Kaushik Mukherjee, Co-Founder & COO, SUGAR Cosmetics on the things that helped the beauty brand hit the sweet spot of success
Sugar Cosmetics has emerged as one of the biggest success stories in India’s nascent yet promising direct-t-consumer (D2C) segment. In the process, it has grabbed the attention of consumers and investors alike. In May 2022, Sugar raised $50 million led by L Catterton. The fundraising episode was also participated by a raft of other investors including A91 Partners, Elevation Capital and India Quotient.
In September, Sugar received investments from Bollywood actor Ranvir Singh. Although it seems like an overnight success story, Sugar has endured a long trek to be in the current position, said Kaushik Mukherjee, co-founder and COO. He shares the story of Sugar’s success and the key factors that worked for the brand.
- Finding the Right Market
As a brand, Sugar has been in existence for 7 years and at the time it had a very different business model. Sugar was in the business of providing beauty subscriptions. This included putting together a basket of products made by other brands and sending it off to customers every month on a subscription. “I thought we are in a very exciting space. The beauty and personal care space was growing,” said Mukherjee.
And yet, investors weren’t queuing up at Sugar’s doors. The business wasn’t scaling. “We realised much later that the investors were right. Market matters. We had to explain to customers what exactly it was that we were selling,”
After three years of doing this, it dawned on them that perhaps the market is somewhere else. The year was 2015. “We sat back and thought, we send different product categories to people such as makeup, haircare, bath and body, fragrances. Yet, out of all of this nothing seemed to get our audience which was 18-24-year-old first users who were trying to get 2000 rs worth of value from a 500 Rs product basket. Nothing used to excite them as much as makeup,” he said.
The company then took the least common denominator—the red lipstick and charted the prices of all red lipsticks available in the market. They found that there the Rs 599 – Rs 699 price band had no contenders. So they decided to play in that band. The brand stuck to it even though it didn’t excite the investors as they thought it was niche at that point. “That is the beauty of building consumer brands in India. Today’s niche is tomorrow’s mass market,” observed Mukherjee.
“Finding the right market is what initially worked for us,” he added.
- Becoming Digitally Native
Between 2015 and 2022, the brand became truly digitally native. “Digital gave us this unique once-in-a-lifetime opportunity to build awareness,” he said. Earlier, brands were communicating to the audience; the communication was one-way. Then, the audience started talking back to the brands through blogs or social sites. That is when brands realised that there is no one way to build awareness, there are multiple ways and Sugar worked at building its digital presence to build awareness and connect with its audiences.
“When we say we want to build awareness top of the funnel through digital. What do we mean? Being available on mobile phones,” explained Mukherjee.
The brand wanted people to stop scrolling on their phones to stop and view what Sugar had to offer. So they designed the product for digital in a way that the brand would register in the consumer’s mind even in the fleeting moment when she is scrolling on her mobile phone. So the brand invested a lot of time and effort and creating an eye-catching visual identity that would work on digital channels. And making things shareable.
- Studying Consumer Reviews
An adage says actions speak louder than words. For sugar, words (in the form of reviews) spoke volumes to them about what their consumer wanted. Mukherjee has made it a habit to read reviews about his company’s products on marketplaces and e-commerce websites. Consumer reviews have revealed many valuable insights that Sugar used to improve and expand its product offerings. Thanks to the insight, Sugar has been even able to build some disruptive products like matte eyeliners and foundation sticks.
- Spending on Social Media
“In 2017, we asked ourselves, what can we invest in and develop/dominate? That’s when we decided to put all our energies into social media,” remembered Mukherjee.
As a result of the focus, Sugar gets 4 billion views per year on its owned media. The brand took great care to avoid pushing the bottom-of-the-funnel communication on top-of-the-funnel platforms.
The brand used influencers and the right approach to build the right voice for the brand.
- Going omnichannel
Mukherjee admitted that Sugar always wanted to become a large brand. “However, that is not possible if you restrict yourself to just a DTC or an online brand. That’s why we decided to play the retail game. First, because it is 90% of the market and second those who are competing with us are playing the retail game so we couldn’t just sit and not play the retail game,” said Mukherjee.
The brand took a step-by-step approach. It started with D2C, then was available on partner portals or e-commerce sites other than their own, and then in shop-in-shops. The next step was to start its exclusive brand outlets and kiosks. Today, the brand has more than 114 EBOs and kiosks. The brand has also forayed into high streets. The plan now is to get into travel retail.
In a nutshell
- Things that worked for Sugar Cosmetics
- Finding the right space in the market
- Harnessing Digital to Build Awareness
- Designing for Digital
- Focusing on Social Media
- Scaling across channels