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Until the emergence of e-commerce and Direct-to-Consumer (D2C) selling, the Indian beauty sector had been dominated by cosmetics majors for decades. In the beauty industry, it's difficult to overlook the influence of direct-to-consumer companies like Nykaa, Mamaearth, WOW Skin, Plum, and Sugar Cosmetics, which are quickly becoming customers' go-to alternatives in metros and Tier 1 and 2 cities.
Established in 2015, Sugar Cosmetics came up with just two products, namely, a black matte eyeliner and a black kohl pencil. Since then, the company has grown to 450 Warehouses. So, in just five years, what led Sugar to emerge as one of the most well-known beauty chains in India?
Sugar Cosmetics - Company Highlights
- Startup Name-SUGAR Cosmetics
- Parent Company-Vellvette Lifestyle, Vellvette
- Headquarters-Mumbai, Maharashtra, India
- Industry-Beauty, E-commerce, Brand Marketing, Cosmetics
- Founders-Kaushik Mukherjee and Vineeta Singh
- Founded -2012
- Current CEO-Vineeta Singh
- Total Funding-$80.8 Mn over 7 rounds
- Revenue-$26.85 Mn (FY22)
About Sugar Cosmetics
- Sugar Cosmetics is one of India's fastest-growing premium cosmetic companies, with a cult following among millennials. Thanks to its clutter-breaking attitude, unique low-poly packaging, and chart-topping products, it has become the first choice of many Indian women. The brand's bestselling goods in the Lips, Eyes, Face, Nails & Skin categories are sent all over the world from state-of-the-art facilities in Germany, Italy, India, the United States, and Korea.
- The brand is devoted to producing products that are a great fit for every Indian skin tone throughout seasons and across the calendar, with a cruelty-free line that is high on design and high on performance. Sugar Cosmetics is aggressively expanding its strong existence with over 35,000 outlets across 550 cities. It is backed by the faith of marquee investors and the passion of millions of beauty aficionados.
Sugar Cosmetics - Industry
- The Indian beauty e-commerce market, which is still in its early stages, might witness a spate of acquisitions over the next 3 to 4 years as smaller, direct-to-consumer (D2C) firms are rising, following a pattern set in the US.
- According to a survey published by Harvard Business Review in 2009, the global yearly consumer expenditure by women was valued at $20 trillion. In 2018, this number rose to $40 trillion.
- As for Global Cosmetic Industry, it is estimated to reach $428.9 billion by 2027. Furthermore, the Indian cosmetics industry is expected to reach $20 billion by 2025, increasing at a CAGR of 25%.
- The fact that the customer base wants to have digital experiences is one of the reasons why beauty is shifting toward e-commerce. It's simpler and less time-consuming indeed, for people to go from online material to an online shop now that they can have practically the same "real-life" experience online as they do in the stores (personal preferences, samples, etc).
Sugar Cosmetics - Name, Logo, and Tagline
- The company began as an online supplier of natural, paraben-free cosmetics and has since grown in popularity not just in India but throughout the world. Due to the usage of the black and white color combination, the visual identity of an Indian cosmetic business is beautiful and refined while also seeming bold and confident. The company's logo is made up of a wordmark with an emblem on the left, which serves as the brand's signifier and appears on all of the company's cosmetics.
- Sugar Cosmetics' slogan says, “Rule The World, One Look At A Time!!!”
Sugar Cosmetics - Founders and Team
Sugar Cosmetics was founded by Kaushik Mukherjee and Vineeta Singh in 2012.
- Kaushik Mukherjee, the Co-Founder, and CEO of SUGAR Cosmetics is a BITS Pilani and IIM Ahmedabad alumnus, and a TEDx speaker. He is also a marathon runner and an Ironman triathlete.
- Vineeta Singh is the Co-Founder and CEO of SUGAR Cosmetics, India's fastest-growing cosmetic business. She is a TEDx Speaker and an IIT Madras and IIM Ahmedabad graduate. She is a triathlon as well as an ultramarathon runner. Vineeta is a popular face on the Indian business reality show Shark Tank. Vineeta has also funded numerous startups.
