You can be on Entrepreneur’s cover!

Why Are FMCG Giants Adding D2C To Its Cart? According to a Mordor Intelligence report, the total addressable D2C market in India is forecast to hit $100 billion by 2025. The opportunity is so lucrative that traditional FMCG companies such as Dabur, ITC, Marico, Wipro Consumer Care & Lighting, Parle Agro are trying their luck in the space either by acquisitions or starting their own digital first brands

By Shrabona Ghosh

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.


"We had a Flipkart moment," said Suhasini Sampath, co-founder, Yoga Bar, describing the euphoria when the acquisition deal with legacy brand ITC was finalized. "I believe the ITC acquisition of young brands will become a defining moment in the history of startups and corporates just the way the Flipkart-Walmart deal opened a lot of doors for the entire ecosystem," she added. ITC is set to acquire Direct-to-Consumer (D2C) snack brand Yoga Bar and the company is aggressively scaling young brands to amp up the D2C offerings.

A relationship can thrive only if feelings are mutual, and that precisely is the point of a report by McKinsey which states that startups can benefit from corporate funding, resources and customer access, whereas corporations need to innovate to stay ahead of competitors and access new technology. "This makes it an important time for collaborations between corporates and startups," noted the report. While this might be an old report, the essence remains: A symbiotic relationship between startups and corporations.

The D2C space is one such area where FMCG companies have been trying their luck with either acquisitions of startups or investments…but is it symbiotic? Over the years large conglomerates have evolved their ways of dealing with startups. While some corporates believe in taking minority stakes in startups and helping founders with industry expertise, for other conglomerates, acquisition is an option only if the value system aligns and therefore be a mutually beneficial relationship.

"With any acquisition, the first priority of Marico is to look at companies that align with its values and would therefore be a mutually beneficial relationship," said Saugata Gupta, managing director & CEO, Marico Ltd.

The D2C (direct to consumers) market in India is witnessing an upsurge, these digital-first brands use online platforms to sell directly to the consumers without the traditional distribution network of wholesalers, stockists and retailers. According to a Mordor Intelligence report, the Indian D2C market size was estimated to be at $55 billion in 2022. With an expected CAGR of 34.5 per cent during the 2022-2027 period, the total addressable D2C market in India is forecast to hit $100 billion by 2025.

Dabur India, a consumer goods company, has soft-launched its own D2C channel called DaburShop. DaburShop has currently been launched with a limited assortment of products and is working on progressively increasing the range as it intends to provide consumers access to the entire Dabur range of products, including its Ayurvedic medicines. "This will become a one-stop shop of the entire Dabur range, including our Ayurvedic medicines portfolio that's not easily available on the e-commerce marketplace. DaburShop will not just be restricted to our widely distributed products, we intend to use DaburShop as a platform for special digitally curated or digital first brands and products that would be launched from the House of Dabur," said Mohit Malhotra, CEO, Dabur India.

Dabur today has one of the highest penetrations in the FMCG industry in India with products reaching 6.9 million retail outlets across the country. With DaburShop, the company aims to deliver to almost 85-90 per cent of pin codes within 24-72 hours, "We are working on progressively increasing its coverage across towns," Malhotra added.

Some of the previous launches in the e-commerce space were Real Health range of Superfood Seeds, Dabur Baby Diaper, Dabur Cold-Pressed Mustard Oil, Dabur Ghee and Vatika Select range of shampoos, to name a few. "So, e-commerce is a big future pillar of growth for us," said the CEO of Dabur.

ITC, a conglomerate with a diversified presence across industries, has invested in D2C brands such as Mother Sparsh, Mylo and recently in YogaBar. Customisation is another key vector which ITC is increasingly working on to drive growth, currently, under its food section, it has Aashirvaad 'Meri Chakki' and in personal care it has ITC Engage Fragrance Finder and Smart Skin Advisor, likewise, it has, a platform to customize notebook covers. "Furthermore, through our own D2C platform ITC store, we are now operational across 20,000 pin codes making our entire range of products directly available to consumers. We are also now present on ONDC - government led digital platform and we believe, when streamlined, this will certainly enable us to create new touch points," said Shuvadip Banerjee, chief digital marketing officer, ITC Ltd, adding that with the D2C boom, penetration into Tier III/IV cities, have been witnessing encouraging growth.

