HUL set for health and wellbeing foray with two investment deals

To acquire majority stake in OZiva maker, 19.8% in Nutritionalab

Hindustan Unilever (HUL) is set to enter India’s health & wellbeing category by acquiring stakes in two companies in this space. HUL on Thursday announced buying a majority stake in Zywie Ventures, which sells plant-based and clean-label consumer wellness brand under the name OZiva, for Rs 264.28 crore. It will also indirectly acquire its subsidiary Zenherb Labs.

In another transaction, the owner of Horlicks will take up a 19.8 per cent stake in Nutritionalab, which houses its products under the brand name Wellbeing Nutrition, for Rs 70 crore.

The health & wellbeing category is a fast-evolving category in India with a potential market size of Rs 30,000 crore over the next four-five years, Ritesh Tiwari, CFO, HUL, told analysts during a conference call after announcing the deals.

Zywie Ventures’ full acquisition would be done in two tranches – first, it will pick up a 51 per cent stake in Zywie Ventures which HUL intends to complete by January 2. The remaining 49 per cent would be considered after three years from the date of completion of the first transaction, which is subject to any extension according to the terms of transaction documents.

Both transactions are a combination of primary infusion and secondary buyouts. HUL will also have board representation in both companies. For Zywie Ventures, HUL said it will provide the company with the necessary capabilities and support to scale up.

Also, both companies will continue to operate under their respective founders.

OZiva was launched in 2016 as a plant-based, and clean-label consumer wellness brand focused on spaces, such as lifestyle protein, hair & beauty supplements and women’s health, HUL said in its release.

“It (OZiva) is a digital-first brand with an omnichannel approach, available on its website (D2C), digital marketplaces, and offline stores where its presence is growing. The company has a strong in-house R&D team comprising PhDs, phytochemists and biotechnologists,” HUL said in its release.

Wellbeing Nutrition was founded in 2019. Its product range includes Melts (oral thin strips), Slow (slow-release capsules), and marine collagen powder focused on spaces, such as beauty, everyday health, gut health, and sleep. This acquisition is expected to be completed by January 23.

“They have a presence in D2C and digital marketplaces, and are expanding in offline retail channels,” HUL said in its release.

Zywie Ventures saw its revenue at Rs 124.17 crore in FY22, up from Rs 72.11 crore in FY21. Nutritionalab reported a revenue of Rs 19.4 crore in FY22.

Sanjiv Mehta, MD & CEO, HUL, said in the release: “We are delighted to welcome OZiva and Wellbeing Nutrition to the HUL family and our portfolio of purpose-led brands. These strategic investments give us an entry into the fast-growing health & wellbeing category. They align strongly with our mission to improve the health and wellbeing of consumers and empower people to take charge of their health through solutions that they can trust.”

Mehta also said: “I strongly believe that HUL is well-positioned to support further scale-up of these businesses through our R&D, market development, distribution capabilities, and Unilever’s global health & wellbeing expertise.”

Tiwari in the release said HUL has a successful track record of building categories through market development. “We are excited to work with the founders of OZiva and Wellbeing Nutrition to grow the businesses further by leveraging our complementary expertise and capabilities,” said Tiwari.

In the conference call with investors, Tiwari said: "For future growth opportunities and future high growth spaces, we will address that through a combination of both organic and inorganic routes."

Aarti Gill & Mihir Gadani, founders of OZiva, said: “As the next step in this journey, with OZiva’s focus on innovation in the space of health & wellbeing and HUL’s strong capabilities in category development and distribution, we believe we can together create a stronger purpose-led brand that brings us closer to our vision and touch more lives around the world.”

In the release, Avnish Chhabria, founder & CEO of Wellbeing Nutrition said that this partnership will help scale up Wellbeing Nutrition by leveraging HUL’s reach and capabilities and become a lifestyle wellness brand of choice.

Earlier this year, Mehta told Business Standard in an interview with Business Standard that he considers health, hygiene and wellbeing the new areas of growth for the fast-moving consumer goods (FMCG) major over the next five years.

Cost & opportunity

• Rs 264.28 crore HUL to pay for 51% stake in Zywie Ventures 
• 49% to be acquired by HUL after the expiry of a 3-year period (subject to extension) 
• Rs 70 crore HUL to pay for 19.8% stake in Nutritionalab
• Rs 124.17 crore the turnover of Zywie Ventures in FY22; the figure was Rs 19.4 crore for Nutritionalab
• Rs 30,000 crore to be health & wellbeing market in 4-5 yrs, according to HUL executive