 Hello everyone, we have with us Mr. Kaushik Mukherjee, CEO and co-founder of Sugar Cosmetics with us. Hi Kaushik, how are you doing? I'm doing well, Ritika. How are you? All well. So shall we just begin with a round of questions? I have too many questions for you. I hope I have all the answers. Sure, let's start. Great. So if you could just tell us, you know, about the social media initiative that you're taking for the 7th year anniversary celebrations and also the insight that is going behind this broad-based marketing strategy. So everybody in the company is super pumped right now because 7 is a huge milestone at least, you know, from where the company started. And right now this year, we are trying to, you know, include our customers and the people who basically gotten us to this milestone as a part of the celebration. So right up at the beginning of the month, we had this social media filter on Instagram. We're trying to see if that can move to other platforms as well, wherein it's a very simple filter, wherein there's a birth decay, can people are blowing a candle, wish us. Because I think normally we celebrate milestones by pushing out a lot of press releases about how this is the milestone which we had targeted and this is how fast we reached it. But this time it's different. This time we want to include our customers as a part of the celebration, make it more cordial, make it warmer. Because if there's one feeling that everybody feels on this milestone, it's gratitude. Given how competitive the market is and you know that we would know we had our customers and our fans not chosen to continue to support us over the years. And we know how crazy the last two years have been. So yeah, very grateful. Right. Right. And what would you say about the brand building journey for sugar? Because you started out in 2015 and today's sugar is a big name, everybody knows sugar. So how has your brand building journey been? And how would you say has it evolved over time? So I think we've, when we started out, we knew we wanted to create a brand. But frankly, we didn't have a manual which said do A, B, C, D, E, these steps in that particular sequence and you end up creating a brand. So we just focused on starting out by doing what we knew we could do, which is create very, very high quality products at a attractive price point. And when that got started, it's always, I mean, we're always impatient, right? I remember in the early days, we used to push out our products and wait for feedback, wait for people to come and repeat purchase. It takes time. And then over the years, we've just had many opportunities when there was a risk of becoming impatient and changing the very personality of the brand wherein we've had pressure from the markets to discount our products, launch products, which we necessarily didn't think fit within the brand ethos. But then we were a little stubborn in the initial days, we stuck to a certain band of price point. We were very clear on not just what we wanted to build, we were very clear on what we did not want to build. And I think, you know, our conviction has been tested in the past, but today when I look back, all that has helped build sugar a brand for the young Gen Z and millennials who've had options in the past, but not something that spoke to them so directly. I mean, today, we get more than 400 million impressions on social media across our own handles and not even counting earned media. And that's massive. I mean, the fact that this has let us reach out to our customers if you talk about our products. I think that has helped us build the brand. So at one point we used to be D2C only, but today we are a digital native brand, but we are pretty much an omnichannel brand. Otherwise. Absolutely. So you talked about your target audience also. And, you know, when you started, I believe you were targeting the, you know, neglected female young demographic as I think Vinita has also spoken often. Yes, yes, yes, yes. Would you say that your target audience has broadened and how are you, you know, communicating your brand to this target audience that you're now catering? So I think the speed at which the target audience is broadening has taken us by surprise because when we had started, I mean, I mean, today we know that it is neglected that time. It was just a bet saying that, okay, all of all the existing options in the market cater to an audience which is let's say 30 and above and which is probably the age at which makeup became a part of someone's regular routine, maybe 10 years back. But what we've seen in the last five to six years with, with social media content consumption, you know, being democratized across your handling devices, exposure like moved up by almost a, almost a decade. So the usage also moved up. And when your age of usage stops becoming 20, 30 and becomes maybe 21, 22, the same products don't work. And it's not just because of a 21 year old being the stereotypical rebel or the 20 or being very spoiled for choice. No, it's not that it's just because I'll give a simple example. As we, as we all age, our skin gets less moisturized and hydrated. So we're not able to carry off formulations that are very, very matte, for example, because you need to add a creaminess to it for it to be comfortable on the lips. But then with an extremely young target audience, you can make very, very solid mattes, which last for very long while. None of the existing brands could at that time experiment with that because it would be a bit controversial. It would be a bit antagonizing for that existing customer base. When we started, we didn't have a customer base. So we genuinely just made the product, which we thought it would work in India. Reached as many people as you could and said, you know what, this lasts really long. And, you know, in India, the whole value for money. It's an international market. So beyond the point, people can pay you what the price you're asking, but the value has