The document provides an analysis of the Indian consumer packaged goods (CPG) market. It finds that while the market grew at 12% annually from 2005-2015, growth has slowed to around 9.3% in recent years. However, future growth is expected to come from rural and semi-urban areas, as well as new digitally influenced consumers. Several new startups have also entered the food, beverages and personal care segments, implementing differentiated business models focused on direct-to-consumer marketing and e-commerce. The document identifies Bombay Shaving Company as a potential investment target due to its focus on an underserved market need through a unique digital and subscription-based model.

1. Indian Consumer Products Space
Landscape Analysis (March 2017)

2. The Indian Consumer Packaged Goods (CPG) market stood at ~USD 190-200Bn
in 2016, with the branded segments accounting for a third of total revenue
India CPG Market Size 2016 (USD Bn)
Source: Bain-CII Report (2017), EY ‘The Retailer’ (Jan 2017), BCG-CII Report (Dec 2015) 2
4.1 6.1 9.4
17.6 13.8
2.9
15.1
47.3 40.9 33.5
5.5 2.3
0.3
3.3
Pulses &
Cereals
Edible Oils &
Fats
Dairy Packaged Foods Beverages Consumer
Health
Home and
Personal Care
~69
~133
CAGR% (‘05-15) Growth% (‘15-16)
~12% ~9.3%
Total
§ The Indian CPG sector has grown at a CAGR of 12% between ‘05-15. The fastest growing sub-categories were packaged food
(e.g. salty & savory snacks, bottled water, confectionary, juice drinks, ice cream etc.), edible oils and selected segments of
home and personal care (e.g. skin care)
§ However, the past 3 years witnessed an overall slowdown (with the last year seeing ~9.3% growth)
– Few quarters of low growth among large players prompted scaling back of growth-oriented investments and a focus on
sustaining profits (at the cost of the top line)
– Overall, growth continues to be driven by market penetration and increasing volumes rather than increase in pricing
§ The recent demonetization was also responsible for short-term woes in the sector
– With ~86% of cash taken out of circulation, consumers delayed making larger discretionary spending on products such as ice
creams, chocolates and beverages
– Production was impacted owing to greater unsold inventory and liquidity crunch affecting credit-repayment ability of small-
medium distributors
Unbranded (USD Bn)
Branded (USD Bn)
Overview

3. Rural expansion continues to drive sales volume; urbanization of towns, a new
digital-native middle class, and new product categories may boost future growth
§ Share of consumption of affluent/elite
households is set to double to 48% by
2025
§ The increase will be driven by a new
middle class population, currently at
267 Mn (2016), with a median age of
27 and high levels of disposable
income
§ The growth will further accelerate
premium-ization and increase share of
branded/ premium products in the
CPG space
Changing consumer demographic,
individual and households
… with next stage of growth to arrive
from semi-rural/semi-urban settings
§ Tier II, III and IV would be 4.5X their
size today & would account for ~45%
of consumption by 2025
§ Growing urbanization will drive
consumerism in Tier II and Tier III
towns, especially in the form of higher
disposable income and increased
penetration of modern trade delivery
channels for CPG products
§ Consumers of CPG products are
increasingly digitally influenced, putting
traditional go-to-market models under
stress
§ 150–190 Mn consumers will be digitally
influenced in CPG by 2020. These
consumers would spend ~USD 40-45
Bn (35% of the market)
§ Exponential growth of e-commerce is
soon to account for >10-15% in some
CPG categories
§ Renewed demand for
natural/organic-based and
environmentally friendly products has
revitalized Ayurvedic products
segment
§ On the heel of success of brands
such as Patanjali, more incumbents
are expected to expand their natural
products portfolio (especially in the
personal health & wellness segment)
Digital channels offer low cost
marketing and delivery
Consumer interest in organic products
may offer future growth avenues
Source: Dabur Annual Report (2015-16), Emami Annual Report (2015-16), BCG-CII Report (Dec 2015), IBEF Consumer Report (2017) 3
Rural regions outpaced urban
market growth by 1.7X
§ Geographic expansion into rural
markets was a major contributor to
volume-led growth across categories
§ As of 2016, the overall rural CPG
consumption stands at an estimated
USD 29.4Bn
§ The rural CPG market in India is
expected to grow at a CAGR of 14.6%
during 2016–2025 and reach USD
100Bn by 2025
§ Consumer loyalty remains weakly
correlated with CPG growth. Hence,
targeting a larger base of customers
(over niche) remains sound strategy
§ Low-frequency, high ticket-size
shoppers offer quick-wins opportunity
to capture mind share
§ Building around memorability through
broad consistent messaging, wide
availability of flagship SKUs and
optimized product range will
accelerate new customer adoption
and alleviate losses due to churn
Despite high customer churn, broad-based
customer focus will support adoption