- Sugar Cosmetics, a direct-to-consumer company, appointed Suchit Sikaria as its new Chief Business Officer on July 5, 2021. Sikaria, an IIM-Ahmedabad alumnus, has over 14 years of sales, marketing, and business operations leadership experience with Performics India and Nokia India. He was a VP and later a Managing Partner with Performics, and has earlier served as the Area Sales Manager at Nokia. Sikaria also has four years of startup expertise from his own entrepreneurial business, Bhukkadpanti, which was built to serve as a food startup.
Sugar Cosmetics - Startup Story
- Vineeta's husband and business partner, Kaushik, was working at McKinsey & Company before the two of them started this firm, and she was attempting to build and expand her skills at another firm. The idea of working together had never occurred to either of them, but they had great respect for one another's abilities. Soon, they both realized that they enjoyed various things, such as Kaushik's interest in technology and hers in product development and marketing.
- As a result, they decided to team together, with Kaushik working on an eCommerce project and she creating a women's business. They sensed a strong bond that might handle their shared interests.
Sugar Cosmetics - Mission and Vision
- Sugar Cosmetics' mission statement says, "We believe in every interpretation of beauty. Bold to subdued, quirky to crazy, every day to glam goddess! We aim to celebrate every aspect of you, no matter what your style is. So, go ahead and pick your faves."
Sugar Cosmetics - Business Model and Revenue Model
- Sugar Cosmetics has a D2C model of business, which also uses an omnichannel approach to sell its products. It helps Sugar sell its products in various eCommerce marketplaces like Amazon, Nykaa, etc. The major revenue streams of Sugar Cosmetics include the sale of its products in India and other export sales.
Sugar Cosmetics - Funding and Investments
- Sugar Cosmetics has raised $80.8 million in over 7 funding rounds that the company has seen to date. It was the Series C round of funding that Sugar had last witnessed on October 21, 2020, which infused $21 million into the company, after which it closed a $50 million worth of funding in its Series D funding round that came from Asia Fund of L Catterton and some other existing investors including Elevation Capital, India Quotient, and A91 Partners.
- estments in Asia via its Asian arm to Hamilton Lane, a US-based alternative investment management firm for $360 million, as of June 27, 2022. The firm has reportedly pulled out private equity investments in startups only from its Fund 1 and Fund 2. However, it refrained from selling off stakes from its Fund 3 investments, via which it invested in companies like Reliance Jio and Sugar Cosmetics.
- Sugar Cosmetics has now onboarded Ranveer Singh as its latest investor. This comes after the company raised Series D funding in May 2022. It is the first startup investment made by the actor, the investment amount however remains undisclosed. With this new partnership, the company will be able to “create new pathways for customer acquisition" and plans to become a new favorite cosmetics brand among millennial and Gen Z customers.
Sugar Cosmetics - Growth and Revenue
- The beauty firm, which operates on a hybrid model, currently has a presence in 35,000 multi-brand outlets across 550 cities. In the previous two years, its income has increased by nearly 6 times. After the pandemic took a heavy toll, the corporation devised novel strategies to reinforce the trust connection between its brand and its clients. SUGAR Cosmetics found a position for itself in the fast-growing beauty sector and weathered the epidemic by slashing expenses and reorganizing the team, as well as utilizing social media marketing and an e-commerce push. Some of the other growth highlights of Sugar are:
- Sugar's website and app witness more than 2 Mn unique visitors each month.
- It sells 200K+ products each month.
- Sugar Cosmetics products are present in over 40K retail stores.
- All prominent eCommerce marketplaces sell Sugar products like Amazon, Flipkart, Nykaa, Myntra, and more
- Sugar also sells its products outside India, in countries like Korea, Germany, Italy, and the US
- The D2C beauty and cosmetics brand managed to clock in Rs 100 crore ($12.13 Mn) in annual revenues. This was a difficult feat even for brands like Revlon, which was only able to reach the same mark in revenues after 20 long years. Sugar was able to achieve such a feat with the help of the omnichannel approach that it has developed when it comes to selling its products along with its focus on content marketing, and the development of its app.