to be two times that. So we were able to, over a period of time, straddle that niche of catering to the younger audience and offering products that last really long. I think that has helped us position and build the brand over a long period of time. So that's how the audience has shifted. As you said, the target group has expanded. It's actually become much younger than what we started off with. We initially started with maybe 24, 25 year old as the average consumer, but it's actually moved further up ahead as we speak. Right. Right. So at Goa Fest, I believe Vinita also spoke about how 60% of your sales comes from 30,000 retail stores. But the 90% of discovery happens online, right? Yes. So I picked that up and I wanted to ask you whether, you know, your sales ratio from offline and online channel is still at 60-40. And how do you see this evolving in the coming years? So as of now, it is 60-40, but again, I didn't expect that it's 60-40 so soon. Because about the pandemic, we were about 40 years. And of course, then we went down and once the stores opened, by that time, the audience was waiting to get back to retail and shop. So as of now, as you were tracking your credit, it's about 60-40. Now, here's something very interesting. Online, the number of channels you sell in, I mean, they are limited. You will have one Amazon, one Nikon and your own channels of course. Retail, there's a lot of retail expansion possible in your opening up stores. So because we have that lever, I think there is a good chance that 60-40 may over the next few years become 65-35 maybe. But I still think that, you know, our digital will continue to scale to hold on to the 35-40% because ultimately, a lot of our consumers first interact with us online. They see a piece of content which is very engaging or is going viral or is trending. And that's when later when they see our store or lower somewhere, they feel, okay, wait, I've seen this brand somewhere, let's just walk in. And with television coming into the fray last year with the ads that we ran on national television, I think the awareness, we're just stretching our awareness beyond the digital first. So that part is going to continue to discover us, not offline first, but still majority right now, 60% still finds us online. Right, right. So I'm sure because India is such a vast country, you have to have like, you have to profile your consumers in a correct way. So that's when, you know, data analytics and all of that. So how are you and, you know, them and strategizing in a way that you're speaking to a different consumer in a different way? Fantastic question, firstly. So we obsess about this a lot that we, when you say marketing, it's about who you're marketing to because India is full of consumers who consume different things at different price points. So unless you choose who you want to talk to, you're going to end up spraying and spraying and it's not going to work. So let's take a step back. When you look at the market, so there is the market. The market is expanding, it's not why it's expanding. One reason is that a lot of unorganized purchases and traders becoming unorganized. So when you look at that, that's the bottom of the funny, getting into the whole, you know, price ladder. And when they start buying branded goods, now at the mass level, there are many brands that are, you know, doing really well. There's, you know, of course, there's Lackman, there's Blue Heaven and all the others. So now what happens when there's a sudden, you know, influx of a lot of people purchasing there, people who are a bit more aspirational feel that, okay, wait, I maybe want another brand because this brand has now become too commoditized. Now, to get that exclusivity, because it's very emotionally linked. It's an emotional purchase, not just functional, the category we're talking about. So you move up the price ladder. And that's why when we profile our target consumer, there is a part of it that is a first-time user, but as we expand offline and become more ubiquitous, build our distribution, we've seen that these are our customers, those who've not tried makeup, we're not trying makeup for the first time with us. They've tried makeup, but down there looking at something which is more aspirational, something which makes them feel good, which is why they're okay spending 500 rupees on a lipstick, but they're okay spending 400, 350 on a car gel when maybe something half the price is available in the market. And when we look at our audience base, I think there's a massive, you know, moving up of audience base from those who used to earlier buy mass products to maybe mark stage or road to premium, value premium segment. And that's what is being built on. So we keep launching different ranges to experiment with different price points. For example, there's a range called metal within sugar, which is priced more premium. It's about, you know, 1,100 rupees. That has its market not online, mostly offline. And there's another sub-range which is very aggressively priced, which mostly sells in general trade stores. So we keep experimenting it to keep track of where the audience is pulsing. But the core is again the $8 to $10 lipstick. So that's where the market we feel is moving towards. Right. But, you know, your category is actually quite competitive. And every day there are new players entering with newer technologies, new, you know, dermatologically tested this and that. A lot of stuff is happening. So, you know, as a disruptor yourself, how do you see this competition building and how do you aim to keep, you know, sugar is market share in that? And also keep it growing. So it's very, you know, it's amazing. I mean, we've always mentally thought of ourselves as the David versus the Goliaths, right? So we are trying to steal market share for somebody. And suddenly we see these reports that, oh, wait, wait. There are some other new brands who are also stealing market share. So the good thing