move tells us about the health conscious consumption market

ITC announces phased acquisition of Yoga Bar: 47.5% stake in multiple tranches by March 2025 255 crores, and the balance, immediately thereafter, at pre-determined market development linked prices.

Yoga Bar owner Sproutlife Foods was up for sale 68 crores in 2021-22, and the company currently claimed to have an annual run rate of 100 crore in its statement announcing its acquisition by ITC. This 47% growth in one year is very impressive, especially if we take into account that the base year of 2021-22 was a pandemic year full of lockdowns, which left home-stayers with limited outlets for their urges. High earners were hungry after snacks. to spend.

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ITC is a company that invests the bulk of its new investments and new recruits in non-tobacco operations and aspires to dominate the FMCG sector. It makes perfect sense for the company to target the high-end wellness and nutrition segment of the ready-to-eat food market.

Yoga Bar has a strong position in nutrition bars, muesli, oats and cereals. It started as a direct-to-consumer online brand, but has now taken over real-world store shelves as well. Yoga & Sprouts has a flair of modern wellness, backed by India’s fast growing youth who are exposed to global trends in clothing and music as well as food fashion. This brand positioning will make it easier for Yoga Bar to diversify into products such as non-dairy milks such as oats and almonds, probiotics and prebiotics (probiotics claim to nourish gut bacteria and pre-biotics promise to do the same ) better, after having made its way, without being damaged by stomach acid and enzymes in the small intestine, into the large intestine, where most of the gut bacteria reside). Perhaps, plant-based synthetic meats may be brought into the fold over time.

The addition of Yoga Bar to its portfolio is in line with ITC’s commitment to diversify from being the world’s first major tobacco company to manufacturing and marketing products ranging from harmful to health to health promoting and lifestyle enhancement .

ITC’s acquisition follows the announcement earlier this month that The Whole Truth, a “100% clean-label food brand”, has raised approximately $15 million in Series B funding round led by Sequoia Capital India. Shashank Mehta, an ex-Unilever marketer, founded the company after a personal struggle with obesity and unhealthy packaged food, which is full of hidden sugars and chemicals. Whole Truth’s proprietary R&D and in-house manufacturing is focused on eliminating all of its hidden sugars, artificial flavors and harmful preservatives. food products.

The “clean food” category is a distinct sub-category in India’s packaged food market, which is expected to double to $70 billion in four-five years, according to the world’s largest food and beverage company Nestle, headquartered in Weway , is in Switzerland. Operates factories in more than 80 countries. If the pace of urbanization picks up – India is currently one-third urban and no country has prospered without urbanization – the pace of growth could be even faster. Its strong foothold in the trend and potentially the highest margin segment means a lot for ITC.

Marico, Tata and Hindustan Unilever have all acquired health food/supplement makers and are creating value for the founders and adding to their own arsenals as they battle for dominance in the food business. This makes the food for health and wellness market a promising area for entrepreneurial success and value creation.

As interest rates tighten in the US and Western Europe, where a lot of venture funding originates, the froth is likely to dry up in many areas of the startup universe. Therefore, proven success in a rapidly growing segment of demand is of keen interest to the Venture Fund industry as well.

The success that two Bangalore-based women entrepreneurs, Suhasini Sampath and Anindita Sampath Kumar, have found with their venture, Yoga Bar, is set to inspire more young women to test the waters of entrepreneurship and seek self-actualization outside of roles There is a possibility. for them. That, too, is likely to be a growth booster for the Indian economy, which suffers from a very low labor force participation rate for women. The more women who become entrepreneurs, the more jobs are created and the more women are in the workplace.

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