Saurabh Bajaj – Dutch Uncles

Relevance Of Sustainability And Purpose In Helping Build Brand Value For New Age Entrepreneurs

Saurabh Bajaj — Sat, 07 Aug 2021 04:35:08 +0000

It’s often believed that Purpose-led brands are recession proof, grow three times faster than others and command a far higher share of the wallet then their competitors. But is that really true, even for the cost or value conscious Indian?

Purpose-driven brands connect with their audience on causes that both believe in. The brand’s messaging aligns to the customers’ beliefs and that in turn builds loyalty. The purpose could be driven through a need to help their customer or to make the world a better place. It can be personal or lofty, but eventually what matters is the authenticity of the same.

A set of start-ups in India have embraced a set of strong beliefs and appear to be seeing strong early success in the market. Let’s study the story of Mamaearth, Bombay Shaving Company and WOW Skin Science to study how they have wowed the Indian consumer.

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The magic of building a credible purpose-led brand is that its core value offers an opportunity for extension into a range of product categories which have a similar need.

Mama Earth

Mamaearth is perhaps one of the finest examples of purpose-led brand building in the Indian market today and it’s intriguing how they went about it.

Their story started in 2014, when Ghazal and Varun Alagh were blessed with a baby boy. Paranoid as most young parents are, they scanned the Indian market for toxin-free baby products and found that there were none! They actually started ordering products from the US and UK, which were expensive with heavy shipping charges and uncovered an interesting gap in the Indian market.

Next, they realized that this need strongly resonated with a new generation of affluent Indian millennial audience that today has a robust and growing consumer cohort. This led them to founding Honasa Consumer Pvt Ltd in 2016 to provide toxin-free baby care products. By the year’s end, the company launched its brand as Mamaearth.

Unleashing the Gold Mine of Consumer Value

They also built credibility for their brand by seeking a certification from MadeSafe – a US based non-profit organization that provides a comprehensive health-focused certification for making non-toxic products.

The magic of building a credible purpose-led brand is that its core value offers an opportunity for extension into a range of product categories which have a similar need. Hence, Ghazal and Varun Alagh soon realized that they were sitting on a proverbial gold mine of consumer value that they unleashed through an entry into the broader cosmetics category. In just 4 years, they went from 6 products in the baby care range to 80+ SKUs across skin and hair care for men and women and a turnover of 100 Cr across 500 cities across the country primarily served through D2C platforms.

However, with purpose at its core, the rapid growth of the brand has been fuelled through robust marketing thought & consumer facing investments.

Decoding Mamaearth’s communication journey

Mamaearth started their communication journey through a traditional purpose-led film ‘Goodness is in the little choices we make every day’. Here, they elevate their rather functional attributes of “No Toxins”, “Plastic Positive” and “Cruelty Free” to the emotional payoff of a better world as a reminder that it’s the little choices we make that make a big difference.

They, next, gave teeth to their claim of building a better world through the rather significant initiative of ‘An act of goodness in every order’. Here, Mamaearth promises to plant a tree for every order that has been placed from them. They lend credibility to their claim by helping you view the tree plan on their website and have claimed to have planted 1, 11,853 as on 31st July 21.

My favorite piece of their communication journey is of course Mama-Earth Day: Grading the Goodness Report Card. Here, they made an endearing edit with a child rating Mamaearth on – Goodness towards planet: Here they talked about 1 Lac+ trees planted and oxygen for 2 Lac people.

Goodness towards people: Products without 1193 toxins.
Goodness towards the environment: 1135 tons of plastic recycled equal to the weight of 200 elephants.
Goodness towards animals: Cruelty free as certified by PETA. No animal testing now & forever.
Goodness in other activities: 50k hand sanitizers, 20k cloth masks distributed to Covid heroes.

So these initiatives surely build the base for a purpose-led brand and what does it give them? The right to charge a significant premium on their products versus main line players and an expectation of a turnover of 500 Cr in 2021.

