ITC to obtain Yoga Bar; to enhance appearance in healthy foods space

The Direct-to-Consumer (D2C) brand Yoga Bar is owned by Sproutlife Foods Pvt Ltd (SFPL), which was acquired by the diversified conglomerate ITC. According to a release, ITC has signed a legally binding term sheet to buy all the shares of SFPL over a three- to four-year period. By March 31, 2025, it will first buy a 47.5 percent share in SFPL in tranches. The remaining stake will then be bought based on pre-established valuation standards, subject to other terms outlined in the contractual contracts.

An "initial investment of Rs 175 crore will be made through primary subscription and secondary purchases for the acquisition of 39.4 percent 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 percent shares taking the shareholding to 100 percent would be determined based on pre-agreed valuation criteria and subject to fulfillment 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. In FY22 SFPL, the startup engaged in the 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 annualized 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 percent stake in Zywie Ventures, a wellness company that owns the OZiva brand, for a consideration of Rs 264.28 crore. Besides, HUL has also announced the acquisition of a 19.8 percent stake in Nutritionalab Pvt Ltd (Wellbeing Nutrition) for a cash consideration of Rs 70 crore.