FMCG Giants Boost Premium Stakes with Strategic D2C Acquisitions

Leading fast-moving consumer goods (FMCG) companies are strategically acquiring direct-to-consumer (D2C) brands, embracing fundamentally different business models in distribution and marketing, Crisil Ratings revealed. These acquisitions are boosting growth and enabling FMCG firms to expand into premium segments.

Crisil Ratings explained that these acquisitions provide FMCG companies with valuable personalised consumer insights derived from digital channels, facilitating accelerated feedback, rapid innovation, and targeted marketing strategies. This development, the agency noted, has not adversely affected the credit profiles of acquiring firms.

Over two-thirds of the acquisitions by FMCG players in the last five years have been in the D2C space. D2C brands gained momentum post-pandemic through unique products and marketing strategies, resulting in impressive revenue growth. This has created a win-win scenario: FMCG companies gain niche market expertise, while D2C brands benefit from enhanced scale and profitability, as noted by Anuj Sethi, Senior Director at Crisil Ratings.

(With inputs from agencies.)