MCaffeine, a research-driven, socially conscious consumer products company, has served more than 100,000 customers in just about 1 year. The brand known for developing grooming products infused with caffeine, was founded in 2016 by Tarun Sharma and Vikas Lachhwani. Its products broadly fall under 3 categories – Hair Care, Skin Care, and Body Care.
IndiaRetailing team spoke to Tarun Sharma, Founder & CEO, MCaffeine to know about the expansion plans and its growth strategies:-
Here are the excerpts from the interview-
Tell us about you and your partner’s career journey.
For me being a standup comedian is just a stress buster and more of a hobby. I was with Box 8 and was responsible for their growth and I graduated from Indian School Of Mines, Dhanbad. I had an interesting journey to decode wherein I always wanted to be in the business but took up engineering. Took IIT and cleared it but joined Indian School Of Mines. And the college which is known for earth sciences and mines, I took up electrical engineering.
Studied electrical and joined a software company after my placement. I was working with Hawlett Packard and this is where I figured out that I was not really good at this job. After this I started a Crowd Funding Website Sanki.in wherein 2011-12 looking at the regulations we came to know that this was not the right time to do this and closed this after running it for 6 months. After this I joined Box 8 wherein I was the first one to join them. There were two founders of the company and with this I got to learn everything across verticals, right from setting up the outlets, scaling them up, hiring, product, technology for 3 years managing a staff of around 900 people across Mumbai, Pune, Bengaluru.
My partner Vikas Lachhwani is a poet and he is an amazing writer. He writes poetry and small phrase stories. He is a guy who appreciates and wants to be around art. His education is from IIT Kharagpur where he studied architecture and from there moved to United States and did his Masters in two subjects i.e. Marketing and the other in Consumer Choice Behavior.
After this he worked for Mu Sigma, a data analytics company. He was instrumental in setting up their offices in US. He worked with many FMCG companies and retailers during this period. After this, he came back to India and started his own company in education technology. This was a statistical model engine which helped students to take higher education tests. After running this business for 5 years he joined Zoom Cars as a Head for its growth as a Senior Vice President. He spearheaded the rapid growth of Zoom Cars.
How did you both come together and how did you start on the entrepreneurial journey?
In 2015 Vikas moved out and even I was moving out from my current job and we met and started working together.
Our first model was aggregating salon business. This is where we picked up the existing inventory, rebrand them without the cost from the franchise and then do the marketing, increase the sales, manage a top line cut and manage customer experience. We scaled 10-12 outlets in Mumbai by the name of ‘Pep Salons’. This is where we discovered that customer experience is paramount to this industry; it’s a high touch industry. Aggregation as a business is done in hotels, cars and people have tried to this in salons. However in comparison, salon is a high touch customer experience driven industry wherein if the services are not delivered properly you may end up losing a customer for ever.
In between this we were also experimenting with our products wherein we were clear that our salon chains will work independently and we can have a clear line of products separately as a business. Since we had earlier launched salon only products we already had a fair idea of how this industry works. Our larger aim right from the time we started was to end up in consumer products as a business. We had well known brand of products in personal care but India has seldom seen brand originating from our geographies.
India had seen brands when the consumption was just starting and those are the legendary brands. But the consumption in India from past 5 years has changed a lot. Today it’s all about young millennial participating in the consumption story. What used to be sold through a television as the only medium 15-20 years back has changed with the coming of Internet and mobile – a powerful tool to explore and follow anything I want. This is a major cause of the change in consumption study. It was a major learning for us in the Indian economy plus the changing modern retail formats, we could clearly see that there is a good way to create a brand. One of the other reasons also is that people are more interested to seek their own identity in brands and they will take decisions based on their liking. Since people are more aware about themselves it will give boost to the launch of more individualistic and niche brand coming in the market in India. With this we were clear the consumer goods are one industry which we wanted to foray and we wanted to make something for young India.
How did you conceptualize the launch of MCaffeine?
When we were ideating around this, we came out with a theory that in the FMCG category any product has to pass a three layer test. The first layer is that the product has to be amazingly good and has to speak about itself and has to meet global levels. And if this product is good then that’s where the repeat transactions will take place. Secondly, it should fit in a segment. And the third layer is that it should have a psychological connect to it.
Since we already had certain knowledge on cosmetic beauty products and the knowledge of consumer products through our salon business, we were very clear that we have to now make a consumer product for young India. When we were researching we stumbled upon ‘Caffeine’ as a super food for hair and skin. So, caffeine delays the hair fall process. However, hair fall happens biologically because of the hormone called DHT (Dihydrate testosterone) which is present in both male and female. Whenever this DHT goes to the hair follicle it makes the hair thinner and then plucks it out of the scalp which is a biological process. Caffeine suppresses the formation of DHT on the hair follicle or scalp only with the topical application and not when you drink it. On skincare caffeine carries UV resistance, anti-oxidants, anti-ageing properties and it also tones down and cuts down extra cellulite in the skin. The most wide spread application of caffeine is easing out the puffy eyes. We could see the use of caffeine by all the MNCs and FMCG products but nobody was building a brand around it. May be it was not a brand worth. Then we started researching only on caffeine as a lifestyle and came across Starbucks, Café Coffee Day, Red Bull where the younger generation is subscribing to it. And the idea of using caffeine came to us. This is an ingredient which actually makes the cosmetic product better. We also understood the changing consumer where there are confident woman and sensitive male coming in. This is where the majority of the consumerism will happen and whosoever is the early adopters to this will benefit. The first test was cleared.
