Mamaearth became a household name within a few years of its launch in 2016. That was soon followed by The Derma Co. and this year came Aqualogica, another D2C personal care brand. If that wasn’t enough, Honasa Consumer has now expanded its focus to strategic inorganic growth opportunities in the highly competitive beauty and personal care segment. Varun Alagh, co-founder and CEO, Honasa Consumer, tells Akanksha Nagar how it built a billion-dollar personal care House of Brands in just six years. Excerpts:
Honasa has just acquired Dr Sheth’s and BBLUNT and is parent to Mamaearth, The Derma Co., and Aqualogica. What does it take to build a “House of Brands”?
First, over the last decade or so the consumer has moved from family consumption to individualised consumption. As this trend shapes up, it is creating opportunities for new propositions and brands that are sharply targeted at these individual needs. As the market grows, there will be new price points opening up. Second, over the course of building Mamaearth into a large-scale brand, we have built certain capabilities at the organisation level spanning R&D, innovation, D2C, marketing to millennials, and content to commerce, which help us build newer brands much faster. The combination of these two makes us feel that this is the right strategy to grab the largest share of the Indian consumer’s wallet. At our heart, we are a brand-building company.
Mamaearth primarily retailed through D2C, followed by online marketplaces and later initiated its offline expansion in 2020. How would you compare the brand’s offline and online retail strategy?
A large part of the category transactions is happening in the offline space and every brand needs to be selling at places where their consumers shop, hence offline will continue to grow in the coming year. We intend to add 40,000-odd stores to the offline business this year. Having recently opened exclusive brand outlets in four cities (Delhi, Gurgaon, Noida and Mumbai), we are aggressively scaling this channel. Currently, the revenue share of the online channel is 70% while that for offline is 30%. We are ramping up our D2C channel and app play too, where we already have over 10 million downloads.
Markets in tier-II and beyond have been very critical for our growth story and they account for more than 50% of our total sales. We service almost 19,000 pincodes and from an offline expansion perspective, we are actively looking at these markets.
The D2C market is on track to be a $1 trillion global market by 2025, with India expected to log $100 billion. Beauty, makeup and personal care have turned out to be the largest segment in the D2C market. What kind of opportunity do you see here?
We will continue to focus on gaining share by driving awareness, distributing and providing innovative products, and creating new propositions and brands. Other factors will be offline expansion and international market expansion. Data and technology are at the core of our differentiated business model. We have data on more than 10 million consumers that help us target better and send relevant, engaging communication. The company had hit the run rate of `500 crore in FY21 and in FY22 we doubled that. We would want to continue to grow disruptively in the next few years. The long-term vision is to build a beauty and personal care company that is larger than some of the existing companies, by the end of the decade.
In a short span of five years, the company has created a product portfolio of 120+ products in over 500 Indian cities. What is more important in your playbook—agility or sustainability?
The marketing playbook is very purpose-driven. Most of our conversations are around purpose, sustainability, being toxin-free, and giving back to the environment — something that our customers can relate to. We believe millennials trust other millennials and this has led us to create a strong influencer marketing channel — the most important channel for the company. We work with thousands of influencers every month, and we will continue to double down on that.