Why Emami is buying stake in Axiom Ayurveda
Ambala-based Axiom which started its journey in 1995, used to produce ayurvedic nasal drops and beauty products. Since then, its herbal juices business got a makeover in 2009 when it launched the brand AloFrut.
- Sep 30, 2023,
- Updated Sep 30, 2023 7:53 PM IST
Kolkata-based herbal-natural fast-moving consumer goods firm Emami Ltd. announced its latest investment bid - in a homegrown company Axiom Ayurveda. While in the recent past, all its acquisitions were in companies producing related products that could help Emami extend its existing portfolio, this time the 26 per cent stake purchase in Axiom heralds Emami’s foray into the country’s burgeoning fruit juice market.
Ambala-based Axiom which started its journey in 1995, used to produce ayurvedic nasal drops and beauty products. Since then, its herbal juices business got a makeover in 2009 when it launched the brand AloFrut.
Emami’s bid to enter a new territory - the local fruit juice market that is already witnessing fierce battles for market share - is not without rationale though. While the market is already saturated with few major brands, with enough muscle power. Yet it is the phenomenal rate of growth at which its size is increasing that draws the interest of firms like Emami, say experts. At a time, when the overall FMCG market is growing at a tepid pace - in low single digits - the fruit juice market is expanding at 14-15 per cent CAGR. Industry estimates suggest the Rs 22,000 crore market is set to touch Rs 30,000 crore by 2027.
Moreover, healthier options are growing faster within the fruit juice category. According to Harsha V Agarwal, Vice Chairman & MD of Emami, with health and wellness being the buzzword for consumers, the management foresees “tremendous potential in the segment”. “We are excited to be present in this category which is in line with our corporate growth strategy to invest in categories or brands that not only have synergy with our existing business but offer potential for growth,” he adds.
According to NH Bhansali, chief executive officer-finance, strategy and business development, and chief financial officer of Emami, eventually, Emami may raise its stake in Axion to 50 per cent (from the current 26 per cent). While that depends on the success AloFrut receives in coming years, Emami’s attempt to capture a slice of the pie won’t be without hurdles.
The Rs 22,000 crore market is fragmented amongst thousands of local fruit juice joints, who together corner nearly 82 per cent of the sales. The rest of Rs 4,000 crore is divided among three major FMCG companies. Dabur India’s brand REAL is a market leader with nearly 60 per cent of the branded fruit juice market share in its kitty. ITC’s B-Natural (2nd largest player) and PepsiCo’s Tropicana owns majority of the rest. Then there a bunch of homegrown D2C and regional brands, including AloFrut.
“It is not easy for any brand, other than the top 3 who enjoy over 85 per cent of the branded juice market - to break into the top league. However, over time and effort one may corner a significant share,” a senior executive from a top branded juice player told Business Today.
Kolkata-based herbal-natural fast-moving consumer goods firm Emami Ltd. announced its latest investment bid - in a homegrown company Axiom Ayurveda. While in the recent past, all its acquisitions were in companies producing related products that could help Emami extend its existing portfolio, this time the 26 per cent stake purchase in Axiom heralds Emami’s foray into the country’s burgeoning fruit juice market.
Ambala-based Axiom which started its journey in 1995, used to produce ayurvedic nasal drops and beauty products. Since then, its herbal juices business got a makeover in 2009 when it launched the brand AloFrut.
Emami’s bid to enter a new territory - the local fruit juice market that is already witnessing fierce battles for market share - is not without rationale though. While the market is already saturated with few major brands, with enough muscle power. Yet it is the phenomenal rate of growth at which its size is increasing that draws the interest of firms like Emami, say experts. At a time, when the overall FMCG market is growing at a tepid pace - in low single digits - the fruit juice market is expanding at 14-15 per cent CAGR. Industry estimates suggest the Rs 22,000 crore market is set to touch Rs 30,000 crore by 2027.
Moreover, healthier options are growing faster within the fruit juice category. According to Harsha V Agarwal, Vice Chairman & MD of Emami, with health and wellness being the buzzword for consumers, the management foresees “tremendous potential in the segment”. “We are excited to be present in this category which is in line with our corporate growth strategy to invest in categories or brands that not only have synergy with our existing business but offer potential for growth,” he adds.
According to NH Bhansali, chief executive officer-finance, strategy and business development, and chief financial officer of Emami, eventually, Emami may raise its stake in Axion to 50 per cent (from the current 26 per cent). While that depends on the success AloFrut receives in coming years, Emami’s attempt to capture a slice of the pie won’t be without hurdles.
The Rs 22,000 crore market is fragmented amongst thousands of local fruit juice joints, who together corner nearly 82 per cent of the sales. The rest of Rs 4,000 crore is divided among three major FMCG companies. Dabur India’s brand REAL is a market leader with nearly 60 per cent of the branded fruit juice market share in its kitty. ITC’s B-Natural (2nd largest player) and PepsiCo’s Tropicana owns majority of the rest. Then there a bunch of homegrown D2C and regional brands, including AloFrut.
“It is not easy for any brand, other than the top 3 who enjoy over 85 per cent of the branded juice market - to break into the top league. However, over time and effort one may corner a significant share,” a senior executive from a top branded juice player told Business Today.