In recent years, top Indian consumer goods companies such as Hindustan Unilever, ITC, Marico, and Emami have acquired or taken controlling stakes in numerous digital-first brands, also known as direct-to-consumer (D2C) startups. This move was largely driven by the ecommerce boom, which presented an opportunity for these fast-moving consumer goods (FMCG) companies to exploit the growing online market. The partnerships have enabled the D2C brands to scale up their distribution networks across India, leveraging the marketing muscle and extensive reach of the FMCG companies.
As a result, many of these D2C startups have experienced significant sales growth. For instance, Plix’s revenue rose nearly threefold to Rs 418 crore in fiscal 2025, while Oziva’s revenue more than doubled to Rs 257.8 crore. Yogabar also saw a 50% surge in revenue to Rs 197.1 crore post-acquisition. However, despite the increased sales, many of these startups continue to incur losses, with some even widening their losses. Experts attribute this to the high cost of customer acquisition, which is a major contributor to the losses incurred by D2C brands.
The founders of these D2C startups acknowledge that being part of a larger FMCG ecosystem has provided them with access to more resources, including a larger distribution network and marketing muscle. However, they also emphasize that their operations remain independent, and they have been able to leverage the ecosystem without losing control. For example, Puru Gupta, the cofounder of True Elements, stated that Marico did not interfere in how they built their brand, and they were able to make strategic investments that led to slower growth in the short term but eventually resulted in significant growth.
Despite the mixed results, FMCG companies are expected to continue their D2C acquisition spree, driven by pressure from investors and analysts to innovate and compete with nimbler D2C companies. However, experts warn that simply plugging a D2C brand into a legacy FMCG system is not a guarantee of success. The cost of customer acquisition and the focus on efficiency and cost management in established FMCG companies can be challenging for D2C brands to navigate. As Arvind Singhal, MD of The Knowledge Company, noted, “In the next five years, most of these acquisitions will turn out to be completely dead. Many of them are being bought at crazy prices but may not deliver the growth expected.”