Marico has been my leading FMCG investment for a long time. For a large amount of time, the thesis revolved around being amongst the best Indian FMCGs with top class marketing and a well entrenched distribution system. I preferred to put investments here versus the global giants because of better valuations versus the global giants and in my opinion these Indian FMCGs still have room to grow internationally.
I am though not as gung ho about these last 2 acquisitions - but only in the current state. Versus say the the kind of D2C brands available, both Beardo and Just Herbs were no where near the quality standards currently that I would expect Marico to own - especially in terms of packaging and product appeal. I can understand the company’s vision of wanting to have 3 100 Cr D2C businesses under their umbrella, so maybe it’s moving towards that strategic pillar.
What I think could be a plausible option is (and I am just being optimistic here as a shareholder)
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Marico likes the space and wants to get into it. Both Just Herbs and Beardo give them straight access to a new category, which is already large + meets D2C philosophy. This means considerable R&D and consumer research time saved - and they can go to market straight away. Even if they understand that these brands are not evolved enough, they have the marketing capability to turn around critical aspects like packaging and product positioning to eventually have category competitive products with a refreshed brand language
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In both the deals, I don’t see disclosures of amount paid. I won’t be surprised to see these being very cheap, or hope that’s the case. A founder of a Just Herbs or a Beardo can easily make thier business 10x by having access to Maricos distribution system in General Trade and Moden Trade. If I was a founder, I would easily give a part of company equity to Marico to get access to the other channels and diverse sales force - and really take sales and profits to the next level
Overall, I hope that these improvements or a similar strategic direction is planned. If not, these are pretty run of the mill brands versus the Organics, Mama Earths of the world. But if given the right direction and with the right product formulations, these could be large incremental businesses for Marico, at hopefully mutually beneficial deal configurations.
Discl : Invested