ilmscore | How ITC Beat Nestle to Acquire Yoga Bar ft. Suhasini (Bonus: Govt. Schemes) | Business Talkies

How ITC Beat Nestle to Acquire Yoga Bar ft. Suhasini (Bonus: Govt. Schemes) | Business Talkies

Published: 2024-07-28
Status: Analyzed

Predictions from this Video

Total: 7
Correct: 0
Incorrect: 0
Pending: 7
Prediction
Topic
Status
Predicted in 2017 that a D2C model for Yoga Bar (or similar FMCG products with a 35% gross margin) would be unprofitable, resulting in a negative 50% outcome after accounting for logistics and marketing costs.
"D2C actually works only for personal care. And this is the answer I gave to my investors in 2017. There was a lot of pressure to do D2C. D2C is the next best thing. I said, the math is dozens up. If your gross margin is 35, then what is left after doing logistics cost and marketing, it will come to negative 50."
D2C Business Model
Pending
55% of the acquisition deal value by ITC is contingent on Yoga Bar's business performance and achievement of specific milestones in the year following the deal completion (i.e., 2024).
"55 percent is based on certain mile states of how the business will pan out next year"
Business Acquisition Earnout
Pending
Quick commerce is predicted to become the dominant future channel for consumer product purchases, but brands that rely solely on quick commerce will struggle with profitability.
"quick commerce is definitely the future way by which a lot of consumers will buy the product but you can't be only a quick commerce brand simply because it's difficult to make money on the channel"
Quick Commerce
Pending
New, bootstrapped companies are predicted to find it almost impossible to succeed in quick commerce, as platforms demand high margins (30-35% of revenue) and require significant marketing budgets, making profitability and securing funding difficult.
"I think the margin now for new Companies are 30 to 35 times more profitable on Quick Commerce than on Quick Commerce with a dedicated marketing budget That's what I think it is So if there is a bootup company it's almost impossible for Quick Commerce It's difficult to take a loan Just to get at most Quick Commerce new age companies don't have success"
New Companies & Quick Commerce Profitability
Pending
D2C business models are only viable for products with gross margins of 65-70% or higher, typically found in personal care, not for products with lower margins (e.g., 35% in FMCG food) which lead to significant net losses after logistics and marketing.
"D2C actually works only for personal care. ... I said, the math is dozens up. If your gross margin is 35, then what is left after doing logistics cost and marketing, it will come to negative 50. ... so for D to C if you want to go to D to C then you should play with 70 per goto rule of 65 to 70 you can play tum"
D2C Business Model
Pending
Yoga Bar's product price points are predicted to decrease to ₹10-₹15 per bar under ITC's ownership, achieved through economies of scale and smaller pack sizes to increase affordability and market penetration.
"I still feel we are expensive ₹ it is still expensive very expensive you have to get to ₹ you know you have to get to ₹ and maybe you know now with the brand being sold exactly maybe ITC will figure out a way to do it at scale it it should be possible it should be possible to make it smaller if you are able to sell at 25 you will be able to sell at 15 and 10"
Product Pricing
Pending
Quick commerce is predicted to become a primary purchasing channel for many consumers. However, brands relying solely on quick commerce will struggle with profitability, making it particularly difficult for bootstrapped and most new-age companies to succeed in this channel due to high delivery costs, expected margins, and marketing budgets.
"quick commerce is definitely the future way by which a lot of consumers will buy the product but you can't be only a quick commerce brand simply because it's difficult to make money on the channel... So if there is a bootup company it's almost impossible for Quick Commerce It's difficult to take a loan Just to get at most Quick Commerce new age companies don't have success"
Quick Commerce
Pending