Honasa Consumer, the parent company of beauty and personal care (BPC) brand Mamaearth, has entered the colour cosmetics space with a new brand ‘Staze’, targeted at 18- to 24-year-olds.
Staze is the seventh brand in Honasa Consumer’s portfolio after Mamaearth (its largest), The Derma Co, Aqualogica, Ayuga, Dr Sheth’s and Bblunt.
The company will sell products such as lipsticks, kajal pens, foundations, compacts and eyeliners under the new brand. Staze has eight categories with 40 stock-keeping units (SKUs).
Honasa Consumer cofounder and CEO Varun Alagh told ET that the new brand will compete with the likes of L’oreal-owned cosmetics brand Maybelline and Hindustan Unilever’s Lakme on price points. Staze will have an average unit price of Rs 300-350, similar to Maybelline and Lakme, he said.
However, Staze is not Honasa’s first venture into the Rs 15,000-crore colour cosmetics category. The Gurugram-based company launched products in this category in 2022 under the Mamaearth brand, and has scaled it to over Rs 150 crore in annual revenue run rate (ARR). ARR is a forecasting method that helps predict the financial performance of a company over a year based on past earnings data.
“Colour cosmetics has been an area of interest for us because we believe that a big multiplier for BPC growth in the country will be women joining the workforce. We are very bullish on how every year millions will add to this cohort,” Alagh said, adding that the highest growth in the overall BPC segment is expected to come from colour cosmetics and skincare sub-segments.
“We are already strong in skincare. More than 60% of Honasa’s revenues comes from skincare. We started understanding the colour cosmetics space with Mamaearth two years ago. It was important for us to understand the category from a consumer as well as a product R&D point of view,” Alagh said.
“Because this (Staze) is a Gen Z-oriented brand where we are looking at first jobbers or college-goers, we felt this is the price point through which we can bring a customer into the brand and the category,” he added.
Market pyramid
Besides established names such as Maybelline and Lakme, the colour cosmetics category has seen a slew of new-age players come in over the last few years that are expanding on the back of quick-commerce growth through platforms such as Zomato-owned Blinkit, Swiggy Instamart and Zepto.
Below the segment in which Staze products will be priced are brands such as Blue Heaven – backed by private equity firm Samara Capital – and Reliance Retail-owned Insight.
The category above Staze – with products at an average unit price of over Rs 400 – includes the likes of Mamaearth, A91 Partners-backed Sugar Cosmetics and Colorbar Cosmetics.
While Sugar Cosmetics reported an operating revenue of Rs 420 crore in FY23, Blue Heaven posted Rs 259 crore in topline.
“The Indian BPC market is somewhere around $25-30 billion, of which 10-12% is online. Online is growing at a faster pace. The size of the low-cost beauty market is not known but one can assess that products below the average selling price of Rs 200 would be contributing close to 40-50% of the overall market,” said Karan Taurani, senior vice president at brokerage firm Elara Capital.
The segment is growing at a fast pace because of ease of distribution from online channels and customers increasingly willing to try out new products, he added.
However, in its earning presentation for the October-December quarter, Honasa said it estimates the masstige segment – comprising mass produced goods positioned as prestigious products – to grow at double the pace of mass products.
Honasa’s category expansion
Even as Honasa’s house of brands continues to grow, sector experts estimate the growth from existing brands to taper off over the coming years, making it imperative for the company to enter newer brands and categories.
“The ramp-up in growth is expected to be led by the younger brands in the portfolio now, but as those brands become well established…some part of growth will moderate. Launching new brands and categories in that case will become key to the company’s growth story,” a Mumbai-based consumer sector equity analyst told ET.
After Mamaearth, the company’s biggest brands are The Derma Co and Aqualogica, which have crossed ARR of Rs 350 crore and Rs 150 crore, respectively.
Earlier this month, Honasa announced its entry into the moisturising soaps category, competing with the likes of HUL’s Dove, which is a Rs 2,000-crore brand.