These Investments enable ITC to augment its future-ready portfolio which is in line with the 'ITC Next' strategy articulated by chairman Sanjiv Puri that focuses on evolving consumer needs.

Why Do Companies Prefer D2C Model?

Large FMCG brands have an opportunity to sustain a completely new operating model through the D2C mindset. D2C ceases to become just another sales channel but opens pathways to build direct dialogues with end consumers which hitherto was obscured by multiple intermediaries and intermittent communication. So, how come big companies remove purchase friction and make the transaction a win-win proposition for the consumer and company? "Enabling factors for large brands will be to build a large cohort of loyal purchasers (vs. fringe/occasional buyers) by moving impulse purchases/ shopping lists with automated subscription services. D2C also drives lower landing prices for the end consumer," said Ravi Kapoor, partner and leader, Retail & Consumer, PwC India.

D2C helps in building rich first party data and polish marketing mix models' basic attribution through the entire marketing funnel. Talking about the importance of having a D2C website for traditional companies, Kapoor said, "It helps in pristine consumer experiences, show case the long tail portfolio, build first party data to drive better consumer insighting, help strengthen tie ups with retailers through enabling hyper local deliveries and build deeper end consumer engagement through gamification."

Going D2C strengthens two of the most fundamental capabilities in the FMCG space: consumer insights and brand trust. "By directly interacting with the consumers, the brand gets more control to build trust that enhances loyal/high-frequency consumers and gets profitable revenues," he added.

Wipro Consumer Care – Ventures is the venture capital arm of Wipro Consumer Care & Lighting. It started its VC fund a few years ago with the aim of investing in innovative and disruptive startups in the consumer space. Since then it has done 10 investments, including MyGlamm (BPC), Ustraa (male grooming), Power Gummies (vitamin supplements), The Ayurveda Co (Ayurveda based personal care), Soulflower (natural personal care), Gynoveda (women's health). One investment has also been made in a south east Asia based startup and another in a Singapore based VC.

"While we take minority stakes in our portfolio, our aim is to help, support and nurture the startups with our industry knowledge and expertise wherever possible. I think the boom in D2C will continue and one will see many more models emerging in the years to come. The entrepreneur ex-system has developed well with strong passion and knowledge which will drive outcomes. We continue to look for interesting opportunities in these spaces," said Sumit Keshan, managing partner, Wipro Consumer Care – Ventures.

Old Wine In New Bottle

While e-commerce has grown rapidly due to smartphones, technology and the demand for convenience, before the pandemic, customers preferred visiting stores to purchase items. However, since the pandemic, the e-commerce platform has become an integral part of people's lives, particularly for purchasing FMCG products. Consumers and households that did not normally adopt online platforms to buy groceries, suddenly started utilizing them.

E-commerce has been one of the channels that Parle Agro, India's largest beverage company, has been using to sell its products even before other companies became a part of the game, however, for a very long period it did not offer significant growth opportunities for beverages until the pandemic. "In 2020, we ventured into e-commerce in a big way. We did not look at it as a platform to leverage only during Covid-19, but as an important channel that will contribute to our sales in the future in a significant way. We collaborated with national, regional and niche e-commerce players with a long-term vision to not only maximize our products' reach and grow our business but increase the contribution of the beverage category to e-commerce players as well, thus creating value for all," said Nadia Chauhan, joint managing director and CMO, Parle Agro.

