Deepak's Musings #138: Why DSGCP doubled down on our partnership with Nuguru

And are VC funds pulling back on consumer brands?

Author

Deepak Shahdadpuri
February 27, 2024

All things consumer & insurgent brands. What I am currently reading, thinking about, and reflecting upon. You can follow me on Twitter at @dishahdadpuri or follow DSG Consumer Partners at @dsgcp.

p.s. You can click any summary link to read the full article from its source.

🧬 Why we doubled down on our partnership with Nuguru

I first met Vikram Rupani when he and his co-founder Roger Egan were starting RedMart. I was fortunate to be on that journey till our exit to Lazada. On this journey, I met Richard and Tina. And we at DSGCP could not have been more delighted to get the chance to back Vikram, Richard and Tina, as they build Nuguru, a company that is redefining what it means to live a healthy life, with a multi-faceted approach, consisting of brand incubation, distribution, and investment.

Backing a Global Initiative in Revolutionizing Healthy Eating

Over the past three years, the DSGCP team has been privileged to accompany Nuguru on its journey of incorporation, transformation, and international growth. We are pleased to support and collaborate with Vikram and a fully built ace team to pivot the business model from its initial foray with the “Clean-in-15” program to today's harmonized approach to wellness.

🤝 Are VC funds pulling back on consumer brands?

This story is US-centric but in it, Modern Retail claims that PE money is pouring into consumer brands at a time when venture capital is becoming harder to come by. It cites the example of L Catterton’s investment in Wellness brand Wthn and bedding brand Boll & Branch.

I think we are missing the details. Yes, I agree that traditional sector agnostic VCs are pulling back on onsumer. Many of them do not understand consumer and for many reasons, including FOMO, dabbled in backing consumer brands but applying filters or playbooks developed for large tech investments. However, there continue to be dedicated VCs, and this pool is growing, focused only on consumer brands who continue to look for back consumer brands.

Are more traditional PE shops that invest in later-stage consumer deals coming in earlier? Yes, there are. The L Catterton example is one such. Others like Verlinvest have set up a dedicated venture arm. And I think we will see more consumer specialists play across stage.

As venture capital funds pull back on consumer, more private equity firms look to play a bigger role in startup investing

With venture dollars becoming harder to come by, startup brands in need of cash injection are looking to private equity to help them grow profitably.

📟 Mswipe Technologies secures RBI’s Payment Aggregator license

With the license, DSG Consumer Partners portfolio co MSwipe will now plan to offer a full payment gateway stack to its existing and new merchants.

RBI grants payment aggregator licence to Mswipe Technologies

Mswipe is looking to become a full-stack payments player, diversifying from offering offline merchant acceptance devices.

🇮🇳 India’s economy continues to surge

The latest flash PMI numbers, based on a survey of 400 manufacturers and 400 service providers, follow data showing a robust 7.6% growth in the Indian economy in the second quarter.

India’s economy surges further ahead in February

Services activity reached a seven-month high, while manufacturing growth is at a five-month high, as per the HSBC Flash Composite PMI

🇮🇳 India’s middle class is booming

In last week’s newsletter, I touched on the two Indias. On one hand, the premium end is soaring and on the other, the mass market is lagging. See the story below on India’s fast food wars to see what is happening in the mass/value segment.

Will we see more brands focus on the luxury end of the spectrum? This is not a decision for the short term. It is a question I debate with founders and I urge them to look out 10 or 20 years. What will the Indian consumer of 2035 or 2045 look like?

Indian brands check into luxury space to cash in on surging middle class, aspirational youth

Amidst global challenges, retail sales of luxury goods grew 3% in India last year, driven by the rise of affluent class and aspirational individuals who desire exclusive products and unique experiences. This has resulted in a spate of homegrown brands that are eager to cash in on the trend.

🍟 India’s fast food wars

The paragraph below captures the intensity of what is playing out in India’s fast food market as consumers continue to tighten their purse strings. Meal deals are being priced at >50% less!

On Wednesday, Westlife Foodworld Ltd said it has launched its new offering, McSaver Meals, starting at just ₹99 for customers in Gujarat, Madhya Pradesh and Chhattisgarh, and ₹149 for customers in other parts of west and south India. The company is also promoting the offer with two new television commercials. Earlier, the McVeggie meal was priced at ₹321—now it is available for ₹149, while the Aloo Tikki meal, earlier priced at ₹230, can now be had at ₹99. The offers are here to stay and not for a limited period.

Fast-food chains push more value meals as in-store footfall remains weak

Fast-food chains are offering discounts on value meals to boost in-store sales amid sluggish demand and high competition. Domino's and McDonald's are rolling out new value meal combos and slashing prices to attract customers back into their outlets.

Snapshot into the venture capital arms of some of the world’s largest CPG companies

DSG Consumer Partners has invested with Danone in Greek yogurt brand Epigamia and alongside Unilever Ventures in Indonesian health supplement brand Youvit. I personally speak to many of the funds in this list, and it is clear that investing in insurgent brands is now part of most corporates innovation strategy.

Big Food’s stake in the future – in-house venture-capital funds’ investments

Just Food’s ongoing guide to some of the in-house, corporate-venture arms operated by the world's major packaged-food companies.

👼 Piccolo X CoComelon

We love collabs. The latest from the DSG Consumer Partners portfolio is our baby food brand Piccolo and its partnership with Cocomeon, a popular children's YouTube channel where JJ and his friends explore everyday experiences.

Moonbug partners with Piccolo for CoComelon snacking range

Moonbug Entertainment has partnered with premium baby food brand Piccolo to produce a new CoComelon branded baby snacks range.

👜 Reliance Brands’ portfolio of luxury brands and why it matters

This story from The Ken is behind a paywall so non-subscribers cannot access it.

Reliance Brands is killing Tata Cliq Luxury

Reliance and its 85 luxury brands mean retailers have to play by Reliane’s rules.

🍷 The Rise of India's AlcoBev Industry

Sharpp Ventures’ Chaitanya Rathi, who was previously COO at Sula Vineyards and started his venture career at DSG Consumer Partners, looks at the changing dynamics and opportunities within India’s alcobev market.

A Blend of Tradition and Innovation

India's alcobev industry has witnessed strong growth over the past decade, evolving from traditional preferences to embracing a diverse range of global tastes.

Select funding & deal news

Lots of interest in mushroom-based functional beverages and see what DSGCP’s LPs are investing in.

Culture POP Raises $21M In New Investment

Probiotic soda brand Culture Pop raised $21 million from new investors which include Enlightened Hospitality Investments — the investment arm of restaurateur Danny Meyer — and a private investment by Howard Schultz.

NPD Snapshots

Epigamia launches Greek Yogurt loaded with Oats & Seed Mix

Epigamia has extended its Greek yogurt range with an addition of ‘Greek Yogurt’ with Oats & Seed Mix’. The yogurt is premixed with oats, chia, flax, and amaranth seeds.

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