Premium beauty brand SUGAR Cosmetics is aiming to double its revenues by the end of FY23 on the back of wider distribution and the addition of new categories. The D2C brand, which is backed by key investors such as Elevation Capital and A91 Partners, is also looking at a fresh funding round.
Speaking at the sidelines of the Goafest 2022, Vineeta Singh, Co-Founder and CEO, SUGAR Cosmetics told BusinessLine, “The last two years the beauty category overall had a lower buoyancy but April started with a bang. It has been our biggest month ever in terms of the end consumer sales as people are getting back to work and are wearing more make-up.”
Singh added, “Our target is to double our gross revenues to ₹600 crore in FY23 and achieve net revenue of over ₹500 crore. This will be done by expanding our distribution and adding new categories.”
Tapping more outlets
The beauty brand is currently available at about 30,000 outlets and it aims to expand its distribution to over 60,000 outlets. At the same time, the company has been strengthening its presence in personal care with new products.
In January, the brand’s parent company, Vellvette Lifestyle picked up a majority stake in ENN Beauty, strengthening its play in the hair and skincare segments. Singh said that the company could look at more acquisitions in FY24.
Asked about the company’s IPO plans and future fundraising, Singh said, “Our IPO would probably be 2-3 years down the line because we want to focus strongly on profitability before that. But meanwhile, we would look to raise a round... not so much from the perspective of capital requirements but simply because we think it will be good timing to raise money.”
The company has not raised prices in response to heightened inflationary pressures and has been absorbing the costs.
“The good thing about our category is that it is a fundamentally very high gross margin category. So we’re still absorbing the inflationary costs even though our costs are now much higher by about 30-40 per cent due to rise in raw material and freight costs,” Singh said.
She noted that their products are “already priced 40-50 per cent higher compared to the mass brands” and that they ”don’t want to hike prices and make the brand unaffordable.”, while adding that the brand is working on economies of scale to reduce its costs.
Eyes on new markets
The brand is also betting big on the tier-2 market opportunity. Singh said that over the last 12 months the aspiration levels of consumers in the tier-2 regions have gone up with rising access to the internet.
“We are already seeing 60 per cent of our business coming from markets outside of tier-1 and we feel that could go up to almost 80 per cent in the next 2-3 years,” she added.