Insurgent brands see $4.7 bn inflows from 2018 to 2022
1 min read 01 Jun 2023, 05:50 PM ISTPremiumisation and new categories creation, which are projected to contribute to 45% of consumption growth from 2022 to 2030, are the sweet spots for insurgent brands
PremiumNew Delhi: New, emerging brands across food and beverages, apparel, and beauty and personal care attracted over 75% of $4.7 billion in private equity and venture capital funds from 2018 to 2022 driven by an uptick in urban demand for such brands, according to a report by Bain & Co. and DSG Consumer Partners.
To measure funding received, the report titled The Insurgent Consumer Brands Playbook, looked at insurgent brands incorporated after 2007 and with total funding of over $3 million since 2015. These brands started online, offering innovative products and building new categories.
“Premiumisation and new categories creation, which are projected to contribute to 45% of consumption growth from 2022 to 2030, are the sweet spots for insurgent brands. In our study of about 150 Insurgent brands, we have seen them target untapped consumer needs and grow twice or thrice faster on an average as compared to market growth across categories. Successful insurgent brands in India have distinguished themselves by driving consistently high revenue growth while concurrently maintaining capital efficiency," Dhruv Aggarwal, partner, Bain & Co.
Urban consumers seeking newer brands and their benefits have spurred growth of such brands. Over the last four years, there has been a significant rise in number of upper-middle and high-income consumers, with 157 million new such consumers added.
As a result, these new brands have either created niche categories or given competition to incumbents.
Indian brands have taken approximately six years to achieve an annual revenue of ₹75 crore. However, once this milestone is reached, subsequent growth came quicker with a majority of the brands reaching ₹200 crore annual revenue mark within a span of next two years, the report said.
“Growth can be quicker after that, once solid fundamentals are created. Secondly, early focus on gross margin is crucial for long-term profitability, overcoming competition and growth pressures. The data validates the maxim that brands die with the gross margins they are born with. Thirdly, entering the Ebitda minus 25% zone within three-to-four years is a vital milestone towards Ebitda profitability. It is the first important milestone towards profitability. Ideally brands should get there sooner," said Hariharan Premkumar, managing dire-ctor, DSG Consumer Partners.