- Sugar Cosmetics grew at a breakneck speed in FY20. With its hybrid online-offline sales, the firm increased its operations by 5.6X in the previous two fiscal years. The team grew from 87 to over 1,750 retail touchpoints in only two and a half years. The team had collected a net income of Rs 103.71 crore ($12.58 Mn) by January 2020 and was aiming for Rs 200 crore ($24.25 Mn). However, the pandemic stymied its expansion goals.
- Sugar Cosmetics' operating income increased by 82% in FY20, from Rs 57.14 crore ($6.93 Mn) in FY19 to over Rs 103.71 crore ($12.58 Mn). Notably, overseas purchasers accounted for 15.4% of its revenues, or Rs 16 crore ($1.94 Mn). During FY20, it generated a further Rs 1.4 crore ($169.78K) from its financial assets.
Sugar Cosmetics Revenue
- The Sugar Cosmetics revenue further increased to Rs 126.36 crore ($15.33 Mn) in FY21 from Rs 103.71 crore ($12.58 Mn), with its operating revenue seeing a growth of 22% during the same fiscal. It was the domestic sales that commanded the company's overall collections, which made up 93.1% of its sales, growing by 34.1%, from Rs 87.7 crore ($10.64 Mn) to Rs 117.61 crore ($14.26 Mn) during FY21. However, the export sales of Sugar dropped by 45.4% because it bore the brunt of the travel and freight disruptions that the company witnessed due to the pandemic outbreak.
Sugar Cosmetics Expenses Breakdown
- The total expenses of the cosmetics brand also grew alongside its revenues, which stood at $36.34 million in FY22, thereby rising from $18.04 million of expenses that Sugar saw in the previous fiscal. The largest cost of the company in FY22 is advertising and sales promotional costs, which contributed to 32.5% of the company's expenses. However, the company has seen a growth in its expenditure in all of the other verticals including its cosmetics cost, employee benefit costs, outsourced support and labor costs, other operating and admin expenses, and freight and packaging costs.
- Despite its tight budget, the team managed to secure their launch items — an eyeliner and a kohl pencil – from a reputable German producer. Customers found the 'Made in Germany' badge to be reassuring, and it enabled SUGAR to get off to a good start. Gloss eyeliners dominated the industry at the time, but SUGAR decided to develop a matte version, believing that its clients would prefer an item they could use every day. The eyeliner was the first of several product bets that SUGAR would make, and it turned out to be a hit.
Importance of Instagram influencers
- The importance of Instagram influencers in beauty business marketing is well-documented. SUGAR jumped on the 'unwrapping videos' and 'before and after' makeovers bandwagon to make people aware. The brand's Instagram influencer approach is well-balanced. Anmol Rodriguez, an acid attack survivor, is featured in one of their most famous videos. Today, the brand has over 2.5 million Instagram followers, much-outnumbering peers such as Colorbar.
- SUGAR, like many other emerging companies, began with an all-digital strategy. The design partner, Opposite was given the task of creating "thumb-stopping packaging." Opposite devised a strong, graphic approach that incorporates low-poly drawings, aware that the challenger brand needs to appear and feel unique from the prevalent minimal and largely black style.
- “Rather than equivocate with existing players, we decided to embrace the new dynamic – the screen was more important than the shelf, the packaging was more important than the logo.”Abhisek Sarda, Founder, Opposite
- Shopify Store
- In 2015, SUGAR opened a Shopify store, which it continues to operate. The firm also released an app in November 2019 that has over 1 million downloads and a 4.5-star rating on Android and iOS. The majority of the internet acquisition approach is still concentrated on social advertisements.
- SUGAR debuted on Nykaa, the beauty website, in 2016 when it had a far smaller number of businesses than it does now. By 2017, Nykaa accounted for roughly 80% of the brand's income, and the team admits they weren't sure whether to be "glad or frightened." In any case, it was evident that distribution needed to be scaled. It was extremely simple to go from Nykaa to other online platforms like Flipkart and Amazon. The true issue, Mukherjee concedes, was breaking the code offline.