Then we wanted to play on the same role serving the confident woman and sensitive man and thus our products are unisex.
Third was the psychological connect and we could see caffeine had that quality. Then we wanted to build an individualistic brand which means if one is a ‘superman the other can be a batman’, hence the feeling of being ‘I am’ excites me and this is where the name of our product came in MCaffeine which means clearly I am caffeine. We knew that this name will cut the clutter around many brands available in the market and it also carries a psychological connect. This is how the brand MCaffeine got stitched and we officially launched the brand in 2016.
Right from day one we were very clear that we want to serve the young millennial India. We will be bold, young and sensitive.
What’s your business model? Share details on your brand’s journey and its products portfolio?
MCaffeine was launched in 2016 with 6 products on digital platforms like Amazon, Flipkart, Nykaa, Paytm etc. We also sell through our own website. With the launch of 6 products we wanted to test the idea of caffeine, so we introduced caffeine shampoo, face wash, face cream, shower gel and these were accepted really well. People were happy with the idea that for e.g. a product like a caffeine shower gel will keep me fresh and active.
For good 9 months we never launched anything new as we wanted to understand how people perceive us. Then we started launching other ingredients married with caffeine for e.g. we launched neem-caffeine, hibiscus-caffeine, silver-caffeine. With this we wanted to give a feel to the Indian consumer with the main ingredient i.e. caffeine married with neem can be a like an indi-rock music.
We were also very clear that we want to end up with the manifestation of caffeine and we launched choco-caffeine face mask. It generated a phenomenal response. It smelled like a chocolate and people liked it so much that they tweeted ‘#feel like eating it’. Then we launched another product in line with the manifestation of caffeine which was coffee face wash, body scrub, and coffee face scrub. This new product line got sold out in 14 days flat which was actually a 90 days inventory. Nevertheless this product line got sold off from our own website which was not a major contributor of sales till this product line was launched.
Moving ahead we will be expanding our coffee and chocolate based product line to much greater scale and more which have caffeine as a manifestation. We believe this is where we will be increasing our volume business with these niche products.
Tell us about your retail mapping?
We are a big believer of online commerce. We are at a run rate of 2.5 million dollars at an annualized rate. We see it growing to 10 million dollars in online retail itself in coming year with our company. From our website itself we are serving close to around 16,000 pin codes across India. With Amazon we can add up 3,000 more pin codes to our list.
Moving ahead whenever the time is right we will consider going offline. This will be evaluated through data. We as a brand will work on data strongly as we will have more data engineers than brand managers. Since we are online, we are exposed to a lot of data which we can use to our benefit. Our whole philosophy in retail would be let our online help offline and offline empower online.
Share details on your manufacturing process and the research you carry to launch a product?
We are engineers by profession but we had people who helped us in the process to set up our products. At this point of time we have a full fledged R&D lab. The backend works as an iron triangle wherein at the front end are we the promoters of team make market and product brief which then goes to the R&D lab which then formulates the products for us and then this formulation goes to the manufacturer, so that we have the clear ownerships of the triangle points and then the final products comes to us. We work with multiple contract manufacturers based on their strength.
What are the compliances you follow?
We were very clear from the start itself that we need to adhere to the high standards of compliances in this business. All our formulations are FDA approved. Over and above we do close to 27 types of tests on our products which are clinical in nature like temperature, microbial and dermatological tests. Once the product clears these parameters then it is launched in the market. We also put all these in our product content list. All our products are paraben and sulfate free and all the ingredients used are natural and all the ingredients are not derived nor tested on animals.
What are you products expansion plans?
Currently, we have some 20 products in our portfolio and we will be launching close top 30 products in this calendar year 2019. We will be going deeper in our ranges. We are working on around 15 products currently which will be launched in the market by May 2019. And the rest of the 15 will be equally distributed till December 2019. These new products will cover our core categories like Face care which will be the highest, then will be Hair care and then Body care.
Share insights on your Investors & funding?
Our initial funding was for half a million which was done in October 2017 led by Harminder Sahni, Founder & MD, Wazir Advisors who is also on our company board with some angel investors who have experience across domains.
We have investment banker like Kaushal Aggarwal who is the Managing Director of Avendus capital which is the largest investment banking firm. Then we have Founding Partner of Ola Cabs Pranay Jivrajka, KK Mehra from Capital Technologies, Box8 Founder Amit Raj and Anshul Gupta as an investor and Devangi Nishar who is the owner of Aza Fashions.
Funding is a byproduct of a good business and as and we need it we go out in the market. As of now we are growing very aggressively and are profitable.
Any plans to go international?
Just to give you a fair idea around 22 percent of the traffic is driven from outside India. For certain keywords we rank first in United States. This is because we are very high on our content. We have got strong interest from US, Europe and UK. We believe India itself is a much bigger market till we make good Rs 100-150 crore on a topline on a yearly basis. But defiantly we wish to position MCaffeine as an aspiring brand from India on the world map.
You are currently catering to products to the direct consumers, do you have plans to explore B2B channel?
Definitely, we are looking at the B2B channels like Salon and Spa etc. Our body scrub has been received well and even generated interest from some of top 6-7 salon chains in Mumbai. So salon is one area which we will be exploring. It will be a learning for us as the product which becomes hit at the salons can be integrated as a consumer product and vice versa.
Share details on your current turnover and your growth aspirations?
We are currently at a rate of Rs 17 crore and our target till December 2019 is to achieve a top line of Rs 70 crore.