Deepak's Musings #143: Insurgent brands are back

šŸŒ± Plant parenting in India is going to be HUGE

Author

Deepak Shahdadpuri
April 01, 2024

I am interested in all things consumer and insurgent brands. In my newsletter, I share what I read, think about, and reflect upon. You can follow me on Twitter at @dishahdadpuri or DSG Consumer Partners at @dsgcp.

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

šŸ­ Insurgent brands are backā€¦..actually they never went away

Victor Martino is a close watcher and analyst of the insurgent brands and their ecosystem. He has a very good sense of where the market is heading.

Itā€™s the resurgence of the insurgent brands

One of the top challenges to major CPG brands in the US are, once again, smaller brands.

šŸŒ± Plant parenting in India is going to be HUGE

Just watch how mainstream and large the plant parenting category in India will become over the next 10 years. We havenā€™t even seriously gotten started, in my opinion.

At DSG Consumer Partners, we were lucky to meet Siddhant Bhalinge, the founder and CEO of Ugaoo. We are excited to be on this journey to educate and evangelise plant parenting.

Gardening SOS? Here's who you can turn to

Responding to the needs of young and curious urban gardeners, a network of plant-care educators and businesses that support urban gardening is growing and thriving

šŸ¦ What will HUL do now that Unilever is spinning off its ice cream business

What next for HULā€™s portfolio of ice cream brands? Will it have the same reasons to follow suit?

Unileverā€™s exit reminds me of when Nestle sold its ice cream business in 2019. At that time, Nestle said the decision was ā€œpart of NestlĆ©'s broader strategy to focus on high-growth categories such as coffee, pet care, infant nutrition, and bottled waterā€. See the FT article below for those who did not follow this story in 2019.

After Unilever decides to spin off its ice cream biz, HUL plans a tempcheck in India

HULā€™s ice cream unit, which includes Kwality Wallā€™s, Cornetto, and Magnum, accounted for less than 3% of its overall business in FY23

NestlƩ to sell HƤagen-Dazs ice cream business for $4bn

Deal with private equity joint venture is latest divestment by CEO Mark Schneider

šŸ“ˆ 6.8% GDP growth in FY25 for India

Those who visit India regularly can see how the investment in infrastructure, capex, technology, and consumption is leading the growth. This government will lay the foundations for growth for years to come.

Morgan Stanley raises India's GDP growth expectation for FY25 to 6.8%

GDP Growth Estimate: The forecast for FY24 GDP stood at 7.9%. "We expect GDP growth to track at around 7% in QE Mar-24 with GVA growth of 6.3% and thus F2024e GDP growth of 7.9%," the company said in its report.

šŸ’³ Credit cards and India

There is a gradual shift in Indians' perception of credit. Where there used to be a preference for saving and paying with cash, there is a growing acceptance of credit as a tool for managing finances and making larger purchases. This can be witnessed in the number of credit cards issued and the aggression with which card issuers have marketed to consumers.

Indiaā€™s credit card industry is undergoing a clean-up

Amid a crackdown by the RBI and dubious practices plaguing the industry, major banks are trimming many credit card offerings despite their popularity and business potential.

šŸ’° L Catterton & Sanjiv Mehta to set up a new consumer fund

Very interesting, and I will be watching this closely. There is a huge opportunity to build insurgent brands in India, so it is no surprise that new funds are taking up this challenge and helping build the ecosystem. What is particularly interesting is that you have a very experienced consumer investor in L Catterton, who has been active in India for a decade, and Sanjiv Mehta, a seasoned consumer executive.

The press release says he will serve as the executive chairman of India for the vehicle from April 4 onwards and will also be involved with L Catterton Asia (LCA) and the firm's other global fund platforms. That is a lot for any one person to do.

I have tremendous respect for L Catterton since its founding in 1989 and have seen how Michael Chu has grown the franchise. This is effectively the third senior management team in India since L Capital (before its merger with Catterton in 2016) has been active in India since 2015.

L Catterton in JV with former HUL chief Sanjiv Mehta for investment vehicle

L Catterton, which aims to deepen its presence in India, manages about $35 billion of equity capital across three multi-product platforms: private equity, credit, and real estate.

šŸ“Š Market share X Profitability

TLDR: You do not have to be big to be profitable. Build a business on first principles with strong and consistent unit economics.

In new-age business, market share may not always mean profitability

India's FMCG sector is adapting to digital transformation by investing in digital advertising and engaging in direct-to-consumer trends. Legacy companies face challenges from local brands and digital-first startups as market dynamics evolve.

šŸ”¼ Value is driving growth not volume

I have written about this in the last few newsletters. Here is more data, courtesy of The Economic Times, confirming what we already know: consumers are willing to pay extra for convenience, quality, and advanced features.

Premiumisation picks up pace for large consumer goods companies

More than 70% of the new products launched by India's largest consumer goods maker, Hindustan Unilever, in the last two years were in the premium segment. Around 65% of all new personal care product launches were in the premium segment for ITC Ltd, doubling the contribution of such products to the division's sales in the last four years to 38%.

šŸ„ƒ The hype around Indiaā€™s whisky market

Indians drink a lot, especially brown spirits, from whisky to brandy to rum. Global brands are excited about the growth at the top end, the premium market.

Pernod Ricard sips Indian single malts with Longitude 77.

Pernod Ricard wants a larger slice of Indiaā€™s single malt market

šŸ“° Select funding & deal news

Funding and deal news that caught my attention this week

Cleantech Co Bambrew Gets $7 M in Round Led by Blume

Bambrew, a cleantech startup operating in the sustainable packaging space, said it raised ā‚¹60 crore (about $7 million) in Series A funding round led by Blume Ventures.

L Catterton Creates New Beauty Venture

Elevate Beauty Ventures is a new platform to invest in early-stage, highly differentiated beauty and wellness brands.

Marc Lore's Food Delivery Startup, Wonder, Raises $700 Million

The company plans to open nearly 100 restaurant locations around New York City area over the next two years

Delhi-based Woodsmen Mountain Whiskey secures Rs 12.5 cr funding

A significant aspect of this funding round is the approximately 10% participation from the core team of Ginglani Distillers, the parent company of Woodsmen Mountain Whiskey. This team includes Joseph Jacob (Ex-AB InBev), Sunil Thakur (Ex-Paul John), and Harpreet Bali (Ex-DS Group).

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