Why Honasa Consumer is Betting Big on House of Brands Strategy?

Apart from Mamaearth, The Derma Company, and Aqualogica, the other brands that are there in the kitty of HCPL are Ayuga, Dr Sheth, and BBlunt.
Why Honasa Consumer is Betting Big on House of Brands Strategy?

Honasa Consumer Pvt. Ltd. (HCPL), the parent company of Mamaearth, The Derma Co., Ayuga, and Aqualogica, and the fastest growing House of Brands for personal care is built on the values of honesty, natural ingredients, and safe care. With a digital-first approach toward consumer brands creating the FMCG conglomerate of the future, HCPL caters to the needs of millennial consumers through innovative products, evolved propositions, direct-to-consumer marketing, and e-commerce fulfillment. 

Ghazal Alagh and Varun Alagh, the co-founders of Mamaearth introduced their first brand in 2016 when they failed to find certified, safe, toxin-free products in India for their son who was born with a specific skin condition.

Elaborating on it further, Ghazal Alagh said, “He was born with a skin condition where anything that we used to apply on his skin used to irritate him and because of that we relied on ordering products from outside of India. It was a very genuine question that kept popping up in our mind why are such products not available here in India? And when I was in New York for a stint where I was doing my education and at that point of time, there was a movement going on there where they were lifting certain products off the shelves because they contained cancer-causing ingredients in them. So I had a little bit of awareness around a few ingredients that must be avoided in the products. I was avoiding those ingredients on myself and when our son was born, it very naturally came to me that I started reading labels and some of those ingredients were present in those baby products. As first-time parents, we were paranoid about the safety of everything and anything that got even close to him.

“We said, if nobody else is doing anything about it, is it worth giving a try? We wore our research hats, talked to a few consumers to understand if they were willing to accept this proposition, did a little bit of research around vendors and that's how we conceptualized Mamaearth as a brand,” she further added.

Mamaearth was launched as a baby care brand as the co-founders wanted to solve the problem for babies at that point in time, eventually, the brand was well-accepted by the consumers and now it is available across skin, hair, and body as a category. Recently, the brand has also forayed into color cosmetics.

Retail Strategy

Currently catering to over 500 cities in India, HCPL is building an ecosystem that helps benefit the consumers and community at large. 

“During my 10-year stint in the FMCG ecosystem, be it Unilever or Coca-Cola, I learned the fact that offline is not an easy game to crack and because there is no way to drive discovery for your brand through offline presence. I believe, that only when you can create an effective pull for your brand, that is when you should consider offline as a channel. I am not denying that it's a very important and large channel for sure, however, for a young company, which is only wanting to target a certain set of consumers to get things rolling and get their PMF going, digital and e-commerce seemed to be a very natural answer. That's why we started with that. However, over time as the brand has scaled, the brand pool has been very strong. About two years back we started expanding aggressively into our offline retail presence and there we've gone into distributive trade - general trade and modern trade. And, we are now available in more than 40,000 stores across the top hundred cities in India,” asserted Varun Alagh.

Recently, Mamaearth opened its first EBO in Delhi and 2 EBOs in Mumbai and will be retailing all the product ranges of baby care along with beauty and personal care.

Elaborating on the same, Varun Alagh said, “Honasa Consumer is in the business of building brands, and brands are built in the minds of the consumers. The mediums used to communicate with consumers will continue to change and evolve. Being a digitally native company, digital platforms and technology are integral to our being, but the core objective is to stay connected with the consumer, and we need to follow the consumer’s journey. If the consumer wants to purchase you offline, you need to be present there. Understanding this need, we decided to venture offline with Exclusive Brand Outlets and we truly wish that consumers show us the same love offline, as they did digitally.

House of Brands

Today, the consumer is looking for different kinds of propositions in the market when it comes to the beauty and personal care category. And it is not like one consumer is looking for one type of proposition and another consumer is looking for another kind of proposition. In fact, that same consumer depending upon the state or the occasion or the body part that we are talking about might be looking for different propositions.

