Honasa Consumer expects Rs 1,000 cr ARR from The Derma Co in next 3-5 years

Honasa Consumer expects its skin care brand The Derma Co to reach an annual revenue run rate of Rs 1,000 crore in next three to five years, according to the FMCG maker's latest annual report.

Besides, the company also expects its other skin care brand Aqualogica and hair care brand Dr. Sheth's to enter the Rs 500-crore ARR (annual revenue run-rate) club and BBLUNT to reach Rs 250 crore ARR by then.

Its flagship brand Mamaearth, which plays across face, hair, and body segment, has already become the fastest-growing BPC (Beauty and Personal Care) brand to reach an annual revenue of Rs 1,000 crore and became the sixth-largest multi-category brand.

"The other brands in our 'House of Brands' portfolio hold enormous potential as well. In the next three to five years, we expect The Derma Co to enter the Rs 1,000-crore ARR club, Aqualogica and Dr. Sheth's to enter the Rs 500-crore ARR club, and BBLUNT to enter the Rs 250-crore ARR club," said its founders Ghazal and Varun Alagh addressing the shareholders.

The Indian BPC market is on the cusp of an enormous change led by a growing middle class, rapid urbanisation, and increased participation of women in the workforce, they said, adding Honsa Consumer is at the forefront of this revolution, leveraging technology to understand the customer.

This is the first annual report of Honasa Consumer, which was listed on the bourses on November 7, 2023.

Honasa Consumer, which started its journey as a digital native brand has gone omni-channel, expanding its offline presence by 37 per cent in FY24, reaching 1.88 lakh FMCG retail outlets.

"Through our websites and key e-commerce platforms, we have coverage of over 97 per cent PIN codes in India. Additionally, we have strengthened our offline presence, reaching 1.88 lakh FMCG retail outlets in India, an increase of 34 per cent YoY," said Ghazal and Varun Alagh.

Contribution of offline channels has now grown from 9 per cent in FY 2019-20 to 35 per cent in FY 2023-24.

Hoansa Consumer plays in the fast-growing BPC space of the Indian FMCG segment with its new generation of brands that are purpose-driven, powered by technology, and responsive to evolving customer needs.

The Delhi-based company which reported a 28.6 per cent growth in revenue from operations, clocking Rs 1,919.90 crore in FY24, is using customer-centric innovation approach, informed by its data-driven insights gleaned from social listening across multiple platforms through proprietary ML-based tools, it said.

"These data-driven product innovations have played an important part in driving growth, with new product development (NPD) contributing to 18 per cent of our FY 23-24 revenues," said its founders.

Honasa's each brand has its distinctive value proposition, they said, adding with their distinctive value proposition, each one of them is capable of capturing the fast-growing BPC categories.

Mamaearth offers toxin-free products, The Derma Co provides active ingredients-based skin care, Aqualogica offers hydration through lightweight textured formulations, BBlunt products offer salon-like hair at home and Dr. Sheth's offers a combination of botanical ingredients with potent actives.

"For instance, we have gained more than 30 per cent market share through offerings in multiple brands in the sunscreen category across key e-commerce platforms and our D2C platforms, as evident from the presence of our brands among the bestsellers on these platforms," the founders said.

Its over 56 per cent volumes comes from Tier II plus cities and towns.

In FY 2023-24, Honasa introduced 122 new products (across all the brands) in the BPC market in India, contributing 18 per cent in revenue from operations.

It has also increased advertisement expenses by 24.7 per cent to Rs 661.28 crore in FY 2023-24, as compared to Rs 530.27 crore for FY 2022-23, as it focuses on investing and increasing awareness for all its brands to gain market share and increase household penetration across key categories.