Mumbai: India is producing more ‘insurgent’ consumer brands than ever, but only a handful are growing into large-scale businesses. Most of these independent brands continue to struggle to break past the ₹100-250 crore revenue mark, according to the fourth edition of the annual India Insurgent Brand Report by consulting firm Bain and venture capital fund DSG Consumer Partners set to release this week.
The number of insurgent brands in the report’s Insurgex Index—defined as brands with at least ₹100 crore in annual revenue, over 30% CAGR growth in a three-year period, and more than 1.5x capital efficiency—grew from 29 in FY24 to 39 in FY25.
Newer entrants in the list include a number of packaged food and beverage brands such as healthy snacking and staples brands Farmley and The Health Factory, and travel and hospitality startups including budget hotel chain FabHotels and restaurant chains The Belgian Waffle Co and Burma Burma.
DSG and Bain covered the travel and hospitality sector in the report for the first time this year. Overall, Bain and DSG define insurgent consumer brands as those with over $3 million in total fundraising since 2015 and a minimum of ₹100 crore in annual revenue.
“The F&B sector started with only two brands in the first year of this report, but now we have nine brands, and this sector is the largest contributor by revenue to the Insurgex Index,” Hariharan Premkumar, managing director and head of DSG Consumer Partners India told Mint. “One of the biggest reasons [for the success of F&B insurgent brands] is the rise of quick commerce. Before quick commerce showed up, packaged F&B was a largely offline business and the likes of Flipkart and Amazon didn’t work for new brands because ticket sizes in grocery were too small.”
Packaged staples, snacks and other grocery items are tracking the same wave of growth that independent beauty and personal care brands saw in the pre-pandemic years, says Rohit Shankar, partner at the consumer products practice at Bain & Co India.
“The net unit economics for BPC and F&B are similar—gross margins are higher in BPC but so are advertising spends. However, the principles of scaling and winning models are similar,” Shankar said. "Quick commerce has done for food, what marketplaces and beauty verticals did for beauty 2016 onwards.”
Margins in packaged staples and snacks tend to be lower at 10-20% while in the beauty and personal care business, they can start much higher, at over 25% for mass market brands.
The ₹500 crore ceiling
However, even as insurgent brands grow in numbers and expand to new categories, only a few are able to scale past ₹100-250 crore in annual revenue, data from the report shows.
Of the 56 insurgent brands founded before 2015, only a third are at over ₹500 crore revenue, while one third continue to operate at ₹250 crore revenue or below. Among the 65 insurgent brands founded between 2015-2020, arguably the height of India’s VC-funded consumer brands wave, only seven have crossed the ₹500 crore revenue mark, while more than half remain below ₹250 crore.
Shankar, however, said that the total revenue generated by insurgent brands has crossed $7.5 billion by Bain and DSG’s calculations, outperforming the scale and growth rates of many major, listed, consumer-facing companies.
“The number of insurgent brands crossing ₹500 crore is higher now,” Shankar said. “This isn’t as much a natural ceiling, as it is typically a place where their playbook needs to evolve for the next wave of growth–across audience, brand building, pack price and channel. The scaling journey is new for these brands. Even when incumbents’ new brands grow past certain thresholds, they are forced to pivot.”
Attractive buys
Yet, a large number of these VC-funded consumer brands continue to seek buyouts from large fast moving consumer goods (FMCG) firms.
Just this week, French beauty major L’Oreal acquired Innovist, owner of personal care brands Bare Anatomy and Chemist At Play, for an undisclosed amount. Bare Anatomy is one of the new entrants in Bain-DSG’s Insurgex Index this year.
This year alone, listed FMCG major Marico Ltd acquired snacking brand 4700BC and protein and supplements brand Cosmix, while rival Emami Ltd acquired IncNut Digital (owners of personal care brands Vedix and SkinKraft) and Axiom Ayurveda, makers of the beverage brand Alo Fruit. Late last year, Dabur Ltd set up a ₹500 crore venture fund to acquire new brands; this year it acquired a minority stake in luxury beauty company RAS Beauty. Bigger rivals ITC Ltd and Hindustan Unilever have also been active, acquiring brands across categories. ITC has acquired staples brand 24 Mantra and the ready-to-eat and meats brands Prasuma and Meatigo last year. Meanwhile, HUL spent nearly ₹3,000 crore to buy out personal care brand Minimalist in one of the largest such deals in India’s packaged consumer industry early last year.
“In our previous reports, we have pointed out that 80% of consumer exits in India are to strategic investors,” DSG’s Premkumar said. “That is not very different from global markets. Incumbents have historically innovated through acquisitions and when we write a cheque, our base case is also a strategic exit.”
However, Premkumar and Shankar added, strategics are willing to buy out smaller, early-stage companies too, with revenues of less than ₹100 crore, if it means access to a fast-growing consumer niche.
“These insurgent brands have been able to go after spaces which are too small or too niche today for large companies to go after,” Bain’s Shankar said. “For instance, Farmley has built a space in snacking, Minimalist did it for serums, and Dot & Key for sunscreens.”