Beauty Business. How SUGAR is spicing up the cosmetics market

The festive season is around the corner, with Raksha Bandhan, Janmasthami, Onam starting it all off. So is the beauty season. It’s the time when Indian women start to deck up in festive finery and glam up with make-up. Excitedly geared up for this peak season for the beauty industry are Vineeta Singh and Kaushik Mukherjee, the husband and wife co-founders of SUGAR Cosmetics, the colour cosmetics D2C power brand.

Singh explains how the key consumption season kickstarts in August with Raksha Bandhan, and continues through Durga Puja, Karvachauth, Diwali lasting till Women’s Day in March. With the key wedding season thrown in, this is the time when beauty players can rake in the moolah if they play their cards right.

Ready with the gloss

The founders of the nine-year old brand are confident they hold the aces. SUGAR Cosmetics is among the early D2C brands that made a big bet on the beauty industry backed by the consumer insight that Indian woman consumers are stepping up spends on colour cosmetics and buying them more frequently. Women in India who were earlier content to apply just a kohl or bindi have started lapping up eyeshadows, bold lipsticks, foundation and more. Today, we actually have days like Nykaa’s National Lipstick Day that celebrate cosmetics, as e-commerce feeds the ever growing demand for beauty products. And brands like SUGAR are ready with products to ride the wave.

Singh points out that the beauty industry growth is being fuelled by the large population of young consumers in India, which has led categories like colour cosmetics to double to ₹12,000 crore in the past 5-6 years.

Nearly 70 per cent of the company’s sales come from the premium segment which is the ₹700-1,200 range. The founders state that the segment has been growing 50-100 per cent year-on-year and will continue to grow at over 50 per cent. The brand will also dip its toes in the luxury segment. “We have a sub brand called Mettle which is upto ₹1,400 price point and we plan to add a few products priced upto ₹2,000 price points,” says Singh.

Recently, SUGAR Cosmetics crossed the ₹500 crore-revenue mark. It has amped up its distribution to an extent where its product portfolio is sold across over 45,000 outlets, including 200 of its exclusive branded outlets.

Growing share

As Singh points out, the brand’s journey has run parallel to the evolving financial independence and aspirations of Indian women. “In 2015, when we started, less than 14 per cent of the online shoppers were women. Today that has grown to 47 per cent. We began with an idea of being a disruptive beauty brand that offers more inclusive products made for Indian skin tones unlike legacy brands. The explosion of the e-commerce channel further helped them discover our products across the country and that really changed the trajectory for us.”

Says Mukherjee, “We were fortunate to be at the right place at the right time as the D2C phenomenon had just begun.”

According to Singh, SUGAR is the third largest colour cosmetics brand in India with about 6.5 per cent market share. The ambition is to make SUGAR the largest colour cosmetic brand in the coming years. But the founders are clear that that this will be done with a sharp focus on the bottomline and not by just growing the topline. “The medium-term goal is to go public within the next three years. When we do file for a public listing, we should be close to the ₹1,000 crore-mark in revenues,” Mukherjee proclaims confidently.

“When you take the company public, you need to have a robust and defensible growth story to take forward. So we have been focusing on continuing to move towards a positive P&L and patiently executing,” says Mukherjee.

According to a report by Redseer and Peak XV released in September last year, the Indian beauty and personal care market (BPC) is projected to reach $30 billion by 2027. In terms of per capita spends, the US leads at $313 and China at $38, India lags at just $14. Online is a significant channel for BPC in India as it is projected to become a $10 billion market by 2027, accounting for roughly 33 per cent of the market then.

It also noted that the Indian pure-play BPC players’ combined revenues is growing at a rate twice as fast as that of the FMCG-led BPC brands.

Strategic moves

Singh points out that the beauty industry growth is being fuelled by the large population of young consumers in India, which has led categories like colour cosmetics to double to ₹12,000 crore in the past 5-6 years.

Of course the BPC space is now intensely competitive. Not only are there a whole host of new age D2C brands jostling for supremacy but the legacy FMCG led beauty brands are reinventing and coming back strongly. They are making higher digital spends and focusing on offering more need-based products just like the D2C players. But SUGAR Cosmetics, which is backed by marquee investors such as Elevation Capital, A91 Partners, India Quotient, Stride Ventures, and L Catterton, has been making strategic moves. In 2022, the brand’s parent company picked up a majority stake in the natural skin care and hair care brand ENN Beauty. It also formed a joint-venture with film star Kareena Kapoor, called Quench Botanics, to offer high-quality Korean beauty products and regimens suitable for Indians at accessible price points. Quench has scaled up 5-6 times in the last 7-8 months, says Singh.

The brand is bullish on the upcoming season even though there is a bit of consumption pressure that all colour cosmetics brands are facing. “But we have seen early signs of stronger consumption and we are bullish the momentum will start again,” says Singh.