Peak XV-backed Honasa Consumer, the parent firm of D2C brands such as Mamaearth, The Derma Co, and BBlunt, hit all-time high profit during Q1 FY25. It reported a net profit of Rs 40.2 crore, a jump of 62.7% compared to Rs 24.7 crore in the year-ago period.
Further, it is confident of maintaining a 20% revenue growth in the current financial year— despite the temporary inventory-led slowdown. And what would drive this growth?
“Getting new users in the fold, increasing market penetration, innovation, and streamlining distribution and advertising channels”, Anuja Mishra, EVP & CMO, Honasa Consumer tells Storyboard18.
In this candid interview, Mishra talks about the company’s value versus volume growth strategy, optimising advertising spends to enhance margins and increasing focus toward Bharat consumers.
“As a brand grows, one needs to balance both the value and the underlying volume growth objective,” she says.
Edited excerpts:
Walk me through Honasa Consumer’s marketing strategy.
We’ve been establishing our ability to very fast create a product market fit and build brands that people know what they stand for. One thing that has worked for us has been understanding how the communication TG is different from the consumption TG for each of our brands. Our strength has always been to experiment with multiple media and content styles to be able to bring out the messaging. But consistency has been a principle that we’ve stood by for overall Honasa.
In terms of marketing spends, it is still predominantly more digital. Offline marketing is a lot about store visibility, our spends in offline has increased, but we are still predominantly online.
But what’s also happening at the end of the day is that media is just transforming, at a very different pace. Today there are a good 60- 70 million households that are cord-cutters and CTV has emerged as on the cusp of digital and TV—so very interesting choices I would say.
How will optimising advertising and promotions expenditure will be a key driver for Honasa Consumer to enhance the margins?
We’re very clear that we’re a house of brands— building a brand both in the mind of the consumer and in the place of the channel of choice. Therefore, we ensure that this A&P investment allocation is driven by a very clear objective of whether it is for the growth-driving categories or whether it is for strategic interventions or new product developments (NPDs).
The larger opportunity for us is to ensure that we make the spends work harder by being a lot more informed about the choices we are making. We are far more deliberate today about where we are spending and also ensuring that the brand health continues to be in green while the scorecard on growth in revenues is equally in the green— it’s a very fine balance.
Do you think brands that rely heavily on online channels for marketing often are prone to online backlash, especially in the beauty and person care category?
I think it’s a part and parcel. When you are a digital-first brand, you have the advantage of hearing consumer feedback, you have the advantage of targeting the communication to consumers. So, you have to admit that all the latest trends will also be the first to hit you— whether it is influencing or de-influencing— one has to be sort of prepared.
Read more: Unearthing Mamaearth: Decoding consumer feedback
You have to be fairly humble in that sense to take those in your stride. When you are visible and present on social media, there will always be more points of view there. Because you’ve given the consumers the right to voice and you’ve invited them to voice their opinions. Feedback is a gift either way whether it is in your favour or otherwise. I think it’s important to understand the intent behind the feedback, which is critical.
Does influencer marketing continue to be an essential part of your communication strategy given the recent ASCI violations?
Influencer marketing is relatively recent, it’s possibly the youngest medium amongst some of the others and we’ve been one of the starters of influencer marketing in India.
As a company, for every piece of communication with the influencers, we are ensuring to relay all regulatory requirements.
The reality is that it’s a bit of a learning curve. Among the vast pool of influencers, some people are quicker to adapt to some of these processes, and some may not.
Overall, my learning from something like this is how you double down on ensuring that your creators—at least for your content are following the norms even more.
We are continuing to invest in influencer marketing and ensuring that we put forth a lot of best practices. If we are one of the larger organisations investing in influencer marketing, so we will be an ally to ASCI and be the partners in ensuring the execution of these regulations.
Read more: Repeated ad violations by Mamaearth parent may adversely impact brand trust, say experts
The ad spends in this have remained very relative over the years but I think as a percentage, it continues to be a very strong part of the mix, the ad spends in influencer marketing has been stable.