But do they have an Achilles heel? If one watches all the brutal reviews of their products on YouTube, it can only be the functionality of their products. They use the right ingredients and sell at a significant premium to other players in the market. But can their products really deliver to the functional delivery of synthetic based cosmetics, I guess only time will tell! For the moment, the going is very good!

Let’s now compare and contrast the Mamaearth journey with other similar brands in this space!

WOW Skin Science

WOW Skin Science is another incredible journey in the same space of premium better-for-you cosmetics. But what I find exciting, is that WOW starts where Mamaearth leaves off, that is the promise of functional delivery.

Ashwin Sokke, one of the founders of WOW Skin Science, had been working in the space of online marketing for some time and as a part of an affiliate programme in the USA, worked on an assignment to market some products in the health and beauty space.

He, then, realized as the e-commerce space started taking off in India in 2013 that there is potent space for a high end D2C brand in India and he kicked off his journey with his partners Arvine Sokkie, Manish Chowdhary and Karan Chowdhary. The founding company was Fit & Glow and the WOW brand was launched in 2014.

Rejecting the conventional brand building

The founders started with their passion for the best formulations rather than conventional brand building and hence honesty and transparency are critical differentiators for the company.

The magic of online listening

Further, given the rigorous digital acumen of the founders, they believe very heavily in data and online listening. Their hero product, the Apple Cider Range started as a drinkable product, but data analytics showed that customers were using it for their hair and on their skin. Thus in 2015 the apple cider range was born. Legend goes that Manish flew to the US nine times to meet formulators and scientists for creating WOW’s popular sulphate and parabens- free apple cider vinegar shampoo. They have since launched several offerings out of it including the drink, shampoo, face wash and moisturizer.

The Right Pricing

The next thing that the founders focused on was the right and transparent pricing for their high end, toxin free brands. At the time of their launch, competition was selling a 200 ml bottle of apple cider vinegar shampoo for Rs 1299, the start-up launched theirs at Rs 399.

Being ‘Customer First’

The third factor in their success is that the founders are extremely passionate about being ‘customer first’. They aggressively deploy social media not just to participate in consumer conversation, glean insights for new products but also to use YouTube and Instagram to promote the brand’s nature-based, science-backed range of products. They spread awareness through product videos and influencers to retarget existing buyers and those that viewed their products.

This strategy paid off and made WOW one of the bestselling brands on Amazon. The next step for the brand was to extend itself to brick and mortar stores and they started their journey only after 4-5 years through Health & Glow in Mumbai, Bangalore and Delhi.

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The brand's promise is to deliver innovative, luxurious products at affordable pricing.

Discovering the brand core

Now, while the brand achieved business success through a range of enviable products fairly early in their journey, they started talking about and embracing the power of purpose only post attaining some scale.

In a query in 2019, when one of the founders was quizzed on how they have used their success to bring goodness into the world, the response was quite honest but revealing. The founder mentioned that we believe in giving opportunities to employees from diverse educational backgrounds with passion and hunger rather than educational accreditations.

It took some time for the brand to discover its core as a brand that would be known for delivering advanced, research-backed, nature-infused products to wellness-conscious people. Moreover, their strengths as an organization with an emphasis on bringing to market nature-crafted products formulated with a high concentration of natural ingredients that help nourish skin, hair and body and deliver visible results. The brand’s promise is to deliver innovative, luxurious products at affordable pricing.

Once the founders released this brand core, they were then able to move away from simple product videos talking about their variants and product features to more meaningful communication. To take on this task, they tied up with two well-known Bollywood actresses Disha Patani and Bhumi Pednekar.

The communication with Disha Patani was again more functional and science driven in line with the core of the brand. In this communication, while ad recall would go up because of a popular celebrity face, yet the message is surprisingly cliché and forgettable.

Waking up to Millennial Audience

With Bhumi Pednekar, we see the brand starting to talk about its nature-infused credentials. Trust in WOW, trust in nature. Here, we see the subtle evolution of the brand language and tonality towards a firmer message of natural goodness.

