Wipro Consumer Care plans to invest Rs 100 crore in growing D2C startup ecosystem

Sarat Chand, Vice President & Managing Director, Benelux, Wipro Limited said this significant win is recognition of our relentless pursuit to partner with our clients in progressing their transformation agendas.

Wipro Consumer Care and Lighting is looking to invest at least Rs 100 crore in Direct-to-Consumer (D2C) startups, especially in the food business, in 2023.

“Till now we haven’t looked at D2C startups, especially in the food segment, but now we are more open to looking at it. We are seeing some exciting startups in this space and we are considering investing in them,” Chief Executive Officer Vineet Agrawal told Moneycontrol.

Wipro Consumer Care would be a strategic investor, helping startups in market access, sourcing raw material, managing financials and building research capabilities through its brand, Agrawal said.

“Startups have a very good understanding of the product and they are good at marketing and good in understanding eCommerce,” Agrawal said.

“Immediate priority is not acquiring any startups, that is not our strategy…We would rather invest in them. Our plan was to invest close to Rs 200 crore, we still have Rs 100 crore left to invest,” he said.

Agrawal also said the Rs 100 crore may increase, depending on how past investments perform.

“We are open to investing in startups in food, especially snacking, and personal care and hygiene startups. We will invest only a maximum of Rs 25 crore in the company and we will not take more than a 25% share,” he added.

Some startups the firm has invested in the past include Powergummies, Ayurvedic company TAC, men’s grooming firm LetsShave, and Indonesia’s Youvit, which makes nutraceutical and wellness products.

To be sure, Wipro Consumer Care is not the only maker of packaged consumer goods that is investing in D2C startups.

Marico, for instance, has acquired male grooming company Beardo, beauty brand JustHerbs and snacks maker True Elements. Hindustan Unilever has announced the acquisition of D2C nutrition brand Oziva for $32 million and taken a minority stake in Wellbeing Nutrition for $8.4 million. Tata Consumer Products has taken over Soulfull.

Aditya Birla Group’s house of brands venture TMRW aims to become a $1 billion business, and will be investing Rs 500-600 crore in 10-12 D2C brands by the end of this year, a key executive told Moneycontrol.

On Monday, Wipro Consumer Care announced the acquisition of Kerala-based spice manufacturer Nirapara, marking its entry into the food business.

“Nirapara is our 13th acquisition and gives us a clear foothold in the spices and ready-to-cook segment. We are excited to enter a large segment that is expected to proliferate,” Agrawal said.

Opportunities galore 

The investments are helping startups partly overcome a funding winter caused by global economic and geopolitical factors that are forcing private equity and venture capital firms to stay away from investments this year.

Wipro’s Agrawal said the D2C food business is a potentially huge market. For instance, the spices segment alone is a Rs.70,000 crore business, of which the organized sector has a share of just 12 percent.

Even for Aditya Birla Group’s TMRW, the eight new partnerships it has formed have helped it achieve an annual run rate of more than Rs 700 crore and the company claims to be on track to increasing that to Rs 1,500 crore over the next 12 months.

The India D2C report 2022 launched by Shiprocket in collaboration with the Confederation of Indian Industry said the D2C market size in India is around $12 billion.

“India is expected to be the third largest economy by 2039 and D2C market is poised to grow to $60 billion by 2027…D2C is scaling rapidly and brands are reaching Rs 100 crore of revenue milestone in just 3-5 years of launching,” the report said.

A host of D2C enablers in the ecosystem -- from product design to logistics management and customer support – are helping lower entry barriers for startups.

While investors and FMCG companies seek to grab a bigger share of the D2C ecosystem, deal flow is still slow.

“While we are staying cautious in this environment, we are advising teams to access deals that make sense and have the best path to profitability and growth,” Wipro Consumer Care’s Agrawal said.