Godrej Consumer Products is charting a different growth path and will not invest in direct-to-consumer (D2C) companies like many of its peers have been doing.
The FMCG major, which has slowed down on acquisitions since 2018, has stated that it would use its funds to invest in entrepreneurs and acquire their businesses.
Our approach is different. Rather than investing in 3-4 companies, we will invest in an alternate investment fund that will use the money to invest in D2C brands. We will oversee and will be in direct touch with those companies to learn and to have partnerships, said Sameer Shah, Chief Financial Officer, Godrej Consumer Products Ltd.
The Mumbai headquartered company will form a team that will be focused on the development of the brand through its investment fund.
We realise that it requires a different skillset to not just acquire but also to operate owing to the size of the business, Sameer said.
D2C impact on FMCG business
While the company believes that the impact of D2C companies on traditional FMCG operations will not be significant but a destructive product could cause an impact.
FMCG consumers are brand loyal and it is unlikely that they switch brands unless there is a ‘destructive’ and smartly priced products from D2C companies. It also depends on how the D2C models eventually change. Most of them are burning cash at this point and we are observing the impact of the funding winter, Sameer said.
The company is planning to expand its operations and acquisitions in the domestic market.