A random tweet by an X user urging buyers to trash Mamaearth products has raked up a social media storm with CEO and co-founder Ghazal Alagh jumping in her brand’s defense. It has also brought under the spotlight its recent rapid growth, raking up the next big question: Does Mamaearth have enough firepower to take on the big players in the market such as L’Oreal or for that matter the bevy of beauty brands from the Hindustan Unilever stable?
Mamaearth, the flagship brand of Honasa Consumer and its most successful, is set to clock `2,000 crore in revenue nearly eight years since its launch. Mamaearth is Honasa’s largest-selling brand, accounting for two-thirds of Honasa’s business.
Varun Alagh, chairman & CEO of Honasa Consumer, says that the company’s strength lies in its differentiated offerings. Many international brands bring their global portfolio to India, without much customisation for Indian skin needs and weather conditions, he says. “Our brands are created for the Indian customer — we do this using quintessentially Indian ingredients and popular household recipes. So, a brand like Mamaearth for example contains products like multani mitti and onion oil. We don’t see this level of customisation by global brands,” elaborates Alagh.
The company aims to grow at a CAGR of 20% over the next three years and hit `5,000 crore in revenue by the end of this decade. What makes the company so confident?
D2C advantage
Industry observers caution it may be premature to make any comparisons between a company like L’Oreal and Honasa Consumer. HUL and L’Oreal have stronger distribution and larger scale, which make it tough for young challenger brands to compete. HUL, for instance, has done well in terms of innovation and is quick to launch new products in the market compared to other legacy brands. For its part, L’Oreal not only offers beauty care products, it also operates salon chains, while Honasa has still to realise the full potential of the available channels.
Alagh points out that its D2C playbook has been a trump card of sorts in this business. “Our disruption of the brand building playbook with the use of technology, social and e-commerce is another reason why we have been able to perform well in a market with large competitors with great distribution strength. Using the power of e-commerce, we have been able to scale sharply to a relevant set of consumers and get feedback in real time to improve our product line with regular testing and innovation,” he says, adding that the D2C model has been liberating for several brands since the pandemic.
Brands no longer have to spend large volumes on media and distribution, like they did in the past.
As per a report by Redseer Strategy Consultants and Peak XV, the BPC market in India is expected to reach $30 billion by 2027. The online market for BPC products is expected to reach $10 billion by 2027.
Pure-play brands in this segment have disrupted the industry by addressing specific and niche consumer needs, observes Rohan Agarwal, partner, Redseer Strategy Consultants. “The past few years have demonstrated how new D2C brands have been quick to fill certain need gaps and respond quickly to micro trends with the right kind of products and offerings. These brands have been more agile and quick to innovate compared with large conglomerates,” says Agarwal.
He adds that global beauty brands have a lower risk appetite and therefore rolling out new products to cater to niche needs takes a lot more time for these firms, which are also apprehensive about new launches backfiring and diluting their brand equity.
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