Emami's role as strategic investor in D2C set-ups is more of a mentor and not of a micro-manager: Harsha V Agarwal

In lieu of the Covid-19 pandemic, there are certain trends that have recorded a constantly increasing momentum, this includes digital mediums, e-commerce, and even omnichannel retail.

According to a survey conducted by Statista, the D2C market in India ranks third after the United States and China in the backdrop of its 700 million internet users and 190 million online shoppers.

As a matter of fact, many big players operating in the FMCG industry - which also forms the backbone of Indian advertising - have resorted to expanding their categorical reach through either diversifying their product lines or acquiring stakes in new-age D2C start-ups that operate in those lines.

In the views of Harsha V Agarwal, Vice-Chairman and Managing Director, Emami, the D2C category is an emerging growth segment in the FMCG space and therefore their strategic investments in ‘The Man Company’ in 2017, followed by ‘Brillare’ in 2018, finds its roots in the company’s strategy of leveraging opportunities brought about by the rapid digitalisation.

Agarwal also emphasised that the future for marketing and distribution is digital, and strategic investments in D2C brands help the FMCG player to be present in categories where they are currently not present.

“The promoters of D2C companies bring in a lot of passion with a strong understanding of the online and digital space which are necessary for growing the business aggressively and we extend our support in terms of resource, expertise and knowledge to them and do not get involved in its day-to-day operations,” he said.

He furthermore also went on to add that it is in the backdrop of such partnerships that big players sometimes get an opportunity to raise their stakes or even acquire relatively new set-ups.

“Currently, both Brillare and The Man Company have now become our subsidiaries as we are now the majority stakeholders,” he pointed out.

Apart from having Brillare and The Man Company in its kitty, Agarwal stated that Emami has also made strategic investments in a nutrition company- Tru Native and a petcare company- Cannis Lupus, as ‘health’ and ‘wellness’ are the two buzzwords and segments that have tremendous potential for consumers today.

Commenting as to what are the key objectives that they seek out of such strategic associations, Agarwal stated that the booming D2C space offers potential growth opportunities for more players to enter the space and co-exist.

“It is not possible for one to be present in every segment and do everything on its own. Hence, we believe that this is the best way for companies like us to strike up winning partnerships with new players who are passionate about fresh brand ideas and business models and deal with new futuristic brand concepts,” he said.

Moreover, he also stated that the FMCG player is always open to inorganic opportunities and partnerships as long as there is a certain business synergy and potential for growth.

“Irrespective of the pandemic outcome, Emami had already envisaged the future of D2C in consumer marketing and had already entered into inorganic strategic partnerships or made investments in organic D2C initiatives,” he added.

Additionally, Agarwal also stated that the FMCG company had resorted to further increasing their stakes in the D2C set-ups - including Brillare (in October 2021) and The Man Company (in Q2 of FY23) - so that they become a subsidiary of Emami.

The FMCG player also has its own e-commerce platform which goes by the name of ‘Zandu Care’, and has been a major initiative in enhancing the direct consumer connection and penetration for the company’s healthcare portfolio. It offers detailed product information, a direct brand interface and helps the consumers with their queries along with doctor consultations etc.

“Since its launch in July 2020, this single brand e-store has witnessed encouraging consumer response registering more than a crore visitors, offering a significant number of consumer data,” he said.

Nonetheless, Emami’s D2C operations for ‘Kesh King’ through the official website also appear to be operating in a high involvement category.

Upon being questioned as to what is the rationale behind big players landing in such strategic associations in the D2C space, Agarwal said, “It is essential for brands like Emami to be present in emerging segments and new-age businesses, even if in a small way that has synergy with the brand’s current line of business and future growth prospects.”

“We believe that many new-age D2C players have new ideas which companies like us can support with our industry experience, investment power and infrastructure strength so that it’s a mutually win–win scenario,” he said on a concluding note.

As part of being a strategic investor, Agarwal stated that Emami’s role in these new-age D2C platforms is more of a mentor as compared to micro-managing these platforms, as the FMCG player believes that it compliments both- the promoters’ passion and the commitment to their own businesses.

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