is that we, most new entrants. So when a brand starts, if you have a lot of money and cloud and network, you can start with, you know, offline distribution and directly show up on the shelves. That is tricky because when you show up on a shelf, it will already reach a critical mass before it becomes visible and somebody flags it to you that, you know what, there is this brand that's actually pulling in good numbers. And by the time sometimes it's too late to, you know, strategize, learn from them. So luckily, all the new brands that are coming in, they are starting on mostly the same platforms that you can view and access even when you and I are sitting on our seats, which is online. So there are, like, tracks competition very closely to not, I mean, to firstly learn, what are the keywords that begin? What are the product categories, which suddenly there's a spike in reviews, which means, you know, commensurately the sales have also increased. And then we, you know, take out a product roadmap and it's charging the other categories, the other price points, is there a widespread that we are missing lots of product in? And in the past, there have been occasions when we have seen one product get a lot of traction and we prioritize that ahead in the pipeline. You know, we need a horse in this race as well. So let's just launch that. So we are trying to grow, become big, but not lose the agility which brought us here. But overall, you know, the first five years of building of the company, we kept hearing that, you know, it's a niche market, niche market. A part of me is very happy when we see new competition and new brands because at least when you reach out to potential investors, nobody's going to say, you know, it's a small market. It's not a small market, it's India. We can't, eventually it will not be a small market. It's just that adoption is taking time, but it's well underway now. Yeah, so also if you could share your market share with us, like currently what market share do you hold in the cosmetic industry? So this, there is no correct answer to this, unfortunately, because when we look at some of the, you know, Niels and Kanta reports, everything, they always, you know, have rankings. And exactly that, because they give ranking, it's very fragmented color, of course, but it's in the market, maybe a 65% market share and maybe, you know, we'll be just after that. So in terms of ranking, I, at least that I know that currently we are in our category. We are third ranked in most modern print stores that we're in, which is the lifestyle, the shop of shop and the, you know, central new health and glow. And the good part is we get an average rank. A lot of specific stores, specific geographies, we're even in the rank, you know, top two ranks in a few places. So I think I have a very good feeling about the coming season, because this is a season where finally up two years, we have hopefully a non-interrupted season with the lockdown, our stores being shut down. And then we can see a lot of what we have invested in our supply chain and our product layout. So by the end of this year, I think we should definitely show up in the top two places. Yeah. So also make up as a category is democratizing a lot. A lot of people are getting introduced to makeup and there's a lot of people looking for, you know, education related to makeup, how to wear this, how to wear that. And sugar has been creating a lot of content around that. So how do you see your in-house content to production in evolving? And also, I mean, are you looking to adopt a content to commerce strategy eventually? So a lot has been talked about the content to commerce. We are also, you know, watching very closely that, okay, what is this? It's a very nice catch phrase. And I really hope that the numbers see at the, there's one part which is about our people coming to read and view and engage with my content, which is happening, clearly it's happening. It's in the numbers, right? Now, for some strange reason, there's no direct data as of now, available in the public domain, which talks about, of the, say, 100 people who come to view my post, how many of them, what percentage of them? Like for example, in the website funnel, you can easily see that, okay, out of 100 people, maybe 3%, 4%, 2.5%, conversion rate happens. Nobody is, none of our players in the industry have actually revealed data to say that, okay, you know, what does the top of the funnel peter down to when it comes to making final sales. So we are keeping a close eye on it. For us, I think we've, we know that there are different metrics which move our funnel. So while the bottom of the funnel will continue to focus on conversions, for the top of the funnel, we don't directly put the pressure of measuring sales on them because then it's, then I think you go, you go astray a bit because then you start pushing discounts, you start pushing gifts with purchase freebies and our audience is not somebody who always likes to be sold 24 seven. I mean, I will, might end up unfollowing an account if that accounts always pushing products to me. So the brief to our team is very clear that it's our responsibility, you know, just our job to educate and entertain the audience who chooses to follow us and engage with us every day. So a lot of the content we create is, you know, you know, biased towards that, that what can we talk about today? Which product can we simplify and demystify today? I think that's the lens we take. And I think we're very comfortable in that space. It's been helping us grow our audience based on all social media platforms. And we will continue to do it and do it now. Right. And also how many retail stores do you currently have in the country? And if you're also looking to expand your retail footprint? So if you look at our own, you know, there's this company on company outlets, which is a sugar branded outlet, which is either stores are pure. So this month, we are currently about 109, if