Cigarette-to-hotel conglomerate ITC on Tuesday announced plans to acquire 100% of Sproutlife Foods (SFPL), a direct-to-consumer (D2C) startup and parent company of health food brand ‘Yoga Bar’ over a period of three to four years.
The FMCG major will initially acquire a 39.4% stake in SFPL for Rs 175 crore. ITC will then pick up a 47.5% stake, in one or more tranches, for Rs 80 crore through primary subscription by March 31, 2025. The balance stake will be acquired basis pre-defined valuation criteria, subject to other conditions agreed to in the binding documents.
“The initial investment for 39.4% will be made through primary subscription and secondary purchases of the paid-up share capital on a fully diluted basis, which is expected to be completed by February 15, 2023, or such other later date as may be mutually agreed upon,” it said in a BSE filing.
The acquisition will enable ITC to augment its future-ready portfolio and enhance market presence in the ‘Good for You’ space, which currently includes Aashirvaad multi-grain atta, Aashirvaad Nature’s super foods, Farmlite range of biscuits, Sunfeast protein shake, B Natural Nutrilite ABC Beverage, among others. Yoga Bar is expected to be rapidly scaled up, leveraging ITC’s enterprise strengths in areas such as sales and distribution, sourcing, product development and digital.
ITC said that the move is in line with chairman Sanjiv Puri’s ‘ITC Next’ strategy, which focuses on building a future-ready portfolio of products that serve evolving consumer needs. Both Nestle and ITC were in the race to acquire ‘Yoga Bar’, a move in line with big FMCG companies’ growing preference to take a share in the protein and health segment, which has become an important category with the growing consumer inclination towards health supplements and snacking.
Yoga Bar was understood to be in the market to raise funds of around Rs 150 crore, and given the growing importance of protein in the F&B space, industry experts had said that it would make strategic sense for companies like Nestle and ITC to participate in the funding, as they not just get a bite of the segment but also the D2C space.
Hemant Malik, divisional chief executive (foods division), ITC, said, “We look forward to scaling the Yoga Bar brand, offering superior and healthy consumer choices. Within a short span of time, it has established itself as a leading brand in the healthy foods space, driven by impactful market positioning and a range of innovative products.”
Yoga Bar currently runs a product portfolio, including nutrition Bars, muesli, oats and cereals. It has a high salience of online sales, with a growing presence in offline stores.