And being close to its consumers, the company keeps a close check on how its consumers are evolving, what is it that they're looking forward to, whether are they getting their needs fulfilled, and a lot more.  Taking a cue from what the consumer is looking for, it introduces innovation be it within the brands or be it in the form of new brands. 

“Wherever we feel that a certain white space exists and where there are no great products available out there in the market, we identify if that proposition needs to be launched within an existing brand, or probably it's an opportunity for us to cater to that audience through a new brand. For example, we launched The Derma Company because we realized that consumers were looking for active ingredients and that space was a void where while they were a lot of products available outside of India, within India there was no brand talking about active ingredients. will be retailing all the product ranges of baby care along with beauty and personal care. We ended up launching a different brand because the proposition was very different from Mamaearth,” asserted Ghazal Alagh. 

“Similarly recently, we've launched AquaLogica as a brand, which caters to consumers who are looking for gel-based products, keeping in mind that Indian skin and Indian weather are very different from the world. So, we don't need heavily textured creams for our skin, a gel-based, light-textured cream can give us moisturization without making the skin oily. So, we have crafted a whole new brand around that proposition, which talks about hydration, which talks about water lock technology, and plumping up your skin effectively through that technology.  We constantly look out for some of these consumer trends and then we try and cater to them through our innovation funnel,” she further added.

As a company, its goal is to take the highest share of the wallet of the consumer in the beauty and personal care space. While building Mamaearth, the co-founders realized that they were not only building a great brand but we were also building some great capabilities as a corporate and those capabilities might be R&D, marketing to millennials, technology stacks, D2C muscle, etc and those capabilities can actually be used to build new mixes and hence take the share of that proposition that the consumer is looking for. 

Apart from Mamaearth, The Derma Company, and Aqualogica, the other brands that are there in the kitty of HCPL are Ayuga, Dr Sheth, and BBlunt.

“Our core strength is building and hence our strategy would always be skewed towards building our own brands and launching our own mixes. That said, wherever we see an opportunity where we feel that a brand can be a very good add-on to our portfolio, we will not hesitate from adding that. We will also look at inorganic as a mode of expansion, but otherwise organic is what we are far more keen and excited about,” he stated.

“Every brand will always start through a digital-first strategy, that's our strength as a company as well and that's where our playbooks also lie. However, once the brand starts hitting the hundred-crore kind of mark - because we strongly believe till that mark, you can actually scale purely through a D2C kind of strategy- after that is when we start looking at the offline play. And we then expand that play basis, how we see traction in the market,” he further added.

Tech Integration

The brand has been very closely using technology to build some of its in-house products which extensively help it with the relevant data and information that can help it take more informed and better decisions.

The company is also exploring social commerce, however, it believes that it is a fairly nascent trend.

Explaining the same, Varun Alagh said, “We are working with a lot of social commerce partners like Trell and Meesho to name a few and even on our own website, we are bringing some of these technologies slowly, AR, VR as well as, the social recommendations.  We're still very nascent in this whole adoption journey compared to China. Over the next five years, let's see how it shapes up. It's also possible some other technology or trend might shape up to be far bigger than some of these trends. So, whatever technology trends are catching the fancy of millennials and consumers in India, we'll make sure that our technology bandwidth and capabilities ensure that we are in that space.”

Future Prospects

Backed by Sequoia Capital India, Sofina SA, Fireside Ventures, and Stellaris Venture Partners, HCPL is set to become a billion-dollar FMCG conglomerate in the next 5 years - spread across the globe but connected through a digital center of excellence.

“We've grown phenomenally over the last three years, especially even during the COVID period when a lot of companies saw a decline in deep growth, we actually grew close to 4.5x in terms of our size and we also became profitable in that year. Even after that, in the last financial year, we have grown disruptively over that base. Our strategy has been working and we continue to keep growing as the number one priority for the organization as we move forward,” said Varun Alagh.

At present, 70 percent of the revenue of the company comes from online channels and the rest 30 percent from offline channels. The company is servicing almost 18-19,000 pin codes from our D2C  channel and 60 percent of its business comes from Tier II and beyond.

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