Only in recent years, we see the brand waking up to its millennial audience which has catapulted the brand to a business of 340 Cr in 2020 and setting it a target of 800 Cr in 2021 with new messages of sustainability.

Now, while the communication with Bhumi does not talk about nature or sustainability the choice of the ambassador reflects this realization. A PR release in 2020 talks about the fact that Bhumi is a perfect choice as she is a persistent advocate for climate change. The PR release talks about the fact that consumers are demanding ‘Clean & Green’ beauty and WOW! is making it accessible to all.

As we enter 2021, the founders are increasingly becoming vocal about how environmental friendliness is at the core of their business values.

Some of the initiatives the founders have embraced in recent times are:

Curating their packages with 30% post-consumer recycled packaging.
Moving towards 100% PCR packaging made from ocean waste for reduced carbon footprint.
Also, extending their range of refill packs which are already available in Face washes to other products.
During Covid, the brand also started manufacturing hand washes and sanitizers, as a part of its CSR activity. They distributed over 15 lakh sanitizers and hand washes in hospitals, police stations, NGOs, municipalities etc.
In recent times, one initiative that WOW! promoted was #TrashYourSpam to fight digital pollution which encouraged millennials to empty their spam folders to fight climate change on the premise that every message in your spam folder contributes to 0.3 grams of Carbon dioxide per message.

While the brand is currently taking baby steps towards sustainability, yet it’s interesting to view their evolving strategy.

Brand building lessons for new age entrepreneurs

There are several lessons that new age entrepreneurs can learn from these two brands who found an un-serviced niche in Indian market and then used purpose-led brand building to drive a disruptive scale up of their business.

Indian millennial audience is rich, vibrant and rapidly seeking out premium, healthy new age offerings that would have been considered fit only for the western market.
The pandemic has made D2C mainstream and if you have an idea that offers great value, you will find consumers all across the population strata well beyond just the Tier 1 & 2 cities.
It’s critical to identify your brand core and build your portfolio around it. There are more than one way to catch the fancy of your consumers, be it the emotional ‘MadeSafe’ route that Mamaearth took or the more functional Nature and Science route of WOW!
As one starts finding traction, it is useful to garner a deep understanding of your consumers, be it through social listening, customer reviews or just spending time with them to understand their passion point. That’s often where the passion points of sustainability and purpose emerge.
As you arrive at the emotional core of the brand that you are building, finding the right brand partners, be it influencers or celebrities can yield a mega scale up of awareness and hence business.
Finally, there is no replacement for a well-researched and winning product. The entire temple of your brand starts with a strong need and a fulfilling product. Everything else helps your scale-up the same.

The post Relevance Of Sustainability And Purpose In Helping Build Brand Value For New Age Entrepreneurs appeared first on Dutch Uncles.

Marketing Mis-steps that Entrepreneurs Should Watch Out For

Saurabh Bajaj — Sun, 25 Jul 2021 10:35:12 +0000

The term unicorn was coined in 2013, by Aileen Lee, founder of Cowboy Ventures, to refer to technology start-ups with valuations over US $1 billion. At that time there were 39 unicorns in the US and none in India. India today has a total of 50 plus unicorns, the third largest number in the world after the US and China. However, firms like Ola, Flipkart, Lenskart, Nykaa, UrbanClap, Paytm and Zomoto make the journey look easy. There are a number of firms that have struggled to scale-up the founder’s visions or the market’s expectations.

Let’s study the journey of some of these companies, each of which have done many things right, but have taken a few marketing missteps that they have then had to pivot to recover. As we investigate these stories, perhaps there are learnings for other entrepreneurs to learn as they navigate their own passion projects.

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The legend goes that the inspiration for Paper Boat came from the flask of Aam Panna, Suhas Misra's mother would pack for him every day.

