Ananth Narayanan wants to build a ‘digital-first Unilever’. But BRND.ME needs a rescue act first

Founded by Angad Bhatia, the company was first sold to Times Internet in 2012. Ten years later, in 2022, Mensa Brand bought the company at a reported valuation of nearly $50 million. Mensa, recently rebranded as BRND.ME, operates as an aggregator of many consumer companies. India Lifestyle Network, the thinking was, could help its portfolio companies with digital brand-building.

However, in June this year, BRND.ME decided to sell the content company at a significant discount, for $9 million, to the RP Sanjiv Goenka (RPSG) Group.

As ownership changed hands for the third time, Bhatia left (he is now the CEO of Firstpost and Creator18), as did a few other employees.

Several people Mint spoke to said that BRND.ME didn’t know how to make the content company work for its brands. However, Ananth Narayanan, the founder and CEO of the firm, clarified that his house of brands didn’t need a media company any longer.

“We later realized that we could do the brand building anyway without having to own a media company. We found a better home for the company in the RPSG Group and even from a management standpoint, this helped us to better focus on our core areas of lifestyle, health, and wellness,” Narayanan, who in his previous role was the CEO of fashion marketplace Myntra, clarified.

Since BRND.ME started as Mensa in May 2021, it has acquired 24 companies to date—from apparel and cosmetics companies to healthy snacking and garden stores. Based on the premise of scaling these brands, the parent company bagged a little over $200 million in funding from investors including Alpha Wave Global, Tiger Global, Accel and Norwest Venture Partners, making it one of the largest seed investments in India in 2021. It was also one of the fastest to achieve unicorn status—a billion dollars in valuation—within six months of operations.

After a period of super charged growth, things have now cooled. Sample this: in 2022-23, the company grew 306% to ₹1,300 crore. However, in 2023-24, revenue rose anaemically, by 13%. Last year, the growth story soured even more—the house of brands inched up only 2%.

The reason ostensibly is lacklustre performance of some of the brands acquired in the first two years of its existence. It was time for a re-think.

The fire sale of India Lifestyle Network was not the only exit Narayanan planned. Earlier this year, the aggregator sold its stake in wearables maker Pebble and is now looking to exit Renee Cosmetics, an Indian cruelty-free makeup brand, Mint had reported in May.

There are other challenges. Over the last year, several top executives have left the company. Founding members Aniket Nikumb, Vinay Juluri and Pawan Kumar Dasaraju have all stepped down. Some founders from acquired brands told Mint that their payments have been delayed (more on this later). BRND.ME, nonetheless, has stayed clear of any legal battles thus far. And lastly, the funding winter of 2022-23 vintage has meant that the days of liberal spending, on prized acquisitions, are now over.

How is the company responding? And can it turn around, getting back on the growth highway?

Mint spoke to over a dozen people, including investors, industry executives, employees and founders of companies BRND.ME acquired, to piece together this story.

Thrasio-style isn’t easy

Before we tell you how the parent entity is course correcting, a bit about the business model.

In 2018, Thrasio, a US-based startup, started acquiring fast-growing consumer brands, many of them Amazon sellers, and helped them grow under a unified mother brand. Through this, Thrasio aimed to expand margins by reducing overheads and other costs of operation, helping small brands under its umbrella generate bigger returns.

This style of investment came to be called the ‘Thrasio model’.

BRND.ME is trying something similar.

However, it is challenging for venture backed players in India to navigate and succeed in this model since it requires multiple factors to be working together, market watchers said.

It is challenging for venture backed players in India to navigate and succeed in the Thrasio model since it requires multiple factors to be working together.

“A very strong balance sheet is the most fundamental requirement to provide growth-funding for the acquisitions. Accommodating losses, while the acquisitions mature into self-sustaining businesses over years, also require a strong balance sheet,” said Devangshu Dutta, CEO at Third Eyesight, a consultancy firm.

He added that the causes of failure can be many. They include limitations or weaknesses in the acquired brands, lack of synergy within the portfolio, inadequate capital and management bandwidth, or even individual brands pulling in their own directions, counterproductive for the parent company.

Despite synergies in certain facets, the supply chains and target market can be very disparate across categories.

The Good Glamm group, 10Club and GlobalBees Brands are three other companies that follow the Thrasio model in India.

Good Glamm has sold back multiple brands, including Sirona Hygiene, at a steep discount. The company has also delayed salaries and vendor payments, and is in the market to raise funds at a steep valuation cut, Mint had earlier reported. 10Club, a struggling e-commerce aggregator, is close to shutting shop, Mint reported in March this year.

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Narayanan, however, believes that BRND.ME does not follow the traditional Thrasio model, which deals with over 200 brands at a time, is heavily dependent on Amazon, and has very little adoption of technology in its operations.

