India’s consumer sector is witnessing a significant wave of consolidations. The recent acquisition of Innovist by L’Oreal was but the latest in a long line of such deals. Over the last few years, several large FMCG companies have acquired digital-first brands to strengthen their presence in emerging categories and online channels. Hindustan Unilever acquired Minimalist and Oziva; Marico acquired Cosmix and 4700BC; ITC has invested in Yoga Bar; USV Pharma has acquired Wellbeing Nutrition; and Honasa Consumer has acquired men’s grooming brand Reginald Men.

Also read: Does greater online penetration destroy profitability?

At the heart of these acquisitions is a simple reality: the online channel has become indispensable for consumer companies. India’s online penetration in the grocery, food and general merchandise categories remains below 5 per cent, significantly lower than in global markets. Historically this was because e-commerce had limited success in building a profitable grocery model. However, the emergence of quick commerce players such as Blinkit, Instamart and Zepto has changed the landscape. What started as a convenience-led grocery proposition has rapidly expanded into beauty, personal care, wellness and general merchandise categories. As quick commerce players increasingly encroach upon categories that were traditionally dominated by e-commerce platforms, large marketplaces have been forced to strengthen their quick-commerce offerings. The result is a rapidly expanding online consumption ecosystem that is likely to drive a meaningful increase in digital penetration over the coming decade. Against this backdrop, the recent acquisition wave reflects the changing nature of consumer demand, brand discovery and distribution in India.

Direct to consumers

The biggest driver of these acquisitions is the accelerating shift towards online commerce. Consumers today are increasingly discovering brands through social media, influencers, quick commerce apps and e-commerce platforms rather than traditional retail shelves. Digital-first brands have been the early beneficiaries of this trend, building strong relationships with younger consumers and creating communities around specific product categories. For incumbent FMCG and beauty companies, acquiring such brands offers a faster route to capturing digital demand than building online capabilities organically. More importantly, it provides direct access to consumers who are likely to account for a growing share of consumption over the next decade.

The end of easy money

During the era of low interest rates, D2C brands had abundant access to venture capital and could prioritise customer acquisition and growth over profitability. That environment has changed. Global interest rates remain elevated, cost of capital has increased, and investor attention has increasingly shifted towards artificial intelligence, AI infrastructure and deep-tech opportunities. As a result, many consumer startups are finding it harder to raise fresh capital at premium valuations. Strategic acquisitions have emerged as a logical outcome. Founders and investors get liquidity, while larger consumer companies gain access to proven brands without bearing the risks associated with building one from scratch.

Buy vs build

Another important factor is the changing pace of consumer innovation. Traditional FMCG companies are often structured to optimise scale and efficiency, whereas D2C brands are built to experiment rapidly with new ingredients, product formats, marketing campaigns and consumer trends. Categories such as active beauty, clean-label nutrition, functional foods and premium grooming have largely been pioneered by digital-first brands. Acquiring these brands allows incumbents to stay relevant among younger consumers and participate in emerging categories without spending years developing in-house capabilities. In many cases, acquiring innovation has become faster and more efficient than creating it internally.

Distribution strength

While many D2C brands have built awareness online, scaling up beyond a certain size often requires omnichannel capabilities. Customer acquisition costs across Meta, Google and e-commerce marketplaces have increased over the last few years, making digital-only growth increasingly expensive.

To become enduring consumer franchises, brands eventually need access to general trade, modern trade, pharmacies, beauty stores and organised retail networks. This is where incumbent FMCG and beauty companies possess a significant advantage. Their distribution infrastructure, manufacturing capabilities and retailer relationships can accelerate growth far beyond what a standalone startup can achieve. For many D2C brands, partnering with a larger consumer company is, therefore, not merely a financial decision but also a strategic necessity.

Omnichannel future

The acquisition wave highlights the increasingly complementary strengths of both sides.

Large FMCG and beauty companies gain access to younger consumers, digital capabilities, innovation-led brands and emerging categories. D2C startups gain access to capital, distribution, supply chain expertise and the ability to scale up nationally. Consumers ultimately benefit from stronger brands reaching wider audiences.

India’s D2C story is therefore not ending — it is evolving. The easy-money era may be over, but the strategic value of strong consumer brands has never been higher.

The future will belong not to purely online or offline players but the brands that successfully combine digital discovery with physical distribution. The current wave of acquisitions is not merely a consolidation cycle — it is also the blueprint for the next phase of India’s consumer revolution.

(Karan Taurani is EVP, Elara Capital)

Published on June 22, 2026