4. High competitive intensity means only 1 in 7 brands wins, while penetration
drives volume (and thus growth) better than purchase frequency and/or pricing
Source: Bain-CII Report (2017), Bain-IMRB Report (2016), Kantar Worldpanel Analysis 4
Broad CPG
categories
Brand Winners
(High growth &
penetration)
New Entrant Brand
Winners
Food
§ Haldiram’s Salty
Snacks
§ Haldiram’s Chips
§ Marie Gold
§ Good Day
§ Balaji Namkeen
§ Amul Butter
§ Yellow Diamond
§ Cadbury Dairy Milk
§ Patanjali
Chawanprash
§ Bingo!
§ Sunfeast Yippee!
Noodles
Beverages
§ Brooke Bond
§ Bru Instant
§ Frooti
§ Thums Up
§ Sprite
§ Limca
§ Horlicks
§ Cadbury
§ Bournvita
§ Maaza
Personal
Care
§ Santoor
§ Parachute
§ Nihar Naturals
§ Fogg
§ Nisha
§ Dettol Soap
§ Godrej Expert Rich
Crème
§ Super Vasmol 33
§ Kesh Kala Kali
Mehandi
§ Dettol Handwash
§ Sunsilk Co-
creations
§ Pushp
Home Care
§ Lizol
§ Godrej Good
Knight
§ Sunny Home Care
13%
11%
10%
9%
7%
6%
5%
5%
0.3%
(1%)
(4%)
(14%)
(15%)
28%
11%
6%
5%
3%
3%
2%
17%
5%0.2%
1.1%
1.3%
0.2%
-0.8%
1.3%
0.9%
0.3%
1.2%
-0.8%
-1.7%
-0.1%
-0.1%
0.3%
0.4%
0.1%
2.3%
0.7%
1.8%
1.2%
1.2%
1.1%
Washing Powder
Floor Cleaner
Hair Oil
Soap
Skin Cream
Toothpaste
Shampoo
Men's Deodorants
Hand Wash
Chocolates
Noodles
Chawanprash
Milk Food Drinks
Coffee
Tea
Cheese
Carbonated Soft Drinks
Biscuits
Salty Snacks
Chips
Juices
Breakfast Cereals
Annualized Penetration Change^ Volume CAGR
Food &
Beverages
Personal Care
Home Care
Top Growth Brands (by category) Penetration change v/s Vol. Growth (‘14-16)*
* CAGR and analysis is over Moving Annual Total (MAT( Nov’14-Oct’16.
^Annualized penetration change is penetration MAT 2016 minus the
penetration MAT 2014 divided by two

5. Deep customer focus have allowed local and global players to build high
growth and differentiated business models
Source: EY ‘The Retailer’ (Jan 2017), Company Websites, News Reports 5
Product /
Company
Consumer Need Differentiated Approach Key Outcome/s
Pulse Candy
Hard boiled candy
segment dominated by
single flavor
undifferentiated products
§ Created product with similar experience to
traditional Indian raw mango with salt/spice.
Increased price to INR1 with increased
grammage to offer heightened eating experience
§ Built extensive distribution reach via local
cigarette shops and word of mouth publicity
§ Clocked INR 100 Cr in
sales within 8 months from
launch, with zero marketing
cost
Paper Boat
Very limited availability
of traditional Indian
packaged drinks
§ Created new category of branded ethnic-
flavored drinks usually consumed at home/local
vendors
§ Innovative single-serve plastics packaging that
is environmentally friendly
§ Digital marketing focus with consistent
messaging targeting childhood nostalgia/stories
§ Volume Sales over 1.5Mn
packs per month
§ Firm valued at USD 100Mn
within 3 years of business
Need for traditional
nature-based products
(food, personal care)
that are high quality and
economical
§ Only uses word-of-mouth publicity with low ad
spending
§ Primarily sells via 15,000 exclusive formats,
reducing distributor margin and ensuring low
cost
§ Operates low-cost/low-margin economics
spurring top line via volume sales growth
§ Grew at 83% Net sales
CAGR (‘12-16) clocking
INR 5,000 Cr in net sales in
FY16
§ Captured >10% market
share in the Indian ghee
and honey market
§ 4th largest player with 5%
share of toothpaste &
shampoo market
Dollar Shave
Club
Need for affordability
and convenience in
purchasing frequently
replaced shaving
equipment among
”digital-native”
customers
§ Leveraged monthly online subscription model
and engaged in contract manufacturing with
South Korean firm to achieve affordable pricing
§ Used viral video marketing (on YouTube
featuring the Founder) and social media for
customer engagement, generating 12,000
members within 48 hours
§ Captured 54% of US online
shaving market with USD
152Mn in sales and 2.63X
growth in 3 years (2012-15)
§ Acquired by Unilever in
2016 for ~USD 1Bn

