The India consumption story is one of the most chased themes for investors in the alternative asset class and M&A-savvy corporates driven by the high share of wallet these product and service brands command. With the Indian economy growing at nearly 8% and domestic consumption being largely resilient to the downturn shocks, this story has become even more compelling.
More than bread-n-butter brands like soaps and shampoos, what is really catching the fancy of investors are branded apparel, cafes, hair salons, book store, juice junctions, online coaching services, spas, restaurants and so on. Clearly, the consumption behavior of the growing SEC A urban Indian is driving the mushrooming of new-age brands that are present in interesting niches.
Analysing the deal data from VCC Edge, a financial research platform from VCCircle, investor interest is very high in brands in apparel, retail, hospitality, OTC drugs and lifestyle-driven products and services. And, pureplay FMCG brands lean towards M&A play given their attractiveness to strategic investors. So, what is really happening is that new consumption patterns are driving new consumer brands. For instance, new brands are born in the erstwhile commoditised or unorganized domains such as cab services or coaching classes.
While lifestyle consumption is throwing up new-age service brands, it is still product brands that are at the heart of traditional businesses. Urban consumption has a distinct lifestyle skew be it leisure, wellness, entertainment, F&B and fashion. And, that's where the early stage growth capital is headed. But, growth in traditional FMCG and retail remains intact given India's wide base of pyramid. A lot of strategic money and late stage/buyout funds are chasing this end. The breadth of opportunities (for investors) in domestic consumption is so compelling that it can find a parallel possibly only in China.
According to Motilal Oswal Wealth Creation Study (2004-09), the most consistent wealth creators are consumer-facing businesses with stronge franchise. Businesses like FMCG, pharma and banking are
non-cyclical and have a high degree of customer captivity. With consumerism in India poised to rise, these businesses should continue to create wealth consistently.
So, which areas of the Indian consumption story are most attractive? Will service brands march past traditional FMCG product brands in terms of investor interest? What are the ROI dynamics between product and service brands? Which are India’s future brand giants in the making? How are brands valued? Which are the areas where discretionary spending is high? VCCircle will help you find answers to the consumer psyche and buying behavior.
With over two dozen speakers drawn from an ecosystem of brand gurus, investment pros, FMCG czars and today’s Davids (challenger brands), the VCCircle brand summit will capture defining trends of the Indian consumption story, as it continues to evolve.