Is India global FMCG’s proving ground?

According to Crisil Ratings, nearly 60 per cent of FMCG companies’ D2C acquisitions over the past five years have been in the personal care segment, surpassing food and beverages categories in both size and frequency of deals.

Investment activity is also filtering in through corporate venture arms. Unilever Ventures, the investment arm of Unilever, led a $4.1 million Series A funding round for Clayco, a Mumbai-based skin care start-up, this year. Earlier too, Unilever Ventures had invested $2 million in Clayco — that was shortly after the brand’s debut in 2024.

What is most interesting is the underlying reason these deals happened at all. Both Minimalist and Innovist were built on one core conviction that the Indian consumer is not who the legacy playbook assumed. Not aspirational in a vague, Bollywood-poster way. They are informed. Label-reading.

And they are willing to pay for something that works. Indian founders saw that before the multinationals did. They have also mastered the integration of online sales, quick-commerce, and targeted offline retail, successfully penetrating underserved Tier 2 and Tier 3 cities. With beauty brands typically enjoying gross margins of 60-75% vis-a-vis 35-50% for food businesses they make for hot picks.

Such transactions also demonstrate that strategic acquisitions are emerging as a meaningful exit avenue for founders and investors. Peak XV backed Minimalist at the seed stage. Sauce VC and Point72 backed Innovist. “Those bets have now paid off at multiples that will fund the next set of companies. That is how ecosystems are built,” says Somdutta Singh, founder & CEO, Assiduus Global.

Way to go

The trend is clear: As they look to tap younger consumers and enhance their digital capabilities, the BPC giants like L’Oréal, Unilever, and Estée Lauder are pivoting from slow, internally isolated, and capital-intensive research toward R&D in favour of investing in, incubating, and outright acquiring nimble, digital-first Indian brands.

The reasons are not far to seek: Growth in India’s fast moving consumer goods (FMCG) segment has slowed down in the last few years — hovering at a volume growth of 4-5%, considered lower than the industry’s historical expectation of 6-8% — and to speed up, growing inorganically through acquisitions is a great option.

A buyout gives them immediate access to pre-built, highly loyal digital communities and first-party data on millennial and Gen Z shoppers. They also act as outsourced R&D labs to experiment with new ingredients (like active chemicals or ayurvedic formulations) and alternative formats.

What makes Indian beauty startups particularly compelling for global FMCG players is that many have already built ₹500 crore-plus brands largely through online channels. For strategic acquirers with deep offline distribution capabilities, these businesses still have significant headroom for growth, making the acquisition economics highly attractive.

BPC brands are also easier to premiumise compared to other D2C categories, as consumers are more inclined to loosen their purse-strings for scientifically-backed formulations and demonstrable product performance.

Valuations in India also remain reasonable when viewed through a global lens, especially considering currency depreciation and the long-term growth potential of the market, says Hitaysh Dhingra, founder, The Man Company and Puresta. While Indian conglomerates have traditionally preferred acquiring brands in the ₹100-300 crore revenue range, global players are increasingly looking at larger, ₹500 crore-plus businesses that have demonstrated strong product-market fit and brand affinity.

“For large FMCG companies, these brands offer access to new consumer segments, stronger digital capabilities, and proven concepts that have already demonstrated market relevance. The combination of a D2C brand’s agility and an FMCG company’s scale creates a strong platform for sustained growth,” sums up Mahesh Ravaria, executive director, Beauty Garage.

Now that India has proved it can build brands that the world’s largest companies want to own, the logical next question is whether India can build the company that does the buying.