Hector Beverages

Paper boat is one of the companies that have caught the imagination of consumers and investors alike. They have had years that have been extremely successful and a few in which the market questioned if the growth story has come to an end.

Hector Beverages was founded in 2009 by Neeraj Kakkar, Suhas Misra, Neeraj Biyani and James Nuttall. Today Neeraj Kakkar and Neeraj Biyani run the show after Suhas and James decide to exit the company.

The company started operations with Frissia (protein water) and later Tzinga (energy drinks) but later smartly pivoted to their third venture Paper Boat. The legend goes that the inspiration for Paper Boat came from the flask of Aam Panna, Suhas Misra’s mother would pack for him every day.

The company started its operations through the Manesar Plant and subsequently roped in its first investors in 2011 including Catamaran and Foot print. The next reached out to Elephant Design that helped them both with the naming as well as pack design leading to the launch of ‘Paper Boat’ in 2013.

The Brand saw strong initial success and they quickly expanded to a second factory in 2014, which was their Mysore plant with a speed of 380 bottles/minute versus 80 bottles/minute in the Manesar Plant, along with the capabilities for coconut water and sugar cane juice.

From 15-16 to 17-18 the Brand kept its focus on three key levers of growth:

Brand Building: They launched Paper Boat with a novel purpose of trying to preserve traditional recipes that go back thousands of years, and were handed down from one generation to another, in a modern form. On this Brand core they invested aggressively in digital engagement and also launched a TVC on main line television.
Innovation: They launched a slew of products including more than 11 types of ethnic drinks and juices: Jal jeera, aam panna, aam ras, alphonso aam, jamun kala khatta, chilli guava, nimbu pani, kokum, neer more, kanji, sugarcane juice, lychee ras, apple and orange.
Distribution Expansion: They also partnered with the Japanese food giant Indo Nissan Foods to strengthen its distribution and brand presence in tier II cities and rural markets.

However, while all three strategies are based on sound business fundamentals, their premium pricing of Rs 30 for 200 ml proved to be an impediment to scale growth and their turnover appeared to stagnate at under 100 Cr.

As a result, the analysis, started to question if the product and packaging novelty has worn off and has the impact of competition in the form of Daburs Hajmola Yoodley, B Naturals Zero Concentrate Promise and the entry of Coke and Pepsi into healthier beverages started to make its impact on the major.

The company pivoted smartly again and has launched a mega push in the last couple of years into several mainstream categories:

Paper Boat Swing at much affordable prices of Rs 10 for 150 ml
Juices in Tetra Pack at Rs 130 for 1 Ltr
Dairy Beverages like Lassi, Thandai etc

Their largest gamble to date is the entry into traditional Indian snack-based products like Peanut Chikki, Banana chips, Aam papad, Bakarwadi, Namak para, Gur para and Shakar para.

The key challenge that the expansion of such a wide portfolio would be Brand stretch. However, what appears to be helping the majority is the fact that the Brand has been based on an emotional promise of ‘nostalgia’, rather than a functional promise and that appears to be assisting them, despite sharp reduction in advertising investments every subsequent year. And the second is distribution expansion where the partnership with Indo Nissan foods only took them to 100,000 outlets. They have now started investing in their own field force to expand to 250,000 outlets and are now targeting 350,000 outlets.

The key thing on the mind of the founders now appears to be an IPO to continue to fund their expansion as they make steady steps towards profitability.

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Mounting losses, restless investors and the pandemic eventually led to the firm being acquired by Wingreens Farms. Raw Pressery business has picked up substantially post the acquisition by Wingreens Farms.

Raw Pressery

Raw Pressery and Wingreens Farms are two Sequoia Capital backed food start-ups which have boasted of innovative food products capturing the imagination of the growing millennial audience. Interestingly the learnings that we take from the challenges these firms have faced very closely mirror what Paper Boat taught us. Let’s now investigate their journey.

