While Mamaearth has undoubtedly been the company’s flagship and bestselling brand contributing more than 67% to its revenues, the `2,000-crore Honasa Consumer is now doubling down on two of its fastest-growing brands, The Derma Co and Dr Sheth’s. The company has been sharpening its positioning and marketing strategy for these two brands, co-founder and CEO of Honasa Consumer Varun Alagh said in a recent interview.
The Derma Co, which was set up in 2020 reached the 500-crore revenue mark in FY25, while Dr Sheth’s, acquired by Honasa in 2022, reached 150 crore, with both brands growing at over 30% annually. “Tech and data have been pivotal to the growth of these brands. They have helped communicate with consumer cohorts in a targeted manner with messages customised for them,” said Alagh. The products from these are also differentiated, catering to an evolved consumer base seeking nuanced offerings.
Each brand addresses certain gaps in India’s growing $21-billion beauty and personal care (BPC) market. “Our existing Mamaearth consumers may want a natural Ubtan face wash for daily use, but may want another product for a sudden acne breakout or a hydrating sunscreen when travelling. The Derma Co’s core proposition is science-backed skincare, while Dr Sheth’s offers science and Ayurveda-backed formulations,” states Alagh.
He adds that Honasa has been able to use digital and e-commerce to scale sharply to a relevant set of consumers, getting consumer feedback in real time and improving its product line-up. To be sure, the brand is employing a similar playbook for its other brands too – Aqualogica that offers hydration-based skincare for the Indian weather, the Staze range of cosmetics targeted at Gen Z consumers and B Blunt for salon-experience-focused haircare and styling.
“Brands like The Derma Co or Dr. Sheth’s have eaten into niches that legacy brands left underserved, fragmenting market share across segments,” says Supriya Kalla, assistant professor, marketing at IMI, New Delhi. “Their product strategy is transparent, educational and problem-solving, with a heavy reliance on digital storytelling and consumer participation, rather than top-down advertising.”
Digital edge
The opportunity for growth is immense, with the country’s BPC market growing at a CAGR of 10-11%, poised to reach $34 billion by 2028, as per a Redseer and Nykaa forecast. That growth is even higher, at 25% for the online market, giving D2C players like The Derma Co an edge over its traditional rivals.
In the online space, Honasa is particularly bullish on The Derma Co and Dr Sheth’s for their range of face washes and sunscreens. Besides e-commerce, the company is also focusing on quick commerce, which contributed 5% of its sales in the last fiscal, up from 2% in the previous fiscal.
“Digital marketing allows brands to target micro-segments that are very expensive to target through the traditional mass-marketing route. By using digital marketing diligently to drive customer acquisition and trials, D2C brands have been able to grow rapidly,” says Santosh Sreedhar, partner at Avalon Consulting.
Another major factor that has turned the tide in favour of The Derma Co and Dr Sheth’s is influencer outreach. The company executed around 2,500 unique influencer collaborations for its various brands in the last fiscal. “We believe millennials trust other millennials and this has led us to create a strong influencer marketing channel, the most important for the company,” adds Alagh, adding that the Honasa brands adopt purpose-driven conversations with young consumer cohorts.
The strategy
Brands in the D2C space were one of the first to turn influencers into category experts, points out Sanchari Chakrabarty, senior VP & head of strategy, 22feet Tribal Worldwide. “This has allowed them to make an interesting shift in how they talk product. The strategy has been to focus on getting a range of influencers to talk about the regimens and products to challenge consumer problems. This is a complete departure from classic advertising that would focus on the promise of the product by showing a celebrity’s glorious, aspirational look,” she says. This signals to consumers that change is in their control and it lies in adopting a new ingredient or ritual.
Entrenched brands are also taking note of this shift, with the country’s largest advertiser Hindustan Unilever upping influencer marketing spends by 40% and roping in 12,000 creators in FY25.
Ingredient transparency is another factor that has played a key role in driving consumer preference, says Kalla. For instance, the Mamaeaerth’s product packages have clear labelling of their hero ingredients – such as 2% salicylic acid or 10% niacinamide.
Although they have challenged market leaders from HUL, P&G and L’Oreal, the Honasa brands don’t threaten the scale of the legacy players yet, agree experts. The future will ultimately be shaped by brands that remain nimble, digitally savvy and consumer-first.