Over the last three years, the company has seen healthy growth in demand for brands on e-commerce. Parle Agro is witnessing massive growth of brands on quick commerce platforms. In quick commerce, it is experiencing triple-digit percentage volume growth and it plans on capitalizing on this opportunity and growing 4-5 times by summer of next year. "Consumers often purchase beverages impulsively which makes quick commerce an ideal platform for us. Our aggressive strategy and increased investment in this platform will drive further growth in the quick commerce sector," she said, adding that they are looking at an SKU-based approach offering specific pack sizes and products for e-commerce platforms to cater to distinctive consumer needs and drive in-home consumption.

FMCG giant Marico is on a digital transformation journey and aims to build a portfolio of at least three digital brands, either organically or inorganically, with a combined turnover of INR 450-500 crore by FY24. In line with this, it has chosen to keep the operating models of legacy brand Marico and the digital brands separate. "I believe, what is important is we build brands which are based on long term sustainability, profitability and potential growth, as opposed to just top line growth and pathway to profitability," said Saugata Gupta, managing director & CEO, Marico Ltd.

The company has made strategic investments in companies such as Beardo and Just Herbs, and last year, we acquired a majority stake in True Elements, a digital-first breakfast and snacking brand. Over the next 12 to 24 months, it plans to add its own portfolio of digital-first brands including Pure Sense, a line of bath and skin care products, and Coco Soul, a range of cold pressed coconut oils.

Boost To Different Categories

With the pace at which the Indian economy is expected to grow, the market will have enough space for many D2C brands to not only co-exist but also to make it big and in many cases even solve niche consumer pain points profitably.

Daily consumption categories such as fresh milk,curd, bakery, biscuits, packaged water, juices, might see a boost. "Due to Inflationary pressures, FMCG volume growth is under a lot of pressure. However, some product categories such as premium personal care products, healthy foods (Millets, super foods etc.) are expected to do well in 2023-24," said Anand Ramanathan, partner, Deloitte India.

Additionally, heavy spending categories such as pulses and edible oil where loyalty can easily be enabled through better value would do good. "High involvement categories where variety is key such as beauty, apparel, spectacles, accessories; health and wellness categories which have high brand loyalty; electronic category where features can be easily discerned and user generated content can influence purchase are the D2C categories that would thrive in 2023-2024," said Ravi Kapoor, partner and leader, Retail & Consumer, PwC India.

In India, with roughly 700 million Internet users and 190 million online shoppers, the country has the third-largest digital shopping base after the United States and China. The D2C gives an experience of freedom: Companies using the channel inevitably develop an emotional connection with their customers, informed through a distinctive brand identity and an apparent value offering which ultimately helps in understanding consumer needs.

Shrabona Ghosh


A journalist with a cosmopolitan mindset. I lead a project called 'Corporate Innovations' wherein I cover corporates across verticals and try to tell stories on innovations. Apart from this, I write industry pieces on FMCGs, auto, aviation, 5G and defense. 

You Won't Have a Strong Leadership Presence Until You Master These 5 Attributes

If you are a poor leader internally, you will be a poor leader externally.


94% of Customers Say a Bad Review Made Them Avoid Buying From a Brand. Try These 4 Techniques to Protect Your Brand Reputation.

Maintaining a good reputation is key for any business today. With so many people's lives and shopping happening online, what is said about a company on the internet can greatly influence its success.

Business News

Samsung Makes 6 Day Workweeks Mandatory for Executives as the Company Enters 'Emergency Mode'

Samsung said its performance "fell short of expectations" last year. Now executives are required to work weekends.

News and Trends

IT Firm Happiest Minds Technologies Acquires Macmillan Learning India

The deal will likely be finished by April 30 and will cost INR 4.5 crore.

Resumes & Interviewing

Build a Better Resume with This $35 Subscription

AI Resume Builder promises to help you apply to jobs twice as fast.

Starting a Business

6 Effective Funding Strategies for Startups

Navigating startup financing is complex. Entrepreneurs find themselves at the crossroads of innovation and survival, where a single decision can either fuel their dreams or extinguish their aspirations. Here we look at six ways you can finance your startup to support your business for long-term success.