Of these,180 insurgent consumer brands are well-funded, with the base likely to expand manifold as the ecosystem matures. These insurgent brands have grown at least 2–3 times faster than the overall market.
While brands that scale rapidly make news headlines, the Indian consumer ecosystem often overlooks the importance of growth with strong fundamentals. This is particularly crucial for consumer businesses, which require a different approach compared to their tech counterparts. While tech companies can grow quickly, consumer brands typically take longer to reach similar scale.
However, when consumer brands grow sustainably—by consuming less capital and focusing on fundamentals—the returns can be just as rewarding and more Predictable. A calibrated approach to growth is, therefore, essential; pursuing growth for its own sake, especially by overcapitalisation, can be counterproductive.
To recognise and celebrate brands that strike the right balance between growth and strong fundamentals, we have created the Insurgex Index. This index, for successful insurgents’, is based on two core dimensions: revenue growth trajectory and capital efficiency.
Revenue growth trajectory measures the brand’s growth over the past three years. Capital efficiency, similar to the Return on Capital Employed (ROCE) metric used by listed companies, is defined as the annualised revenue of a consumer brand divided by the cumulative capital consumed to date. This metric is a crucial lead indicator of the brand’s steady-state unit economics and the founder’s ability to manage resources efficiently.
In our inaugural edition of Insurgex for FY23, 18 insurgent brands made the Insurgex shortlist across categories such as Food & Beverages, Beauty & Personal Care, Wearables & Appliances, Apparel and Lifestyle, Home, and Jewellery. These brands have demonstrated strong revenue growth, with a 3-year CAGR of 30% or more, and have maintained capital efficiency of 1.5x or higher.
But, it is important to recognise that not every year will be a strong one for brands.
From FY20 through FY22, the number of brands on the Insurgex list grew from 10 in FY20 to 20 in FY22. However, FY21 and FY22 was the “honeymoon period” for digital-first brands, since the pandemic left consumers with little choice but to shop online.
The landscape shifted in FY23 when the country reopened. Brands faced a reality check as they had to adapt to offline channels and manage rising customer acquisition costs as consumers returned to traditional purchasing channels. Despite these challenges, FY24 is promising, with many brands returning to profitability and performing well on fundamental metrics.
The Insurgex Index represents a new standard for evaluating the success of consumer brands. By balancing growth with capital efficiency, the Insurgex Index spotlights brands that are not just scaling rapidly but doing so in a sustainable way. As we continue to track the progress of these brands, we believe the Insurgex Index will serve as a valuable tool for founders, investors, and the broader market, guiding the way towards long-term and sustainable success in India’s consumer landscape.
—The authors; Hariharan Premkumar and Navneet Chahal are Managing Director & Head of India at DSG Consumer Partners, and Partner at Bain’s Consumer Products, Retail and Consumer Practice, respectively. The views are personal.