I'm not mistaken, live stores. That is currently if I'm not missing a 41,000 stores, which is a mixture of general trade stores, modern trade stores, all stores, not just stores that we own and operate ourselves, but the universe is much higher. I mean, I know for a fact, lakh new stores are products are distributed through more than one, one and a half lakh stores. So we have a large headroom to go, which is what gives me confidence that as we continue to grow, the market share will continue to increase over the next three to four years. Right. And you know, are you also leveraging experiential marketing at your retail stores? Because that's really important. People are attracted to these things. So how are you? How are you? So I think we went deep when there was the safety protocols, very strict safety protocols, they were in your company. You can't source products, you can't test products. So at that time, you know, we had modified our own app, which would also open up on a tablet to show how, you know, using our, how our products would look on you. The thing is, we're also trying to discern signals from noise because it's become the first time you saw me two years back, it was like, wow, I can see this. Now every other Instagram filter has it. So right now, we're also asking ourselves that, you know, what is really wow and what is gimmicky? So we're trying to do less of what's gimmicky or at least even if, I think there's this for gimmicky stuff, but that's short, that's a short self-life and maybe you do it for a campaign online on Instagram or something, which is actually a filter. On our stores, we're trying to see more than just seeing a product visually on yourself. Can you order Omnichannel even when you're in a store and the product is out of stock, having the endless aisle concept? So we are seeing a single view of the customer, seamless loyalty programs. So we're trying to build out a few of those features as we speak and not just what we've seen in the past, which is virtual triumphs. Yeah. So from sugar, we've often heard that, you know, even Vinita spoke about it at GoFest, I believe that, you know, we're trying to build a brand for the next two decades. So how are you solidifying that at the brand trend and how would you summarize your marketing strategy overall, you know, to justify that? So I think when we started the brand, we thought we knew product and that was our forte. Over the last seven years, if I were to pick one thing which we understand better, even more than product, I would probably say our audience. And that audience loads of changing because seven years, somebody was 25, earlier is 32 right now. So we're trying to keep up a trend of what do, if our audience face is beginning to use makeup at an earlier age, what are they talking about? What are they interested in? Are they on Fortnite? Are they on Roblox? What are they do? Right. And because as a brand, we have to find our space in their worlds because we can't expect them to come to our world every time, especially when they don't have shopping intent. Because shopping intent, you have it when there is some pain in your, that you're trying to address. Okay, I'm running out of cards. I need a new card. But that is a, that's not a very emotional purchase. You're just doing it to stop the worry that I'm going to run out of cards. Actual brand building happens when there is no pressure to buy. But there is a lot of excitement to buy and excitement happens when the brand is seen in spaces which they identify with. It could be an NH7 music festival or it could be Sula Fast or it could be anything. So we try to identify properties that the brand can collaborate with. I think as a brand and as an industry, we think that this category is going to continue to grow over the next two decades because we are in very early stages and this industry has fantastic cross margins. It has great applicability, especially now that the age at which our target audience starts working, starts heading out of home. It just keeps getting earlier. So I wouldn't be surprised if there are ranges which start targeting even teens. You know, there are some reports around that. So we have enough to build which is why as a brand, I know that although we are beginning to really, really spread out across the country, it matters that even when the audience is not physically in our vicinity in the mall or in the store, they continue to see us on wherever they are spending time. If it's a television, yes. Like for example, nobody, very few part of our target audience still spend time on Facebook. So what are the new avenues is actually the new place where we need to build presence in? So we keep obsessing that about that a lot which is why we have a significant investment in our social media and the content team and that's been serving us well. So I do, because it's been serving us well, I think that's what we're going to double down on over the next decade as we continue to grow. It's like we are a part media company. Sometimes I feel. I think that's a good place to be at. Yeah, today I think it is daily. Any final comments, anything you'd like to add? So I think off our chat, one of the most interesting things you touched upon is that how we had seven years of wearing the startup, scrappy startup hat. But at the same time, we are aware that as the category goes, there are a lot of newcomers who are now wearing the scrappy startup hat. So we've got a strategy to have. We want to compete with the big boys. At the same time, we absolutely, absolutely can't lose our products here. So the team is focused on maintaining the whole DNA of the brand and company. And I think as long as we do that, we're going to hopefully continue to delight a lot of our consumers wherever we go. So that's a dream. Right. Thank you so much, Kaushik, for doing this. It was an absolute pleasure talking to you today. Thank you. Thanks for taking the time. This was enjoyable. Thank you.