HUL Buys Into 2 Digital-first Wellness Startups For <span Class='webrupee'>₹</span>334 Cr

The company acquired stakes in Zywie Ventures Pvt. Ltd, the maker of OZiva brand of lifestyle protein products, hair and beauty supplements; and Nutritionalab Pvt. Ltd that sells products under the Wellbeing Nutrition brand. Mint first reported on 17 October that HUL is in advanced talks to invest in Nutritionalab.

HUL spent a total of ₹334 crore for the two deals. Existing leaderships of both companies will continue to manage their operations, while HUL will get representation on their boards.

In a regulatory filing on Thursday, HUL said it has picked up 51% in Zywie for ₹264.28 crore in the first tranche. The balance 49% stake will be acquired after three years from the completion of the first tranche on pre-agreed valuation criteria. OZiva is endorsed by Bollywood actor Deepika Padukone. The OZiva team is currently led by Aarti Gill and Mihir Gadani.

HUL has also bought a 19.8% stake for ₹70 crore in Nutritionalab, which makes oral thin strips, slow release capsules and marine collagen powder. The stake was bought through a mix of primary infusion and secondary buyouts for ₹70 crore in cash. Nutritionalab posted revenue of ₹19.40 crore in FY22. The company is led by Avnish Chhabria.

Both transactions are expected to be completed in the next one to three months, HUL said.

The move is line with HUL’s “strategic priority" of entering fast-growing demand spaces. Holistic health and wellness are emerging as “mega consumer trends" in India, Ritesh Tiwari, chief financial officer, HUL, said in a analyst call.

The company wants to build a portfolio of fast-growing, lifestyle-led, science-driven brands in the health and wellbeing category, it said in an investor presentation. HUL operates in three segments including beauty and personal care (BPC), food and refreshments and home care. These new products could sit under HUL’s beauty and personal care category.

“Given the strong presence and capabilities that we have in BPC, be it beauty, in chemist channels, and the general understanding of consumer needs in the space, we believe it’s a better fit under BPC," Tiwari said.

HUL will continue to look at both organic and inorganic opportunities to grow the health and wellness market in India; it could also tap into Unilever’s global portfolio to introduce health and wellness products in the country. A separate team will drive category creation for the health and wellbeing category in India, Tiwari added.

“These strategic investments give us an entry into the fast-growing health and wellbeing category. They align strongly with our mission to improve the health and wellbeing of consumers and empower people to take charge of their health through solutions that they can trust," said Sanjiv Mehta, CEO and managing director, HUL.

HUL is well-positioned to scale up these businesses through its R&D, market development, distribution capabilities as well as Unilever’s global health & wellbeing expertise, Mehta said.

The move also points to HUL’s aggression in the direct-to-consumer market as well as its intent to capture new emerging consumer trends. For instance, the company has five in-house digital brands including Simple, Baby Dove, Acne Squad as well as Find Your Happy Place.

The move also marks further consolidation in the market for branded direct-to-consumer and new-age brands, said industry insiders. “This could probably be the first of many more to come," said Sameer Shah, director at investment banking firm Candle Partners. “It is a matter of time that we see select other global MNCs also evaluate and attempt D2C deals," said Shah.

Launched in 2016, OZiva is a plant-based consumer wellness brand with an annualized revenue run rate of over ₹100 crore. It is backed by Matrix and Eight Road Ventures and has raised $ 17 million. Wellbeing Nutrition, founded in 2019, has an annual revenue run rate of ₹50 crore. It is a digital-first brand, but expanding its presence offline.

Over the years, HUL has made a clutch of acquisitions in more developed categories such as its 2015 acquisition of hair-care brand Indulekha for ₹330 crore. It also bought health food drinks brand Horlicks from GSK. In 2020—HUL acquired VWash from Glenmark Pharmaceuticals Ltd.