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At a time when the Indian cosmetics industry is flooded with foreign brands, the Chennai-based start-up Syona Cosmetics Pvt Ltd - founded as recently as June 2012 - has decided to take on the imported giants with its own products, developed for Indian skin types and affordable for salons, but of international quality.
Syona Cosmetics launched its first skin care product only on August 29 this year (under the brand name Estrella Professional) - based on technology sourced from partners in Spain, UK and other European countries known for their quality and safety standards - but Raja Varatharaju, co-founder and director, already believes that the company has the potential to post revenues of Rs 600-700 crore in five years.
Starting his career at Voltas in 1999, Varatharaju has worked successively with the Chennai-based FMCG major CavinKare (founded by C K Ranganathan, a successful entrepreneur who revolutionised shampoo marketing in the 1990s through his innovations), Ford India Private Ltd and Henkel India Ltd. It was his stint at CavinKare that influenced Varatharaju to become an entrepreneur, he says.
Likewise, it was during the time he spent as a partner in a friend's firm, where he advised various companies on their brand-building initiatives, that he realised that the highly fragmented salon products market for hair care and skin care, worth about Rs 2,000 crores, was a potential business opportunity.
During his research he found that while a little over 50 per cent of the hair care industry was highly organised, about 80 per cent of the skin care market was unorganised and featured lots of imported brands. The hair care space is developed, but skin care is still developing.
"We wanted to be the company that would help develop this industry. While the technology is imported we devise our own formulations," said Varatharaju. "The major constraints were resources (mainly money), and the fact that the market imposes high quality standards, and prefers small package sizes."
The skin care market currently comprises mainly imports from Europe, with most products not suited to the Indian skin. "That's where our products are different. We have global technology that is suited for the Indian skin in terms of melanin management."
Syona's USP is global quality at affordable cost, says Varatharaju. A key strategy is to market small packages (hair care or skin care) ranging from 100 grams to 500 grams, while products available in the market are a minimum of 500 grams or a kilogram. He says that when customers buy in large quantities, a major portion goes waste, because the freshness and effectiveness are lost.
"Our brands are cost-effective, since the products are developed in India and not imported, which in turn will help salons to make a profit and set aside money for expansion," he adds.
Having roped in more than 300 salons as customers within a month of the launch in Chennai, Syona wants to be a pan-India player in the next two years, focusing on the top 10 cities. At present it has 25 products, and in the next six months it plans to launch another 50 products.
Currently, all of Syona's products are targeted at salons, but in its second year, it will target retail outlets as well, and in its third year, it plans to enter Dubai, South Africa and East Asian countries either by setting up marketing offices or entering into strategic tie-ups.
In an industry that is growing at 25 per cent a year, Syona hopes to acquire a 30 per cent market share in the next three to four years and clock revenues of Rs 600-700 crore in five years - Rs 200-250 crore from salons, Rs 100-150 crore from retail, and the rest from other products and overseas markets.