6. Several upstarts have emerged in the CPG space, primarily in the Food &
Beverages and Personal Care Space (1/2)
Source: News Reports and Analysis 6
Company
(Founding Year)
Product
Category
Business Description
Drum Foods
International
(2015)
Milk &
Dairy
§ Manufactures Epigamia Greek yogurt and Hokey Pokey ice cream (focused on healthy snacking
segment) currently available across 1,500+ modern retail stores in metros
§ Raised ~INR 45 Cr Series A led by VerilInvest & DSG Consumer Partners for enhancing supply chain
and production capacity
Raw Pressery
(2013)
Beverages
§ Makes cold-pressed raw juices sold via its online store and via modern trade outlets. Offers 19 product
variants sold individually, bundled and as monthly subscriptions.
§ Claims to have 25,000 subscribed customers and monthly sales of 100K bottles
§ Has raised over USD 7Mn from Sequoia Capital, Saama Capital and DSG Consumer Partners
Valencia Nutrition
(2015)
Beverages
§ Launched VitaMe, its flagship water-based functional beverage (containing vitamins, minerals, anti-
oxidants, electrolytes, etc.) in 2015 in 4 variants
§ Sold online and via retail stores, the company initially began retailing in South India and is currently
looking to expand in key metros, Tier I and II towns
iD Fresh Foods
(2006)
Packaged
Food
§ Manufactures packaged ready-to-cook food batter (dosa, idli, etc.). Recorded sales of INR 100 Cr in
2015-16 with largest markets being Bengaluru, Chennai, Hyderabad and Mumbai
§ Experimenting with unique distribution model called iD Trust Shops, unmanned self-service stores in
large residential complexes, offering customer 24x7 product access
§ Raised USD 25Mn from PremjiInvest in 2017, to expand product offerings with 2 new variants, aiming
at INR 1,000 Cr in sales by 2020 in domestic and US/UK markets
Yoga Bars (2014)
Protein
Bars
§ Offers all-natural protein bars made from locally sourced ingredients. Distributed via few retail outlets
(Godrej, Namdhari), e-commerce (HealthKart) as well directly to corporate offices. Products can be
bought online as bundles or via a subscription model
§ Targets 25-35-year olds customer segment with active/busy lifestyles, with messaging promoting
health and well-being
Green Snack
Company (2015)
Packaged
Food
§ Manufactures and sells non-baked, non-fried Kale and Quinoa based snacks with 6 product variants
§ Raised angel funding of USD 500K in 2017. Currently, expanding product presence from 20 to top 35
Indian cities (metros and Tier I) and distribution via cafés, restaurants and gourmet food websites
Illustrative list of new players in the Indian CPG space

