Legacy FMCG giants are no longer content building brands from scratch. ITC, Marico, and HUL are snapping up digital-first startups but each is doing it very differently.

There’s a quiet arms race playing out in India’s consumer goods sector, and the weapons of choice are startup acquisitions. Legacy FMCG firms, long accustomed to building their own brands over decades, are increasingly writing cheques for digital-native challengers. ITC is among the most active players, but its strategy is deliberately unhurried, and that’s exactly the point.

ITC’s Selective Shopping List

Over the past few years, ITC has built a portfolio of stakes and acquisitions that span nutrition, organic food, frozen meats, and baby care. These aren’t impulsive buys; each reflects a deliberate effort to enter categories where ITC lacks internal capability or where consumer trust is hard-won.

The results are starting to show. Yogabar and Mother Sparsh together grew 60% year-on-year in Q3 FY26, a number that would be hard to manufacture internally at that pace.

Why Every Legacy Brand Is Doing This

ITC’s acquisitions don’t exist in isolation. Across the sector, the logic driving this consolidation wave is the same, even if the execution differs. There are five structural forces at play:

Premiumization is real and large. India is expected to add 40 crore upper-middle and high-income consumers by 2030. These shoppers don’t buy the same products their parents did. They seek specialized nutrition, science-led skincare, and wellness brands categories where D2C startups, unburdened by legacy portfolios, have moved fastest.

Core growth is slowing. Traditional FMCG volume growth dropped from 6.6% in FY24 to 4.2% in FY25. Acquisitions aren’t just about excitement they’re about plugging genuine holes in growth portfolios.

D2C has already won categories. Indian D2C brands collectively crossed $5 billion in revenue in FY24. Legacy firms have concluded that building competitive brands in these spaces from scratch would take longer and cost more than simply acquiring the winner.

Digital capabilities are hard to hire for. Performance marketing, social commerce, and community-building are competencies that startups develop by necessity and that large organizations struggle to cultivate internally. Acquisitions offer a shortcut.

Trust is a moat you can buy. In categories like baby care, consumer trust is accumulated slowly through consistent product safety and community reputation. Acquiring a brand that already has it is far more efficient than trying to earn it from zero.

How Acquisitions Actually Drive Innovation

Beyond the financial logic, these deals change how large companies behave. The innovation benefits are both tangible and cultural.

“The challenge isn’t buying the brand it’s preserving the agility that made the brand worth buying in the first place.”

Three Firms, Three Very Different Playbooks

ITC, Marico, and HUL are all running this same broad strategy, but their pace, sector focus, and ownership philosophy diverge sharply and those differences matter.

Marico’s goal is explicit: become a globally recognized “house of digital brands.” Its ₹1,000 crore digital portfolio is growing at 25% CAGR, and it moves to full ownership of brands like Beardo and True Elements relatively quickly once their potential is established.

HUL, by contrast, uses its massive balance sheet to make category-defining moves. Its acquisition of Minimalist for roughly ₹2,700–3,000 crore, one of the largest D2C exits in Indian consumer history, instantly gave it scaled presence in science-based skincare, an area it couldn’t have credibly entered organically in the same timeframe.

ITC’s “ITC Next” strategy is deliberately slower and more trust-centred. Rather than rapidly scaling a digital brand portfolio for its own sake, ITC targets specific gap categories where it lacks internal bandwidth, or where consumer relationships require long-term cultivation, like baby care. Its use of minority stakes and a startup fund reflects a preference for learning before committing.

The Risk No One’s Fully Solved Yet

Every legacy firm faces the same integration paradox: the very qualities that make a D2C brand worth acquiring, speed, cultural agility, digital nativity, and a willingness to lose money while building community, are qualities that large, profitability-focused distribution networks tend to erode over time.

Marico is further along in figuring this out than most. ITC, with its measured approach, is arguably buying itself time to watch others navigate that tension before making larger bets. Whether that patience is prudence or hesitation will only become clear as the decade unfolds.

What’s certain is that the old model built everything internally, distributed through modern trade, repeat is no longer sufficient on its own. The Indian consumer has moved on, and the brands following them are the ones that will define the next chapter of FMCG in India.

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