This IIT grad is taking on MNC giants with her $100 mn beauty brand

Before the Covid-19 outbreak in the country, Vineeta Singh's firm SUGAR had already crossed Rs 100 crore in net revenue and posted an 85% YoY growth rate

When Vineeta Singh, co-founder and CEO of SUGAR Cosmetics pitched her lipstick business a few years ago for funding to a bunch of venture capitalists (VCs), most of whom were men, they turned it down. They told her that the market was not large enough for brands that focused on millennials. She was told her fledgeling venture would not work as the product had no differentiation to build a strong brand and compete with large players.

“Most VCs are men and for them to appreciate the value of a lipstick that lasts longer, takes (more) time,” says Singh, who was determined to make her startup succeed and initially ran it through bootstrapping. 

SUGAR soon became cult-favourite amongst millennials and one of the fastest-growing premium beauty brands in India. Before the outbreak of Covid-19 in the country, SUGAR had already crossed over Rs 100 crore in net revenue at the end of March 2020 and posted an 85 per cent year-over-year growth rate. Seeing the rapid growth of the firm, investors, including the ones who had rejected the funding earlier, made a beeline for the company. 

The firm recently raised its biggest funding round of $21 million at a $100 million valuation, according to industry sources. Its retail presence is now spread across 130 cities in over 10,000 retail touchpoints. The company is currently at an annual net revenue run rate of Rs 200 crore. It expects to cross Rs 1,000 crore revenue in the next few years and even has plans to go public.

“I think our biggest superpower is that we have always been underestimated,” says Singh. “We are literally competing with the largest brands in India and in their turf, which is retail stores.”

An engineer from the Indian Institute of Technology, Madras, Singh had been passionate to launch her own consumer brand focused on women. After graduating from the Indian Institute of Management, Ahmedabad in 2007, she turned down a Rs 1 crore pre-placement offer from Deutsche Bank. She initially dabbled with an online lingerie business and a services business but couldn’t scale them up.

In 2012, she launched Fab Bag, a beauty and grooming subscription company that offered members an opportunity to try top global brands every month, specifically recommended for them by beauty experts. It succeeded to create beauty profiles of more than 200,000 women and had a monthly subscription of 16,000. However, it became a challenge to scale up the venture. But Singh got insights into how millennial women shop. She then pivoted the business as SUGAR Cosmetics along with her husband Kaushik Mukherjee in 2015. It started as a direct-to-consumer cosmetics brand with products that were specifically created to suit Indian skin tones.

One of the important reasons for SUGAR to become successful was the research and development process and placing bets on a complex supply chain. Crafted in state-of-the-art facilities across Germany, Italy, India, the USA and Korea, the brand ships its bestselling products in lips, eyes, face, nail and skin categories across the world. With a cruelty-free range that focuses on performance, the brand is obsessed with making products that are a match for every Indian skin tone across seasons and around the calendar.

“We found that a lot of international and Indian legacy brands were not focusing on a younger audience,” says Singh who started the SUGAR brand with a limited range of matte liquid lipsticks, crayon lipsticks, matte eyeliner and Kajal. 

About 94 per cent of the market is still offline retail. Initially, it was a huge challenge for her to partner with physical retailers. Few retailers asked her how would she be able to compete with large FMCG (fast-moving consumer goods companies) in the traditional retail setting. But it soon got an opportunity to do a pilot with Lifestyle and other retailers also starting note of the company.

“Many retailers and competitors used to underestimate us,” says Singh. “But that gave us a lot of strength to work harder and prove them wrong.” 

Social media platforms also played a key role in SUGAR’s products to reach customers. Women were inspired by other women customers to use the firm’s products rather than celebrities. Last year, SUGAR crossed 1 million followers on Instagram while clocking over 200 million impressions across all social media. 

Also, there has been a rapid increase in e-commerce shopping by women over the past five years. SUGAR witnessed a 6X jump in revenues over the last two fiscal years. While the Covid-19 disruption was a spanner in the works, the firm was quick to bounce back to 150 per cent of its pre-Covid revenues last quarter and that too profitably. This is because, after initial hiccups, the pandemic has accelerated the shift to e-commerce in 2020, as more consumers are shopping online. Earlier, almost 90 per cent of its revenues would come from metro cities. That has now changed due to the pandemic, where 40 per cent of the revenues now come from tier-2, 3 and 4 cities and towns.

E-commerce still contributes about 60 per cent to SUGAR’s revenue. The brand has also built an omnichannel distribution network that includes over 10,000  retail outlets across more than 130  cities to take their products to the doorstep of beauty enthusiasts across the country.

SUGAR recently raised a $21 million Series C funding round led by Elevation Capital, with existing investors A91 Partners, India Quotient participating and strategic venture debt from Stride Ventures. Elevation Capital had taken insights from about 450 customers of SUGAR before making the investment.

The investments would help to keep the brand’s fast-moving product range ahead of the curve. The funds are also expected to be used in building both digital and retail distribution to further reach existing and new geographies. The brand’s Android and iOS apps have seen a million downloads with a 4.7-star rating. 

Today, SUGAR is among the top 5 cosmetics brand by sales contribution at most stores of retail chains like Lifestyle, Shoppers Stop and Health & Glow. Having closed FY20 at a net revenue of Rs 105 crore, the company is currently at an annual net revenue run rate of Rs 200 crore with the aim to double this in the next 12 months. 

Singh who is a mother to two kids is also a fitness enthusiast and regularly performs activities such as running, cycling and swimming. When the pandemic first hit, it created a stressful situation for her as an entrepreneur. Singh said she was able to manage the stress levels by working out regularly. She was also able to complete her goal of completing a half marathon in under two hours. A few years ago Singh and her husband Kaushik Mukherjee had also become India's first couple to complete the famous Ironman triathlon.

“Making a startup work is a long hard and patient requiring journey,” says Singh. “I think that doing some of these endurance events have really helped us stay calm, patient and resilient.”