Long before the introduction of online business and direct-to-consumer (D2C) marketing, the Indian beauty sector was dominated by beauty care product giants. It is hard to ignore the impact of direct-to-consumer firms in the cosmetics industry such as Nykaa, Mamaearth, WOW Skin, Plum and Sugar Cosmetics, which have become the go-to solutions for clients in metropolitan areas and tier 1 and 2 metropolitan areas.
Sugar Cosmetics is releasing only two products in 2015: a dark matte eyeliner and a dark kohl pencil. Since then, the group has expanded to 450 stock-keeping units. Anyway, let's see how Sugar managed to become India's leading beauty chain in five years.
About Sugar Cosmetics
Sugar Cosmetics is one of the fastest growing premium cosmetic companies in India and today Sugar is the favorite brand of twenty to thirty year olds. From state-of-the-art offices in Germany, Italy, India, United States and Korea, the brand's products in Lips, Eyes, Face, Nails and Skin classes are shipped worldwide.
With a free collection that is elegant in design and high performance, the brand offers products to suit every Indian color in every season. Sugar Cosmetics is aggressively expanding with over 10,000 retail locations across 130+ urban communities by 2021 with the aim of reaching out to all beauty care product consumers in the country, backed by marquee financials.
Founders and team
Sugar Cosmetics was founded in 2015 by Kaushik Mukherjee and Vineeta Singh.
Kaushik Mukherjee
Kaushik Mukherjee, Co-Founder and COO of Sugar Cosmetics is an ex-BITS Pilani and IIM Ahmedabad student and TEDx speaker. He is also a marathon runner and Ironman triathlete.
Vineeta Singh
Vineeta Singh is the Co-Founder and CEO of SUGAR Cosmetics, India's fastest growing cosmetics company. She is a TEDx speaker and a graduate of IIT Madras and IIM Ahmedabad. She is a marathon and ultramarathon sprinter. Vineetha is a well-known character in the Indian business family drama Shark Tank. Vineeta has also invested in several new ventures.
The Startup Story
Kaushik, Vineeta's husband and colleague, was working at McKinsey before the two started this business. They had a high respect for each other's abilities but didn't know where to start. The two were struck by Kaushik's talent for innovation and Vineeta's talent for product development and advertising. As a result, they decide to collaborate, with Kaushik working on an e-commerce project and Vineeta starting a one-woman business.
Business model and revenue model
Sugar Cosmetics has a direct-to-consumer (D2C) business strategy and uses an omnichannel approach to sell its products, enabling Sugar to sell its products on various e-commerce marketplaces such as Amazon, Nykaa, etc. Sugar Cosmetics' huge revenue growth is attributed to its product offering for India and other commodity deals.
Funding and Investments
Sugar Cosmetics has raised $85.5 million in capital through four financing adjustments. On October 21, 2020, Sugar followed up with a Series C round of financing that invested $21 million into the organization, with a $50 million Series D financing round coming from the Asia Fund of El Caterton and some other existing financial backers.
Challenges faced
The impact was compounded by the fact that 60% of their revenue was from retail outlets. Following that, during Open 1.0, the group was pushed towards a net revenue target of not less than 5 crores. According to Vineeta Singh, the group had to cut salaries and restructure work to deal with the problem. Regardless of the difficult conditions, business productivity recovered by the second-last quarter of FY20. SUGAR has gone ahead and expanded its number of locations at a time when most retailers are downsizing their number of shops. This year the number of shops has been increased from 1000 to 2500.
Future plans
SUGAR Cosmetics prioritized hygiene and safety for its retail customers, creating five new brand-owned retail outlets throughout the pandemic. To strengthen D2C channels, the company is focusing on expanding its flexible application, which previously had 800,000 application deployments in a year. Content marketing, strong partnerships and new items will all be on the agenda in 2022. Sugar CEO Vineeta Singh revealed that the firm's most current target is to cross Rs 300 crore in revenue by FY22.
