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SUGAR Cosmetics anticipates profitability in FY24 and year-over-year growth of 90%

SUGAR Cosmetics is eyeing to get profitable this fiscal year. Over the last year, the brand grew 90 per cent year-on-year and reduced its EBITDA losses by around 15 per cent and it is planning to bring it down to zero this fiscal year, Vineeta Singh, co-founder and CEO, SUGAR Cosmetics told ETRetail in an exclusive interview.

In FY 2022, the revenue of the brand stood at Rs 226 crore. The financial results for FY 2023 are yet to be announced, however, Singh said, that the brand has grown about 90 per cent this fiscal and for FY 2024, it is further eyeing 60 per cent growth on its FY 2023 revenue.

“If we have to consider a listing over the next two to three years, we have to generate a significant PAT,” she stated.

The brand has opened 100 EBOs in the last 12 months taking the total EBO count to 200 and these stores are spread across pan-India.

Currently, 35 per cent of the revenue of the brand comes from its own D2C website and EBOs, general trade contributes 40 per cent and the rest 15 per cent is divided between marketplaces and modern trade.

“In our direct-to-consumer channels, the average cart value online is Rs 1,200, and offline is around Rs 1,800 and our customer acquisition cost has always stayed below Rs 400,” she said.

“90 per cent of our consumers discover us for the first time digitally but more than 50 per cent of our consumption happens offline. We are already the third largest brand as far as market share is concerned in the colour cosmetics category,” she further added.

Currently, the brand offers 500 SKUs, and out of these 200 SKUs are fast-movers.

“Our hero products are foundation sticks and matte lipsticks. Foundation stick contributes to 10 per cent of our overall revenue and matte lipsticks contribute 8-10 per cent,” she said.

At present, 40 per cent of the revenue of the brand comes from lipsticks, 40 per cent from face makeup, and the rest 20 per cent is divided between eyeliners, gel mascara, and nail paints.

This fiscal, the brand is planning to spend Rs 100 crore on expansion and marketing as it feels that still there is a lot of scope for expansion in terms of distribution, both in general trade and in EBOs.

“For expansion, we will be focussing more upon tier II and tier III cities because that’s where our penetration is still quite low. 60 per cent of our sales now happen outside the metro and tier I cities. So, tier II and tier III cities will continue to drive a large part of our growth over the next 12 months,” she stated.

As far as international markets are concerned, the brand has a presence in the Middle East. It is planning to enter the US and other Southeast Asian countries like Indonesia and Singapore to name a few.

“We will be entering the US market by early next year, however, for the next five years, we will continue to drive 90-95 per cent of our business from India because India is a significantly faster-growing market for colour cosmetics than any other country in the world,” she stated.

“At a Rs 10,000 crore market size, India continues to grow at a double-digit year on your for color cosmetics, except for the one or two years in between when Covid impact was there,” she further added.

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