Investors gain big appetite for small consumer brands

Time of India

4 days ago

About a dozen small, regional
consumer brands
are either in the process of raising
private equity funding
or are being pursued by investors keen to acquire minority stakes, executives said.
These include Ahmedabad-based
frozen food maker
Iscon Balaji,
skincare brand
Dermabay, condiment and noodle brand Moi Soi, Raipur-based Zoff Spices, and soft drink maker Bindu Jeera.
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The intense activity in small and mid-sized companies comes at a time when their larger rivals are trailing in finalising acquisitions and broader growth plans as they battle with sluggish demand in India's major cities.
Several mid-sized funding deals were finalised in recent weeks including snacking brand Khari Foods, desserts chain FES Café, and moss-based supplement maker CosMoss. Chandigarh-based Lahori Zeera and dairy and daily essential brand Country Delight too have raised more than ₹200 crore each.
'We plan to raise ₹5-7 crore over the next two quarters from a clutch of
angel investors
and family offices to scale our presence and accelerate innovation,' said Divneet Kaur, co-founder of Dermabay.
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Regional Foundations
The Ludhiana-based maker of clinically-created skincare products started operations in 2022-end.
Ceres Foods, which sells noodles, ready-to-cook meals, and condiments under the Moi Soi range, is raising its first institutional round of Rs 30 crore, said its director Deb Mukherjee. 'The funds will be used to fuel the next phase of growth and scale Moi Soi into a Rs 500 crore brand over the next three years… as a bootstrapped venture, we've gone up against legacy players with limited resources, reaching profitability along the way,' said Mukherjee.
Executives attribute the surge in investor interest to a combination of factors.
'We thought premium was about affluent metros but it's very much visible in smaller towns. Also, quick commerce and e-commerce have reduced the advantage of legacy brands on distribution and availability,' said Kannan Sitaram, co-founder and partner at Fireside Ventures, an early-stage fund, which has invested in Jaipur-based dairy firm Frubon, teen-care beauty brand Sammmm, and Chennai-based Sweet Karam Coffee, among others. 'It is this opportunity that investors including us are looking at—to build brands based on regional foundations.'
Industry trackers said while the bigger consumer transactions have become rare with large companies grappling with slowing sales, especially in cities, it is the smaller ticket deals that have surged.
Total deal volumes rose 26% year-on-year in Q2 of the current calendar, though values dropped to the lowest since Q4 2022, reflecting a shift toward smaller-ticket transactions, consulting and audit firm Grant Thornton Bharat noted in its 'Consumer & Retail Dealtracker' report for the June quarter. The report added that it recorded 120 deals valued at $884 million in the quarter, including IPO and QIP activity. While palm oil-free snacking company Khari Foods raised Rs 3 crore in seed funding led by Meri Punji IMF last month, Gurugram-based dessert cafe brand FES Café too raised Rs 3 crore in seed funding from serial entrepreneur Aakash Anand and his venture Wolfpack Labs.
CosMoss, a wellness brand focused on sea moss-based supplements, also raised undisclosed seed funding.
Executives at legacy companies, including
Hindustan Unilever
,
Nestle
and
Tata Consumer Products
, have called out the threat from smaller brands in recent interviews and earnings calls.
'Smaller companies are turning more noticeable than the big giants, they are broad-basing consumption and also keeping larger companies from getting complacent. I think it's good for the industry,' said Suresh Narayanan, outgoing managing director at
Nestle India
. The instant noodles category itself has been exploding with dozens of regional brands, many of which are competing on price.