New-age consumer brands to create $50-bn listed market capitalisation by 2030: Elevation Capital

The cohort of new-age discretionary bands will grow from around $1.7 billion currently to $50 billion by 2030

Even as funding activity shows some signs of a pick-up in the Indian startup ecosystem, there is rising scepticism around the potential for new, large and profitable businesses that can be created in the consumer tech space. Mayank Khanduja, partner at Elevation Capital, the VC firm that has backed over 190 companies and deployed more than $2.6 billion of capital since 2002, however, thinks the opportunity is still large.

Mamaearth (Honasa Consumer) is the only new-age discretionary brand and the Gurugram-based company has a market capitalisation of around $1.7 billion, Khanduja told Moneycontrol. “Now, what we are saying is that by 2030, this cohort of new-age discretionary brands will grow from around $1.7 billion to $50 billion of listed market capitalisation and that will be on the back of 15-20 IPOs in the coming six years.”

The optimism is because of more spending capacity, especially in the hands of Gen Z shoppers. E-commerce penetration and the availability of credit options are the other catalysts which are spurring the growth of consumer brands.

For instance, in 2020, when Elevation invested in Country Delight, a tech-enabled fresh dairy essentials , the average spend per household was about Rs 1,500 per month but that number is now at Rs 4,000, Chirag Chadha, Principal at Elevation Capital, explained. While the average spend increased because of more assortment, Chadha said it was also because customers are showing more willingness to pay for premium products.

Pet care, leisure travel, personal care, quick service restaurants (QSRs), apparel, durables are the key categories that will create winners in the consumer tech and brand space.

Last month Moneycontrol reported that investors were lining up to back consumer startups and that the deal activity was more pronounced in that particular sector as customers are now showing appetite for new brands and are willing to experiment.

“In addition to consumer brands being responsible for a $50 billion market capitalisation, we will also have a lot of consumer services brands that will add a comparable amount, or even more, in incremental market capitalisation,” Chadha said. Urban Company, Swiggy, Zomato are a few companies from the cohort.

These were part of the findings in Elevation Capital’s report titled: “What If… We Win? Unlocking The India Consumer Tech Opportunity” which was released on April 24. The report also highlighted that India’s top 2 percent, or roughly 5 million households, will increase their pool of discretionary expenditures from $40 billion currently to $100 billion over the coming decade.

“With more disposable income in the hands of the consumer, large share of the new revenue and profit pools would accrue to the consumer tech companies,” Khanduja concluded.