Deepak's Musings #139: DSGCP's 2024 Sustainability Report

This year, we are proud to showcase the strides of Blood, GO DESi, Anveshan, Ugaoo, and Coolmate in building responsible business practices.

Author

Deepak Shahdadpuri
March 04, 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.

🌱💚 DSG Consumer Partners’ 2024 Sustainability Report

While consumer awareness about sustainability is growing, there remains a noticeable say-do gap, with few willing to act on their concerns. "Good value for money" remains the top purchasing driver, reflecting SEA consumers' price sensitivity. Despite the importance of being environmentally friendly and purposeful, these factors rank lower in consumer considerations. It's clear that businesses must meet ESG standards while also prioritizing key table-stake elements to remain competitive.

This year, we are proud to showcase the strides of Blood, GO DESi, Anveshan, Ugaoo, and Coolmate in building responsible business practices.

Sustainability at DSG Consumer Partners

We believe that focusing on people and prosperity indicators is foundational to building a sustainable business, especially in the regions where we invest. Despite the challenges posed by developing economies in India and Southeast Asia, our portfolio companies are taking tangible steps towards being more sustainable.

🥨 An insight into one of Malaysia’s fastest-growing CPG companies

I grew up in Singapore in the 70s snacking on Mamee. My 3 kids (17, 15 and 10) also love Mamee. It is an iconic brand in Malaysia and Singapore.

I only met Pierre for the first time in 2023. He was introduced to me by a mutual friend Darren Tan of Apricot Capital. Mamee had recently acquired a controlling stake in one of our portfolio companies The Golden Duck.

Pierre Pang on Mamee Monster parties, brand building and the 3-generation trap

The third-generation heir to Malaysia’s famous snack brand talks about family legacy, making Instagrammable products – and why Mamee isn’t a ‘family business’.

🌎 The need to localise even for global brands

The top-selling flavours for Maggi are from India and Indonesia and local flavours are adapted to each market. I am also seeing this across categories from yoghurt to savoury snacks (I love Lay’s magic masala) to RTE to QSR. With a large percentage of the sales growth coming from new and emerging markets, brands must step up to the plate and adapt quickly as insurgent local brands are often already in the market with a more authentic story.

How PepsiCo, Kellanova adapt their snacks to local tastes around the world

CPG companies have turned to different shapes, textures and flavors, such as Cucumber Lays in China and Tangy Tomato Pringles in India, to appeal to regional preferences.

📟 Mswipe raised $20M in latest funding

I have been on the board of MSwipe for 10 years and have worked closely with Manish and Patel as they are building one of India’s most robust payment solutions companies, starting with the humble mPOS machine and with the recent grant of the payment license to become a full-service platform.

Mswipe Technologies secures $20M in growth equity from existing investors

The funding comes right after the RBI granted a payments aggregator license to Mswipe earlier this month, along with 10 other companies.

🛒 Britannia explore various GTM strategies to enter new premium consumer categories

I am curious if they will consider acquiring insurgent brands in some of the categories they are looking at. Given certain pockets of strengths and moats, I would think Britannia has the right to leverage those assets with new brands in premium categories. We shall see.

Britannia explores JVs to enter high-margin categories such as chocolates, fresh dairy and salty snacks

Britannia Industries: "Chocolates is a big market but difficult to penetrate and therefore, it will only be through a JV if and when it is possible," he said. "We are present in multiple categories and want to get them larger before going to others. The go-to-market strategy with the help of Bain will help identify blank spaces more precisely to ensure improved distribution of its products across markets," Varun Berry, vice-chairman and MD, said.

👄 What is lip oil and why is it on trend?

I learnt something new this week. Lip oil. Here is a 101 on lip oil and why it is taking the beauty market by storm.

Why are we all so obsessed with lip oils right now?

The proliferation of these glossy and moisturizing formulas shows no signs of slowing down.

Is the CBD trend reversing?

Until there is clarity of regulation, CPG companies are not going to invest too much in CBD-based products.

Companies Were Big on CBD. Not Anymore.

A lack of federal regulation and a mishmash of state laws have made selling products featuring the cannabis-derived ingredient not worth the trouble.

🍷 Building a CPG brand takes decades not years

This story was in the 1 Mar 2024 INSEAD #LifelongLearning newsletter. It is a piece I contributed to in 2009. Yes 15 years ago. I had invested in Sula Vineyards in 2005, partnering with Rajeev Samant, who wanted to build India's most loved wine brand.

Fast forward 15 years. It is now 2024. Rajeev took Sula public in Dec 2022 and the company has a market cap of US$600 million.

This case study has so many lessons for me, as a VC, for Rajeev as a founder, and for all entrepreneurs who have the conviction and wisdom to work hard to take advantage of what the next 20 years will bring for the Indian consumer. We are just getting started.

Looking at Sula, their headroom is immense given that even after 15 years less than 2% of Indians drink wine. Another key lesson for 1st time entrepreneurs: you do not need to look at exports. India is a huge market.

Sula Vineyards: India’s case for wine

In 2009, Samant expressed his desire to increase the percentage of the population drinking wine from one to five percent in the next ten years. This would require a significant increase in grape planting through triple shifts and expanded acreage. The focus of the company is on the domestic market, as there is a vast untapped market available here, and hence there is no need to focus on exports.

👜 India’s luxury market

S&P Global has projected that India will become the third-largest economy in the world by 2030. With this Indians are getting wealthier. The next 20 years are going to be very exciting for premium and luxury brands. Indians may look for “value” but they love premium and luxury products.

But as we all know, Indian spending patterns differ from the West and even from other Indian markets.

Worth reading this piece from German consulting firm Simon-Kucher as they look at what it may take to win in this space.

India's luxury market 2024: The right GTM strategy for luxury brands

India's luxury market is the fastest growing market in Asia, with continued expected growth.

🍹 Is there a market for premium rum in India?

Whilst we are on the topic of premiumisation and luxury, have you seen what has been happening in India’s rum market? Anyone who has grown up or lived or spent time in India, and is not a teetotaler, would have tried Old Monk. Old Monk’s market share has been falling over the last 20 years for a variety of reasons.

Rum gets a premium makeover. Are consumers ready?

Rum is among the most popular alcobev categories in India after whiskey. Often termed a poor mans drink, it is going through a premiumisation trend, which means a subtle fine-tuning in terms of taste and becoming heavier on the pocket. Will these new-age rums find new consumer cohorts?

CPG IPO: Gopal Snacks to go public next week

I will be watching this closely. Like Sula, this is an offer for sale (OFS) by existing shareholders with no new shares being issued given that the company is profitable and management claims they are fully funded. I am curious to see how it will be priced and how institutional investors receive it. At the top end of the price bank, this will have a 5,000Cr (US$600m) market cap.

Gopal Snacks is a fast-moving consumer goods (FMCG) company in India with a major presence in Gujarat

Gopal Snacks: A Savory Investment Opportunity?

IPO Central delves into the Gopal Snacks IPO analysis and explores if subscribing to Gopal Snacks' IPO might be a wise choice for investors.

Select funding & deal news

Funding and deal news that caught my attention this week

Prefer Brews Up $2M in Seed Funding to Make Beanless Coffee

Prefer, which makes beanless coffee from food industry sidestream ingredients.

Samara & consortium of investors set up $150M platform for packaged foods

The platform will be similar to Sapphire Foods, which Samara Capital had set up for food services, which operates Yum! Brands' quick-service restaurant (QSR) chains KFC and Pizza Hut in India. The Samara Capital-backed platform, to be called Agro Tech Foods, has begun with Sundrop edible oil, peanut butter and ACT II popcorn as its first brands.

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