Ghazal and Varun Alagh, co-founders of Mamaearth parent Honasa Consumer Ltd. open up about the ingredients of their success and the strategies they follow while sharing their growth and expansion plans…
Gurugram-based Honasa Consumer Ltd.’s beauty and personal care flagship brand Mamaearth sells about 16,000 units every hour. What started with a simple launch on Amazon in 2016, showcasing safe and toxin-free products for babies till the age of five is today a unicorn valued at over $1 billion. In just seven years since it was unveiled, the company has been publicly listed with five brands under its umbrella—Mamaearth, The Derma Co., Aqualogica, Dr. Sheth’s, and Ayuga.
Mamaearth reported an annual profit of Rs 111 crore for the financial year [FY] 2023- 24, against a loss of Rs 151 crore in FY23, according to its regulatory filing. The digital-first brand opened its first exclusive offline outlet in 2021 and has not looked back since. Currently, with 110 exclusive stores, Mamaearth through its modern and general trade distribution is available in 1,80,000 stores across all platforms. The brand further aims to be available in 4,50,000-5,00,000 stores in the next four years.
Founded by Ghazal and Varun Alagh, the brand started as Asia’s first Brand with MadeSafe certified products for babies and soon moved on to crafting safe personal care for adults. The brand is cruelty-free as certified by People for the Ethical Treatment of Animals, widely known as PETA.
Mamaearth today has a product portfolio of over 200 products and has reached over 5 million customers in 500 Indian cities servicing over 18,000 pin codes.
In a candid conversation with IndiaRetailing, the Alaghs open up about the ingredients of their success and the strategies they follow while sharing their growth and expansion plans. Edited excerpts…
From losses to profit in just a year…What’s the secret behind the remarkable turnaround?
To be honest, the secret sauce to this turnaround has been consistency. As long as we are consistent in building the right brands with quality, the profits are bound to show up. With the kind of gross margins that we have as an organisation, we were also choosing to invest in younger brands. We have five brands, which we have either launched or acquired in the last three years, and all of them were in nascent stages and needed more investment. And as they scaled, the numbers were bound to show up.
Going ahead, our mantra remains the same, to continue to build brands consistently.
The loss in the 2023 fiscal was due to an exceptional item, which is a write-off that we took on Momspresso acquisition. Aside from that, we were EBITDA (earnings before interest, taxes, depreciation, and amortization) profitable, and have enhanced profitability by almost 500 basis points. And it has been a combination of efficiency in marketing, better gross margins, and opex leverage that we are seeing as we are scaling as a company.
Any particular launch or campaign you want to highlight determining the success?
We have been launching products every year in line with the kind of trends that we have mapped for consumers. And hence, this is core to us and not anything new.
Similarly, in terms of building brands, we have been using the right mediums and messages to reach out to consumers and we have just continued doing that.
How do you enhance your brand reputation?
The most important thing that consumers expect is that you make promises that you can deliver and you are consistent with what you say and what you do. And that probably is the most important thing to build a brand reputation.
So, for example, in the case of Mamaearth, it promises safe, certified, toxin-free products, which bring the best of nature to you. And we need to remain consistent with that promise. As long as we consistently meet those expectations, that is the most important lever of brand reputation. We try day in and day out to make sure we are able to do that.
How do you stay ahead of the market demands and trends?
Listening to consumers has been one of the most important skills that we have built over time. Initially, it was manual in nature where we would talk to a lot of consumers, conduct surveys, and get that understanding. Over time, we have developed technology tools like Profet, which help us garner the consumer footprint from the Internet—be it on YouTube or Google searches. Using AI models helps us understand the chatter around keywords and subcategories, and how they are being talked about and the volume of these mentions. Parameters like these help us to understand and spot trends.
This helps us make decisions about how we should design the product and when we should launch products.
A combination of technology and consumer listening helps us map trends.
What are your key performance indicators for measuring success in the market?
The most important indicator would have to be market share. Analysing if your consumers are happy with you can help in mapping the perception of the brand, your brand love scores, how are your repeats, how is your NPS (Net Promoter Score) for the D2C channels and how are your brand searches moving on Google. A combination of these metrics is what we track to gauge the brand health.
Are there plans for category expansion?
As a company, we keep looking at different subcategories. Of course, Beauty and Personal Care (BPC) category is core to us. And we continue to focus completely on it. But within BPC, every couple of years we identify one category, and we find ways, through our current brands or potentially a new brand, to enter that.
Recently, colour cosmetics is the category that we have recognised. We first entered it through Mamaearth with a safe, certified colour cosmetics range. This year, we have also launched Staze 9TO9, which is a pure colour cosmetics brand. And we intend to build that.
How do you evaluate the potential of new categories?
Through a combination of multiple data points. How is the category doing? How is it growing? What are the gaps in the category? Has there been disruption in the category or is it ripe for disruption now? What are the consumers looking for in the next decade? How is that category going to grow and where is that growth going to come from?
Answering some of these questions helps us understand if the category is interesting as well as if we have the right to win with a differentiated play in that category.
How do you decide the focus for geographical expansion?
Online sales provide a lot of directional data. It was able to provide us with an understanding of the pin codes and geographies Mamaearth has a strong pull in. Where are the consumers buying? What are they buying in those geographies? This helps us map a planned offline expansion strategy.
If we must expand distribution and open stores, which geographies should we start with? It helped in getting early traction. Because wherever you open, you already know that there is demand.
The next thing we went was for the distributed trade, modern and general trade. We executed some of the SKUs to see the traction and it paid off well for us.
Any new markets you are targeting now?
The next phase of expansion will be focused on tier 2 cities and beyond.
Has offline revenue reached online levels?
As far as Mamaearth is concerned, the ratio is 50-50.
What have been the sustainability goals for the brand?
Early on, we recognized the fact that consumers are going to choose brands, which have a strong purpose attached to them. For Mamaearth, we have two purpose programs that we run in parallel. One is Plant Goodness, and the second is Plastic Positive.
Under Plant Goodness, we have planted almost 6,00,000 trees till now, which are connected back to consumer orders. On our website, if you place an order, you can actually see the tree that we have planted, the geolocation of the tree, and its picture, and we send that information to customers by email as well. Our aim is to hit a million trees by the end of 2025.
Outside of that, we also recycle more plastic than we use. And that’s another goal and promise that the brand has. And we continue to stick to that promise.
What is your long-term goal?
Our goal is to become the most loved beauty and personal care company in India, which has brands that help the consumer move up the aspiration ladder. That will be the continued goal. We are also one of the few companies, which have a strong brand-building muscle and the ability to build brands, which is something that we will continue to focus on. Wherever we see consumer opportunities, we will build more brands there in the future.
