Becomes the first unicorn of 2022 at a valuation of $1.2 bn, plans to use the recent funding to expand in international markets
Honasa Consumer Pvt Ltd, the parent entity of the skincare brand Mamaearth, became the first unicorn of 2022 with the $52 million fundraise from Sequoia at a valuation of $1.2 billion.
The company plans to use the funding to expand its presence in international markets and make acquisitions as it builds a house of brands in the beauty and personal care segment. BusinessLine spoke to Varun Alagh, Co-Founder and CEO, Honasa Consumer about its house of brands approach and the acquisition plans. Excerpts:
The company was last valued at $730 million in July 2021 and is now valued at $1.2 billion. What factors do you attribute to this growth?
Over the past six months, we have continued to execute our growth plan and grow as an organisation. Clearly, that is something that investors have seen and shown confidence in.
Further, our other brands like The Derma Co and Aqualogica have also been able to set a narrative that, apart from Mamaearth, we will also be able to build new businesses which will drive growth for us in the longer term.
How many acquisitions do you plan to do this year? Will the geographical expansion be a driving factor for these acquisitions?
Acquisitions are a very strategic piece and should be done based on what you see fitting perfectly into your capabilities or portfolio requirements. For instance, our recent acquisition of Momspresso was driven by the objective of getting the community and content capability in the organisation.
Similarly, we might look at other capabilities or categories where our current brands might not be present or do not have strengths. There are also a few markets of interest such as GCC (Gulf Cooperation Council) and Indonesia. If we find a suitable brand there, which also helps to strengthen our market entry, then we will look at doing an acquisition.
What are the benefits of taking a house of brands approach?
We believe that there are certain corporate strengths that we have created in the process of building Mamaearth. Those strengths can be technology, data, market playbooks, distribution, and we want to utilise them through the house of brands approach.
As for the consumers, each brand continues to maintain a separate identity and branding. On the back end, all brands will be able to use the same infrastructure, technology stack, R&D understanding of personal care, consumer insights around skincare and that is where at an organisational level, all of these become synergies.
Does your target audience also grow with the house of brands strategy?
A target customer grows from the perspective of a psychographic segment. Our target customers are evolving digital millennials – Indians in the age group of 18-35 years.
Even in this target group, there is a segment that wants natural skincare products that Mamaearth targets and then there is a segment that prefers science-backed clinical products. So in that way, the house of brands strategy increases our target segment and hence our ability to take share in the market.
You recently acquired a content platform Momspresso. How does this acquisition aid the company’s growth plan?
If you look at the journey of a consumer on the internet, it usually starts with searching about a problem and they consume a piece of content on that problem. Then that content leads to the discovery of a product. Thus content plays a very pivotal role in driving consumer concentration, which is what anyone who is playing in the content-to-commerce narrative is realising.
In terms of collaboration, becoming Mamaearth’s content engine is one thing. Momspresso also has a very strong creator product called Momspresso MyMoney, which can be tapped to spread the stories around the brand, among other potential synergies.
What is the offline versus online sales split for your brands? In terms of online sales, how much business do you get from your website versus an e-commerce marketplace?
Our website is the biggest channel for us, bigger than any other marketplaces like Flipkart, Nykaa, etc. For example, if Amazon is the largest marketplace channel for us, our D2C will probably be three times larger than that as a channel of sale. We have also been focusing on offline sales for the past 12 months. 70 per cent of the business still continues to be online but offline has been growing fast too.