On Tuesday, cigarette-to-hotel conglomerate ITC announced plans to acquire 100% of SproutLife Foods (SFPL), a direct-to-consumer (D2C) startup and the parent company of health food brand Yoga Bar.

The FMCG specialist will initially acquire a 39.4% stake in SFPL for Rs 175 crore. ITC will acquire a 47.5% stake in one or more tranches of Rs 80 crore through primary subscription by March 31, 2025. The remaining shares will be acquired based on predefined valuation criteria, subject to other agreed-upon conditions in an agreement-binding document.

“The initial investment for 39.4% will be made by way of primary subscription, and secondary purchase of paid-up share capital on a fully diluted basis, which is expected to be completed by February 15, 2023, or such other date as may be mutually decided by may be agreed upon,” it said in the BSE filing.

The acquisition will allow ITC to expand its future-proof product portfolio and increase market presence in the ‘Good for You’ segment, which currently includes Aashirvaad multigrain atta, Aashirvaad Nature’s superfoods, Farmlite range of biscuits, Sunfeast protein milk Past, B Natural Nutrilite ABC drinks, etc. Yoga Bar is expected to scale rapidly, leveraging ITC’s corporate strengths in areas such as sales and distribution, purchasing, product development and digital.

ITC said the move is in line with Chairman Sanjiv Puri’s ‘ITC Next’ strategy, which focuses on building a future-ready portfolio of products that meet the changing needs of consumers. Nestle and ITC were in the race to buy Yoga Bar, a move in line with the growing priority of FMCG companies to capture the protein and health segment, which has become an essential category with growing consumer inclination towards health supplements and snacking.

Yoga Bar is believed to be in the market to raise around Rs 150 crore. Given the increasing importance of protein in the F&B space, industry experts said it would make strategic sense for companies such as Nestle and ITC to participate in the funding, as they get not only the segment but also the D2C space.

Hemant Malik, Divisional Chief Executive (Foods Division), ITC, said, “We look forward to expanding the Yoga Bar brand by offering better and healthier consumer options. Within a short period, it has established itself as a leading brand in the healthy foods segment, driven by a unique market position and a range of innovative products.

Yoga Bar currently runs a product portfolio which includes Nutrition Bars, Muesli, Oats and Cereals. With a growing presence in offline stores, it has an increasing presence in online sales.