Transformation Realized: Strategic acquisition nourishes, nurtures, and energizes the long-term health of consumer wellness company

After three years of a major acquisition and an overhaul of its planning processes, a consumer wellness company has transformed itself into a front-runner that offers innovative, industry-leading products.

With an Indian heritage and global footprint, Zydus Wellness has repositioned itself in the consumer wellness market through a visionary and strategic acquisition. In the year 2014-15, the valuation of Zydus Wellness was INR400 to 500 crore, with a few well-known brands, such as Everyuth, Sugar Free, and Nutralite, under its umbrella. It made a giant leap in turnover by acquiring Kraft Heinz in 2019.

Zydus Wellness now boasts of seven leading brands in the portfolio, namely Complan, Sugar Free, Glucon-D, Everyuth, Nycil, Sugarlite and Nutralite, with a revenue of ~INR2,000 crore. Their five state-of-the-art manufacturing facilities across four locations in India and co-packing facilities in Oman and New Zealand with business spanning over 20 countries across three continents, have enabled Zydus Wellness to establish itself as a leading player in the consumer wellness domain. The company’s business transformation journey started a few years back.

The acquisition of Heinz was a tactical decision that marked the beginning of a new and exciting phase for Zydus Wellness. However, the acquisition came with its set of challenges. The immediate focus was to get the front end of the value chain up and running to avoid any impact on sales. The other critical aspect was to manage the communication within the organization and ensure that the company did not lose key performers post the acquisition and got their support in realizing the synergies. Lastly, the task was to drive the synergies across the value chain.

EY worked closely with Zydus Wellness to help drive the synergies as well as the transformational agenda across its value chain’s backend functions of procurement, supply chain, network, and logistics. The EY team adopted a three-pronged approach for synergy realization. As a first step, the focus was on quick wins to generate momentum. The second move was to redesign and optimize the entire supply chain while improving service levels. The third step was to ensure that sustainability and capability were built through robust processes and stronger, tech-enabled decision making.

In the next phase, the focus was on long-term plans to drive value through manufacturing excellence and supply chain integration. Revisiting the manufacturing strategy to explore distributed manufacturing that could handle supply disruptions and ensure resilience, EY enabled Zydus Wellness to consolidate its plants and drive manufacturing excellence to reduce conversion costs. A consolidation exercise was performed across plants and warehouses to reduce the serving cost while improving service levels and response times to the outlet base.

The two entities — Zydus Wellness and Kraft Heinz — had different approaches to sales and operations planning. Therefore, there was a need to create a common governance model to establish visibility and control across the integrated entity’s complete value chain. Three crucial components of the sales and operations planning process — demand planning, replenishment planning, and sales and operations planning — were targeted.

The company’s forecasting and reporting mechanisms were overhauled, the responsiveness of replenishment planning improved, and a formalized decision-making process established.