Mumbai-based personal care brand mCaffeine launched an employee stock ownership plan (ESOP) days back “to create about 100 crorepatis within the company”. The brand, which started its innings as a pure-play direct-to-consumer (D2C) player, is betting on its offline business to reach the `1,000-crore mark by FY25. CEO and co-founder Tarun Sharma talks to Christina Moniz about the company’s growth strategy and Alia Bhatt’s role in boosting brand salience. Edited excerpts:
The beauty and personal care category has been growing exponentially in India, with a plethora of brands. What makes you confident of success here?
There is plenty of growth potential in this category because India’s per capita spending in this segment is far lower than many other markets around the world. If you look at the range of products in a consumer’s bathroom today, there will be a mix of legacy brands, challenger brands like ours and international players. That’s a great sign, and hopefully we will see more homegrown than international brands on shelves.
New brands have segmented the market into small and even smaller blocks. Does that make the game easier or more difficult?
This is not a winner-take-all market, unlike a category like food tech where there are two dominant players. The consumer’s need types have evolved on the back of internet penetration in the past 5-7 years, which has also led to the creation of new products that cater to specific concerns. Challenger brands like ours have been able to respond faster than large companies to address these emerging needs like under-eye patches, for example. Every brand in this category has its own story and positioning. Ours is a brand that offers products that help consumers feel good about themselves. That is why our brand resonates with both male and female consumers. Men are going beyond just a soap or face wash when it comes to grooming and self-care today, and so around 33% of our consumers are men.
mCaffeine expects to become profitable by the end of this fiscal and clock `650 crore in sales. How close are you to achieving these targets?
We started out as an online brand, a great starting point that resulted in over 1.5 million app downloads. We are now confident of achieving our `650-crore target maybe even before the financial year ends. We have been growing really fast in the last couple of years, and expect to reach the `1,000-crore mark by FY25. Our physical expansion has been largely in geographies where most of our online customer base is based. We started our offline foray around 18 months ago and our offline business now contributes around a third of our total revenue. If we are to reach the `1,000-crore mark in the next fiscal year, we need the share of offline sales to grow to 50%. Currently, large cities such as Mumbai, Delhi and Hyderabad have performed well for us but smaller markets like Raipur are also seeing a good consumer response. Our growth is also largely attributed to repeat customers, from whom we get around half our business.
What are the potential and challenges in the colour cosmetics segment?
We launched our range of lipsticks in response to a growing demand for them from our existing customer base. We never positioned ourselves as a cosmetics brand but rather more as a personal care and body care brand. The initial response was great and our first batch of lipsticks was sold out in under a month. We also launched concealers after that, but we have not yet taken a decision about developing a full range of cosmetics. We currently operate in three broad categories of body care, face care and hair care. Over half our business comes from the body care range, and we own about half the body scrub market in the country. Our face care segment is also performing well currently. The hair care business is still smaller in comparison and we are working on defining the right strategy for this product range. Cosmetics, since it is the newest category for us, is a really small part of the business at the moment.
You named Alia Bhatt as brand ambassador for mCaffeine about two years ago. How has that boosted your brand salience?
Prior to getting Alia Bhatt on board, we did a great deal of influencer marketing. However one of the insights we got from our consumer research is that India is a low-trust society. As you go deeper into smaller and emerging markets, having a brand ambassador that people recognise can help build brand trust. Alia was the perfect choice for us – she is a superstar and millennial icon. Our association with her also helped when we started building our offline presence. Brand awareness for mCaffeine grew by 70%, top-of-mind recall also grew and business from tier-II markets started growing faster than tier-I. Around 57% of the business today comes from markets outside of the top 10 cities.
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