Kolkata-headquartered FMCG major, the ₹3,192 crore Emami, has been on an investment spree. Not surprisingly, most of its recent investments have been in direct-to-consumer brands. Its most recent investment has been in pet care start-up, Cannis Lupus Services (in which it has picked up a 30% stake) and Tru Nativ F&B, a nutrition products start-up, which it acquired in March last year. In 2021, it launched the German skincare brand, Crème 21 in India, which it acquired in 2019 and also increased its stake in Helios Lifestyle (which owns The Man Company). According to Harsha Vardhan Agarwal, vice-chairman and managing director, Emami, investing in new-age companies is a good way to foray into newer categories. "We have invested in men's grooming, premium personal care, nutritional products and pet care. Had the D2C opportunity not been there, we would have probably never entered these categories."

Agarwal admits that three-four years ago the rate of innovation of most legacy companies was rather low. "Earlier, launching and marketing a new innovation was expensive, hence one could do only a limited number of innovations. With ecommerce becoming big, brands can do many more innovations than what they would have done earlier. The cost of launching a product has reduced as an ecosystem has developed. You can develop a product, launch it on a smaller scale and you don't need a large marketing budget. You can test the water and then scale it. Those opportunities were not there earlier." He says that legacy companies a few years ago didn't understand ecommerce as well. "Now there are enough and more people in the system who are aware, every company is equipped to run this channel," he further explains.

Around 7%-8% of the FMCG major's revenue has come from ecommerce in the past year and Agarwal expects it to increase to 12% in the next couple of years. He says the data generated from its sale on ecommerce platforms coupled with the insights from its various D2C investments has also pushed the company to premiumise the mass market portfolio of legacy business. At a time when volume growth has been lacklustre due to the volatility caused by the geopolitical crisis and inflation, most FMCG brands have resorted to premiumisation.

"Ecommerce data gives us insights on the gaps in the market. We have a separate team that analyses consumer trends that we can exploit. It can even be an ingredient that a consumer is looking for. For instance, rice water is becoming popular as an ingredient for hair care. An insight like this can always be turned around into launching hair oil or shampoo containing rice water," explains Agarwal. The company has launched a premium range of hair oils under the Navaratna brand. It has also launched nutrition products for senior citizens under the Zandu brand. "Specialisations will increase going forward," he says.

Agarwal believes that D2C and ecommerce would play an important role in the FMCG major's future growth strategy, but the distribution would be omnichannel. "Just as the legacy brands are looking at ecommerce platforms, the D2C brands want to distribute through traditional distribution systems. Our strength in general trade and modern trade helps D2C, as they don’t have the wherewithal to build this kind of distribution network. Some of these companies we have invested in, we are looking at distributing their products through the traditional route."

However, investing in D2C brands doesn’t mean that they would be integrated completely into Emami. Running a D2C brand, according to Agarwal, needs a different mindset, quite different from a legacy brand. "We are not interested in directly running the business on a day-to-day basis. We may take a majority stake in them and even acquire them fully, but the scaling-up process and the investments required will be different from our traditional business."

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