However, what has happened is that the content formats, whether long form or short form and the overall landscape have been changing. We’re a believer in the power of creators and influencers, but we’re constantly ensuring that we are looking at what format and what kind of creators work for different brands or KPIs on the brand. We have been optimising mix within that.
In the recent past, the company has discontinued two of its brands— including Ayuga and Momspresso. Would the company now shift its focus towards being conscious of who to acquire, partner with, or start any new business?
I wouldn’t call them failures and would call them very steep learning milestones in our journey. We are a seven-year young organisation and are way wiser now. But also, we’re an organisation that has a very agile and entrepreneurial mindset— if something is not working does give us learnings, but definitely not that we shouldn’t try.
Read more: 95% of ASCI ad violation allegations are influencer posts, not advertising claims: Varun Alagh
One would always see us come up with very well-researched and understood spaces and ensure that we’ve done everything that there needs to be done to make it a success, but equally be humble and say that something’s not panned out.
How is Honasa Consumer working double time to improve distribution and inventory challenges?
Honasa is an omnichannel brand that is present in tier-two and three towns. Over the years, we have been far more informed now of what would work offline but not online because there are consumer partitions that the brand needs to serve and be cognisant of which channel can deliver better. There will always be hits and misses for every brand.
That apart, our household penetration in the tier-two towns is as high as it is in the metros, so the brand very clearly has a very strong receptiveness and a strong core of aspiration that it drives in the tier-one or two towns.
To capture the value-conscious consumer segment, Honasa recently introduced products under its Mamaearth brand in the ₹99 category. How is the company increasingly focusing on lower-pack units (LPUs)?
The important thing about LUPs— this is also my learning from the beverages category—is that it’s not really depleting the value that you give to the consumer. It is more about ensuring that you are available at the right accessible price points for the consumer to try the brand.
While the company is very much already out in the market with Rs 99 offerings, we will do this a lot more with access-driven price points to ensure that we are participating in the recruitment batch of the categories. At this point, we don’t intend to foray into sachets but never say never.
We believe that there is enough to sweat the market with the current portfolio. Increasingly, the objective will be how to ensure that the investment allocation, not just in media, but also distribution is focused on certain key strategic interventions.
What remains the value versus volume growth strategy for the company?
As a brand grows, one needs to balance both the value and the underlying volume growth objective. Volume growth also is driven by new pack penetration. Looking at unit and transaction growth is extremely critical to understanding if you’re actually recruiting new users.
So, value growth is going to be a continuing metric that we will look at but equally, we’re getting into a lot of these occasions, which we may not have been participating in earlier; we will also be focusing very strongly on transaction and volume growth. The main objective is to gain share and get more users to try us.
How does Honasa Consumer position itself as— a masstige or a premium company?
We are operating at different price points and different indices. There’s a strong growth in both the premium and prestige price points and there is a very strong growth in the mass segment as well.
In the current context, we are very much a masstige brand in terms of price points; we are in a more mass and popular segment.
How is offline as a retail channel growing for the company?
We are seeing very healthy growth across our channels. Offline continues to grow in salience. What’s interesting about the offline channel is that it’s opening new avenues, and new consumers for us and we are also witnessing exclusively offline buying consumers.
That said, quick commerce is a channel to watch out for; it is growing for us. We’ve also done a lot of sampling interventions and product placement on these platforms for awareness interventions and visibility interventions across multiple partners. That’s again a channel that has a very steep learning curve because things are changing every quarter.
Overall, online is still the largest contributor to sales for us.
The company plans to grow with a CAGR of 20% over the next three years- what would remain the three major growth drivers for the company going forward?
Brand building in the core categories will be a very important piece for us. It’s essentially about ensuring that we’re getting new users in the fold, increasing our penetration and market share. I think innovation will continue to be a very strong growth engine for us, it has been a strong growth contributor. And that’s again in the core of the DNA of the brand. Thirdly, playing to our strength in every channel- whether that’s distribution assortment of packs or advertising on the channel.
Would AI/ML or any sort of latest tech would be a component of any of it?
AI is actually in some sense is getting submerged or is getting sort of subsumed into everything that we are doing. We are using AI for sharper consumer targeting for more defined cohorts, and supply chains- but there is a lot of testing and learning to be done on that front.