ITC's Yoga Bar acquisition adds firepower in FMCG major's arsenal to take on HUL in health and wellbeing space

Diversified conglomerate ITC on Tuesday announced the acquisition of Sproutlife Foods Pvt Ltd (SFPL), which owns Direct-to-Consumer (D2C) brand Yoga Bar.

ITC has signed a binding term sheet to acquire 100 per cent shares of SFPL over a period of three to four years, said a statement. It will initially acquire a 47.5 per cent stake in SFPL in tranches, by March 31, 2025 and the balance stake will be acquired, basis pre-defined valuation criteria, subject to other conditions agreed to in the binding documents, it added.

An "initial investment of Rs 175 crore will be made through primary subscription and secondary purchases for the acquisition of 39.4 per cent of the paid-up share capital?, which is expected to be completed by February 15 2023," said ITC in a regulatory filing.

Further, a cash infusion of Rs 80 crore will be made through primary subscription, in one or more tranches, by March 31, 2025, it added.

The purchase of the balance 52.5 per cent shares taking the shareholding to 100 per cent would be determined based on pre-agreed valuation criteria and subject to fulfilment of various terms and conditions, it added.

According to ITC, it is "fortifying its presence in the Rs 45,000-crore, fast-growing, nutrition-led healthy foods space" with the proposed strategic investment in SFPL.

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In FY22 SFPL, the startup engaged in manufacturing and sale of products catering to health-conscious consumers under the new-age digital-first brand Yoga Bar, had a turnover of Rs 68 crore.

According to ITC, this acquisition is "in line with the strategy to augment the company's future-ready portfolio, the proposed acquisition will strengthen and expand its reach with innovative food products for health-conscious consumers."

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 & distribution, sourcing, product development, and digital," it added.

ITC divisional chief executive, Foods Division, Hemant Malik said: "We look forward to scaling the Yoga Bar brand offering superior and healthy consumer choices. Within a short span of time, Yoga Bar has established itself as a leading brand in the healthy foods space, driven by impactful market positioning and a range of innovative products."

Suhasini Sampath Kumar and Anindita Sampath Kumar, co-founders, said: "We are confident that this partnership will add to Yoga Bar's competitive advantage and take it to the next level from the current annualised run rate of over Rs 100 crore."

The health and wellbeing segment is a fast-evolving category in India and several FMCG (Fast Moving Consumer Goods) companies are entering the space.

Last week, FMCG major Hindustan Unilever Ltd announced the completion of the acquisition of a 51 per cent stake in Zywie Ventures, a wellness company which owns OZiva brand, for a consideration of Rs 264.28 crore.

Besides, HUL has also announced the acquisition of a 19.8 per cent stake in Nutritionalab Pvt Ltd (Wellbeing Nutrition) for a cash consideration of Rs 70 crore.

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