ITC to buy 'Yoga Bar' to strengthen presence in health foods space

ITC signs binding term sheet to buy 100% share capital of Sproutlife Foods

Diversified conglomerate, ITC, said on Tuesday, it would acquire 100 per cent of Sproutlife Foods Private Limited, makers of Yoga Bar healthy foods.

The company has signed a binding term sheet to acquire 100 per cent of the share capital (on a fully diluted basis) of Sproutlife in tranches, expected to be completed over a period of 3 to 4 years.

In an exchange filing, ITC said that acquisition of 47.5 per cent was on a fully diluted basis through primary subscription and secondary purchases. An initial investment of Rs 175 crore would be made for acquisition of 39.4 per cent, which is expected to be completed by February 15, 2023 or a later date mutually agreed upon.

A further infusion of Rs 80 crore would be made through primary subscription, in one or more tranches, by March 31, 2025 or later.

Purchase of balance shares taking the shareholding to 100 per cent would be determined based on pre-agreed valuation criteria and subject to fulfilment of various terms and conditions.

The acquisition of Yoga Bar, which has a strong online presence, comes on the back of ITC’s investments in D2C brands, Mylo and Mother Sparsh over the past one year.

The Yoga Bar acquisition, ITC said, would fortify its presence in the Rs 45,000 crore fast growing, nutrition-led                 healthy foods space. Its product portfolio comprises nutrition bars, muesli, oats and cereals.

Positioned as a digital first brand, Yoga Bar has a high salience of online sales (D2C, e-commerce platforms), with a growing presence in offline stores. According to a ITC statement, Yoga Bar has established itself as a leader in the bars segment and has built a strong market position in the muesli segment.

The acquisition would also enable ITC to augment portfolio in the ‘good for you’ space, which currently includes Aashirvaad multigrain atta, Aashirvaad Nature’s Super Foods, Farmlite range of biscuits, Sunfeast protein shake, B Natural Nutrilite ABC Beverage, among others. And leveraging ITC strengths in sales and distribution, sourcing, product development and digital, it is expected to be scaled up rapidly.

Commenting on the acquisition, Hemant Malik, Divisional Chief Executive, Foods Division, ITC Limited, stated, “We believe that this investment is an exciting opportunity that aligns with ITC’s Foods Business’ aspiration to build a formidable portfolio in the nutrition-led healthy foods space.”

“We look forward to scaling the Yoga Bar brand offering superior and healthy consumer choices.”

Suhasini Sampath Kumar and Anindita Sampath Kumar, co-founders, said, ITC has a long history of building world-class brands, leveraging its core competencies which encompass superior understanding of the consumer, strong backward linkages with agri supply chain and a deep and wide distribution network.”

“We are confident that this partnership will add to Yoga Bar’s competitive advantage and take it to the next level from the current Annualised Run Rate of over Rs 100 crore. We are delighted that ITC and Yoga Bar will work together to build one of the largest brands in the healthy foods space.”

Post-pandemic there has been a growing interest in the D2C space. In December, Hindustan Unilever announced its entry into India’s health and wellbeing category by signing a deal to acquire a majority stake in Zywie Ventures, which sells plant based and clean-label consumer wellness brand under the brand name Oziva for Rs 264.28 crores.

It will also indirectly acquire its subsidiary Zenherb Labs. On January 11, it informed the exchange that it has completed the acquisition of 51 per cent shareholding of Zywie. 

In another transaction, the now owner of Horlicks also said in December that it would acquire a 19.8 per cent stake in Nutritionalab which houses its products under the brand name Wellbeing Nutrition for Rs 70 crore.