From ITC, HUL to Marico: Why big FMCG is paying billions for brands you’ve only seen on Instagram

India’s biggest packaged goods companies are increasingly buying the very brands that built their followings online, often before they became household names.

Cosmix is only the latest addition to Marico’s growing digital-first portfolio. Over the last few years, the company has acquired or invested in brands such as Plix, True Elements, Beardo and Just Herbs, as it builds out a wider premium personal care and nutrition portfolio. Marico has publicly stated a D2C revenue target of Rs 2,000-2,500 crore.

The story is playing out across the sector. Tata Consumer Products has stitched together a pantry-led growth platform through acquisitions such as Capital Foods, home to Ching’s Secret and Smith & Jones, and Organic India, which it acquired from Fabindia in an all-cash deal valued at Rs 1,900 crore. 

Hindustan Unilever has taken a majority stake in Minimalist for Rs 2,706 crore. ITC has bought into Yoga Bar and acquired 24 Mantra through an earn-out structure. Godrej Consumer Products acquired male grooming brand Muuchstac in a Rs 450-crore deal completed in December 2025, while Emami took over The Man Company for Rs 272 crore.

According to Crisil Ratings, about two-thirds of FMCG acquisitions over the past five fiscals have been in the D2C space.

Buying growth where the core is slowing

A big driver is the reality that many legacy FMCG portfolios are trying to tackle the challenge of sustaining margins.

Amit Purohit, vice-president at Elara Capital, told financialexpress.com that the core portfolios of most large FMCG companies are “well penetrated” and face challenges in sustaining double-digit revenue growth. That, he said, is why acquisitions have become the preferred route, particularly given the “strong cash generation” of incumbents.

Purohit described the shift as structural rather than cyclical. “Structural challenges,” he said, were the key reason behind the acquisition wave, rather than a short-term phase driven by hype.

New categories, not just premium versions of old ones

For years, FMCG premiumisation was driven by tweaks within the same categories, premium hair oils, better shampoos, “healthier” biscuits, and more expensive soaps. But the current acquisition cycle is increasingly about entering new segments altogether.

Purohit said the focus is on categories that offer “huge growth opportunity”, especially those linked to “looking good” and “better for health”. As per capita income rises and awareness grows, these categories are beginning to scale up, he added.

Importantly, he said these acquisitions are “more of entering into new categories” rather than simply moving up the value chain in existing ones. “Premiumisation— they tend to leverage the legacy brands,” he said.

Speed is the product

What FMCG companies are really buying is time.“These companies operate on rapid test-and-iterate cycles, enabling large FMCG players to compress product development timelines from years to months,” Vikram Gupta, founder and managing partner at IvyCap Ventures, told Financial Express in an earlier report.

For incumbents used to long innovation cycles, that speed has become valuable in itself, especially in categories where consumer preferences shift fast, and trends are shaped on social media before they appear on supermarket shelves.

Data, loyalty, and a ready-made community

Beyond product pipelines, digital-first brands come with something traditional FMCG historically lacked: direct consumer relationships.

Gupta said D2C brands bring deep first-party consumer data, covering discovery, repeat behaviour and churn, giving acquirers clearer visibility into changing preferences and pricing elasticity.

In an earlier report, Somdutta Singh, founder and chief executive officer at Assiduus Global,  told Financial Express that acquiring D2C startups also means buying a loyal customer base that already trusts the brand. “By acquiring these startups, FMCG companies are also acquiring a loyal consumer base that already trusts the brand, which reduces the cost and time needed to build long-term engagement,” she said.

The biggest reason these deals keep happening is simple: the growth rates are not comparable. Singh said D2C companies recorded revenue growth of around 40% CAGR between FY21 and FY24, compared with about 9% CAGR for established FMCG firms over the same period.

“That gap matters because it explains why incumbents are actively looking outside their core portfolios for growth,” she said.

Are incumbents overpaying?

Haris Bijoor, founder of Harish Bijoor Consults Inc, told financialexpress.com that the strategic thinking inside FMCG companies has shifted sharply. “The key thinking seems to revolve around the thought that either you build or you buy. If you can’t meet them, buy them,” he said.

Bijoor added that the portfolio approach is changing, where companies are no longer only thinking in terms of products, but also channels. “The portfolio approach today includes the type of channels that you have and adopt. D2C, e-commerce and much else is a part of it all,” he said.

But he also flagged a key risk: scale. “Time alone will tell,” Bijoor said on whether FMCG firms are overpaying. He argued that many D2C brands face a ceiling. “There is a glass ceiling for most D2C companies. And crazily, the 100 crore mark seems to be getting more and more difficult to reach,” he said.

“If this breach is not possible, then people will question the kind of price they have paid for buying into early D2C initiatives, which seem successful, but which all of a sudden seem to have reached a glass ceiling, beyond which growth seems difficult,” he added.

Purohit, however, disagreed with the overpayment thesis. He said valuations are being driven by growth opportunity, margins and the ability to leverage distribution. He added that buyers are increasingly structuring deals in stages, taking partial stakes first and moving to full control as the business scales. “Don’t think they are overpaying, instead they are doing a part investment and as the business scaleup would take up 100% control. This is a good approach,” he said.

What can go wrong after the deal?

The risk, analysts say, is not only the price but the execution. Purohit said one of the key challenges is “leveraging the offline channel and assessment of opportunities”. In many cases, digital-first brands that thrive online struggle when pushed into traditional retail.

For now, most large FMCG companies are choosing to let these brands operate independently. “They typically run independently, and companies would look to integrate as a later stage depending on their benchmark,” Purohit said.

Instead of building a few large mass brands, companies are seemingly assembling portfolios of smaller brands, each with its own consumer cohort. And in many cases, the brands being bought are still ‘quiet’, usually famous on Instagram or quick commerce rather than Kirana stores or for having standalone stores in malls. 

As Bijoor put it, the new imperative inside FMCG is blunt – build if you can. If you can’t, buy.