Sugar Cosmetics - Acquisitions
- Sugar Cosmetics has acquired 1 company to date. The acquisition of ENN Beauty was announced on January 13, 2022, when the company picked up the majority (51%) stakes in the natural skin and hair care brand.
Sugar Cosmetics - Competitors
The top ten rivals in SUGAR Cosmetics' competitive group can be listed as:
- Lotus Herbals
- Blue Heaven Cosmetics
Sugar Cosmetics - Challenges Faced
- “In FY20, we had hit the ₹100 crore ($12.12 Mn) net revenue number. For us, it was more psychological that we can’t go under ₹100 crores. But there came a point when we were unsure, as April and May were very hard. As a company, we have always been close to breakeven and have been very conscious of our bottom line, but in the first quarter of FY21 we saw a loss of ₹5 crores (0.61 Mn), and we knew we had to bounce back,” Vineeta Singh said.
- The impact was worse because retail outlets accounted for 60% of their revenue. As a result, during unlocking 1.0, the team rallied to a target of at least 5 crores in net revenue. To deal with the issue, the team had to go through wage cuts and employment reshuffles, according to the founder Vineeta Singh. Despite the difficult circumstances, by the third quarter of FY20, the firm had regained profitability.
- When most merchants were reducing their physical footprint, SUGAR moved ahead and increased its number of locations. This was a strategic move Singh couldn't afford to miss out on. They realized that they needed to increase their investment. They were able to attract seasonal customers since they expanded their area before the holiday season.
- By the conclusion of FY21, the firm expected a 40% increase in net sales. Here, it is important to note that the company has already surged its domestic sales by 34.1%. In FY22, the revenue from sales of goods was $26.85 million, a significant increase as compared to the previous year. Singh has big goals for the next five to six years, and she wants to reach a net income of 500 crores ($60.53 Mn).
Sugar Cosmetics - Future Plans
- SUGAR Cosmetics has expanded outside India, having a physical outlet in Russia and an online presence in the United States. SUGAR Cosmetics intends to increase its offline standalone locations. The brand, which was created in 2015, currently manages 100 outlets on its own, with aspirations to increase that number.
- According to some figures, 95% of trading in India still takes place offline. SUGAR intends to use this to extend and enhance its retail base, as well as improve its retail marketing and visual merchandising experience.
- SUGAR Cosmetics opened five new brand-owned retail stores throughout the pandemic, putting sanitation and safety first for its retail consumers. To strengthen its D2C channels, the firm is focusing on expanding its mobile app, which has already had 1M+ app installations in less than a year. Content marketing, strong alliances, and offering new items will all be on the agenda. The CEO of Sugar Vineeta Singh has revealed the company's latest plans of crossing Rs 300 crore ($36.32 Mn) in revenues. Besides, she also added that Sugar would also be foraying into new categories, including the hair care category that the company will most likely be entering very soon fostered by its acquisition of ENN Beauty.
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What does Sugar Cosmetics do?
- Sugar Cosmetics is one of India's fastest-growing premium cosmetic companies, with a cult following among millennials.
Is Sugar Cosmetics an Indian company?
- Yes, Sugar Cosmetics is an Indian company.
Who founded Sugar Cosmetics?
- Sugar Cosmetics was founded by Kaushik Mukherjee and Vineeta Singh in 2012.
Who is the CEO of Sugar Cosmetics?
- Vineeta Singh is the CEO of Sugar Cosmetics. She is also the founder of the company and can be popularly recognized as one of the judges of the popular Indian business reality show "Shark Tank India".
What is the Sugar Cosmetics valuation?
- The Sugar Cosmetics valuation was last recorded to be over $99 million in Jan 2022. The brand is currently eyeing a valuation of $500 million.
Which country owns Sugar Cosmetics?
- Sugar Cosmetics is an Indian company.
Which companies do Sugar Cosmetics compete with?
Some of the top companies Sugar Cosmetics competes with are:
- Lotus Herbals
- Blue Heaven Cosmetics