His company, he argued, is focused on scaling fewer brands and is diversified across platforms like Amazon, Myntra, Flipkart, Nykaa and other quick commerce channels. The brands also own every part of the process, from manufacturing to distribution, he said.

Currently, about four brands—MyFitness (peanut butter and protein bars), Party Propz (party products), Majestic Pure and Botanic Hearth (both beauty brands)—contribute to about 60% of the parent’s overall revenue.

Fuss over payments?

Overall, BRND.ME has raised around $283 million, across equity and debt, according to data from Tracxn.

However, as the funding tap dried, the company went into a cash preservation mode.

Over the last year, the four-year old company held multiple discussions to negotiate its terms of contract with the founders of brands it acquired, two people with direct knowledge of the matter said, asking not to be named.

“Ananth has offered equity instead of cash payouts to some founders. Many of them have seen more than one-year delays in payouts,” one person said, asking not to be named. He added that these negotiations have been prolonging over the last year.

Payments to the founders of smaller brands are more affected, they said. “Payments to the larger brands have been fairly consistent,” one person mentioned above said.

BRND.ME, in its clarification to Mint, dismissed any delays in payments to smaller brands saying most of them have been fully bought out. The company also added that there are no current discussions with regards to offering alternate payment options.

24 to 10

Founder Narayanan, who wants to build a “digital-first Unilever out of India”, admits to some mistakes the parent entity made.

“We did make a couple of mistakes. So 2023-24 was a reset year in that sense,” he said. “We bought too many things too quickly but now we are working on consolidating them. One lesson learnt is that focus helps.”

The company, therefore, is on a course-correction mode, now focussed on growing a smaller set of brands and making them market leaders.

We did make a couple of mistakes. 2023-24 was a reset year.
— Ananth Narayanan

Until last year, the company had about 24 brands across apparel, beauty and personal care and home décor segments. While the sale of some “non-core assets” could simplify its portfolio, the company also embarked on a reorganization of its business. Several smaller brands have now been consolidated under 10 larger brands, a move the parent entity thinks could drive better cost efficiencies.

“We do a lot of cross-selling within our consumer base and technology also aids in this process of scaling our brands,” Narayanan said.

For some of its larger brands now, BRND.ME has dedicated managers who oversee day-to-day operations; smaller brands have a manager shared across two-three companies to enable cost efficiencies. These managers are responsible for product development and brand building.

Nutty business

The company has identified high-potential companies in its portfolio and has doubled down on them to improve its top and bottom lines.

Mint spoke to brand managers within the company to understand the focus on prominent brands. They include Majestic Pure, Botanic Hearth and Myfitness.

Over the last two years, Myfitness has more than doubled its revenue by selling its flagship peanut butter product and has also introduced new varieties—stuff such as chocolate-flavored peanut butter— which has done well, according to a brand manager who didn’t want to be identified.

The manager added that the company plans to launch other products such as high protein oats, muesli and protein bars, as it looks to ride the wave of health snacking. Apart from India, Myfitness is focused on selling its products in West Asia and has run trials of some products in the US and Canada.

Botanic Hearth and Majestic Pure, meanwhile, have also witnessed significant growth. Together, they contribute nearly 35% of the parent company’s overall revenue, according to another brand manager Mint spoke to. While Botanic has seen 100% year-on-year growth on the back of newly launched products like rosemary hair oil, Majestic Pure, an aromatherapy brand, has witnessed over 50% growth across international markets including Germany and the UK.

These brands want to build for the world, leveraging India’s low-cost advantage. They can procure raw materials through the domestic supply chain at a far more competitive cost than brands manufactured abroad can.

Profit goals

BRND.ME, meanwhile, is in the process of shifting its headquarters from Singapore to India, joining a queue of foreign-domiciled startups such as Flipkart, Zepto and Dream Sports which have already moved or are in the process of moving. The larger goal is to tap the country’s capital markets.

A potential public listing, over the next 18–24-months, is on the horizon. Currently it is negotiating a pre-IPO round with existing and new investors. The business rationalization it underwent could help its cause.

The company said it is hoping to achieve profitability in the current financial year—it claims to be ebitda (earnings before interest, taxes, depreciation, and amortization) profitable for the last nine months. In 2023-24, it cut its India business losses by 31% to ₹156 crore, data sourced by Tofler shows.

Some investors appear bullish.

“One of the biggest challenges is maintaining focus. Ananth and the team have addressed this by sharpening their portfolio strategy,” Niren Shah, managing director and head of India at Norwest Venture Partners, said.

Shah added that the VC firm has deep conviction in the opportunity to build digital-first, globally scalable brands from India. And BRND.ME is well-positioned for this.