7. Several upstarts have emerged in the CPG space, primarily in the Food &
Beverages and Personal Care Space (2/2)
Source: News Reports and Analysis 7
Company
(Founding Year)
Product
Category
Business Description
Dr. Vaidya’s New
Age Ayurveda
(2016)
Consumer
Health
§ Manufactures Ayurvedic products for Hangover recovery (LIVitup!) and Energy booster (HerboFit)
§ Plans to leverage family Ayurvedic clinic business brand and distribute product through non-traditional
channels like bars, gyms/yoga studios, wine shops, music festivals and e-commerce platforms
§ Currently owns 96 FDA-approved formulations for Ayurvedic proprietary medicine, all produced in-
house in their factory in Silvassa, Dadra
Happily Unmarried
(2015)
Personal
Care
§ Launched Ustraa brand of male grooming products (face & body wash, beard care, shampoo, hair
serum and colognes) in August 2015
§ Achieved sales of INR 10 Cr by early 2016 (forecast INR 40 Cr for 2016-17). Two-thirds of sales were
via mobile e-commerce by customers from 2,000 urban & rural cities
§ Plan to avoid modern trade (due to unviable margins) and utilize a combination of e-commerce and
Kirana stores (mom & pop stores) to build product visibility and distribution.
§ Currently looking to raise INR 30-50 Cr to expand distribution present to 20,000 general trade location
nationwide
Bombay Shaving
Company (2015)
Personal
Care
§ Male Grooming startup offering facial and beard care products. Plans to attack the Indian male
grooming market with its differentiated six-part shaving regimen offered through a flexible subscription
model. Recently raised USD 600K in seed funding from several angel investors
Zed Lifestyle
(2016)
Personal
Care
§ Sells men’s grooming products (under the Beardo brand) including beard oils, beard waxes, soaps,
etc. While Beardo sells on several e-commerce platforms, direct sales via salons makes up 75% of its
revenue
§ Marico Ltd. recently announced acquiring 45% stake in the company (over 2 years via primary
infusion and secondary buyouts), as part of expanding their male grooming portfolio and brand in the
online and salon space
Mcaffeine (2016)
Personal
Care
§ Offers Caffeine-infused personal care products (shampoo, hair gel, face wash, face cream, body
butter, etc.). Has sold over 30K SKUs via e-commerce platforms either as single products or bundled
kits in just 4 months.
§ signing a contract with a large personal care products retail chain which will give them access to 200
touch points. Secured USD 300K in angle funding to expand marketing, invest in R&D and analytics,
and increasing supply chain
Illustrative list of new players in the Indian CPG space

8. Criteria identified for CPG success help hone in on “Bombay Shaving
Company” as potential target for investment
Source: News Reports and Analysis, Euromonitor Analysis 8
CPG Landscape
analysis
identifies
following
success criteria
§ Propel customer adoption using 1-2 Hero SKUs
§ Focus on market penetration into semi-urban markets, targeting 27-year old middle class persona
§ Deploy broad consistent messaging derived from customer insights on underlying market need
§ Leverage digital/online media to drive sales growth
§ Build word-of-mouth marketing channel that is unique to your product and helps create differentiated
branding
§ Work towards wide availability using the appropriate trade channel/ distribution for your target customers
Bombay Shaving Company
Company and
Product Overview
§ Started in early 2016, the Bombay Shaving Company was founded by ex-McKinsey and GroupM employees
Shantanu Deshpande, Raunak Munot, Rohit Jaiswal and Deepu Panicker
§ Modelled after the Dollar Shave Club, the company offers a bundled male shaving and grooming kit (~INR 3,000
price) targeting the premium end of the male grooming segment
Market Potential
and Competitive
Environment
§ Indian men's grooming market was estimated at INR 7,500 Cr in 2015 and is projected to touch INR 14,200 Cr by
2020. Men's shaving accounts for ~42% of grooming sales (refill blades: 18%, razors: 16%, others: 8%)
§ Competition includes both large incumbents like P&G’s Gillette brand and upstarts like LetsShave (who have
partnered with Korea-based Dorco blades)
Key Elements
§ Utilizes direct-to-customer and flexible subscription model, allowing customers to start/pause/stop as per their
convenience. As of August 2016, averaging 400 orders a month, and plans to scale to 100K users and 5,000
orders a month by 2017
§ Has strong online branding and social media marketing, focused on high quality product design and premium
packaging. Targets wide customer base including the growing 25-35-year old segment
§ Partnered with Feather Blades (Japan). Leveraging contract manufacturing suppliers of large FMCG companies
to ensure high quality for personal care products
§ While customer in metros remain their major clientele, cities like Jaipur, Indore, Lucknow and Pune account for
25% of their orders. Plans to expand presence and availability via offline channels.
§ Strong angel investor group allows access to right trade channel partners and future talent
Recent
Developments
§ Raised USD 600K from angel investors (August 2016) including Noshir Kaka (MD, McKinsey India),
Subramanian Ramadorai (Advisor to PM), Kiran Deshpande (former CEO, Tech Mahindra), Pankaj Gupta (Head
of Operations, USL Diageo), Ravi Nigam (MD, Tasty Bite) and Maninder Gulati (Head of Strategy, OYO)