Raw Pressery was founded by Anuj Rakyan in 2013-14, with the dream of preparing cold pressed juices at a shared kitchen in Mumbai. He wanted to deliver these juices directly to the customer daily, by utilizing spare time of Mumbai’s daddawalas.

The original insight for the Brand emerged when Anuj Rakyan suffered a back injury playing football. He wanted to heal himself naturally without surgery through rest and nutrition. He made juices at home, but realised that something equally good was not available on shelves. He realised that there was an opportunity for a clean label product with only goodness inside and nothing else.

It was indeed an inspiring vision, and enabled him to take the brand across 15 cities in the country.

This allowed the brand to scale-up to a business of 65 Cr 2020 however they retained very high operational expenses and hence a loss of almost 60 Cr. In chasing their vision, the company made several logical pivots. The first was the realisation that while a few core consumers may take subscriptions, a large part of the business is going to remain offline. So, despite a very premium product, the online share of the business in 19-20 was only 10%, however the bulk of their business came from airports (30-35%) and organized modern trade stores like Food Hall and Reliance (50%).

Next, the group believed that the product should do the talking for them and they kept their advertising expenses persistently low at 30% in the initial years and under 10-15% by 2020. Their biggest challenge with the low shelf life of the products and the very expensive cost of refrigerated logistics. Though investments in technology were able to expand their shelf life quite substantially, logistics remained a persistent challenge. The softer challenge that the organization was not able to solve was the high cost of employees which accounted for as much as 40% of their top line. The equivalent numbers in scale firms are between 4-5%. These challenges could only be solved by expanding their range into products with a more affordable entry price and a range which holds its core promise of goodness but can move into the non-refrigerated aisle. And hence in Oct’18 the company expanded into Almond Milk at a pricing of Rs 80 – Rs 200. By Nov’19 they launched Coconut water with a pricing of Rs 50- Rs 60 and by Dec’20 into High Protein Smoothie.

By 2020, the contribution of these businesses was 40% for Cold Pressed Juice, 10% for Dairy, 35% for Coconut Water & 15% for Almond Milk. However, these initiatives only increased the dependence of the company towards offline channels and as the pandemic hit the company could only increase their business contribution from D2C to 15% and modern retail then accounted for 80% of their business. The lucrative Airport channel which was the backbone of their business could only account for 5% of their business. Mounting losses, restless investors and the pandemic eventually led to the firm being acquired by Wingreens Farms. Raw Pressery business has picked up substantially post the acquisition by Wingreens Farms. Let’s understand Wingreens business model a bit more to understand the synergies that have kicked in for both the companies.

Wingreen Farms

Wingreens Farms was incorporated in 2011 by Anju Srivastava and Arjun Srivastava. The products of the firm include dips, spreads, sauces and bakery products. The couple was working in the US for several years advertising and marketing and decided to return to India. They were taken aback by the condition of farmers in the country and the company was originally christened as WIN (Women Initiative Network) in Gurugram in 2008 with a capital of Rs 10 Lakh.

The initial idea was to work with farmers who had land but no money. The business model was to rent out land and pay the farmers the same both for renting the land and also as salaries for the women working in the company. In 2008, Anju started growing potted herbs in a half acre of farmland that she rented from the farmers in Tauru village, Haryana. She grew varieties of basil, thyme, oregano, peppermint, and other herbs for sale. However, she struggled in the initial years due to the extreme weather conditions in northern India.

She finally tasted some success in 2011, when Anju made pesto out of the basil she grew, and approached Spencer’s in MGF Megacity Mall, in Gurugram. The plan was to allow customers to taste the pesto, however they didn’t have any pasta and hence used chips. To their surprise customers showed good acceptance for the product as a dip. Following the successful launch of pesto as a dip, WIN was rebranded as Wingreens Farms, and the company then went on to launch 150 variants in 50 SKUs including, chipotle sauce, fiery desert mustard dip, dill tzatziki, peri peri hummus, rosemary hummus, peppermint with green tea leaves dip, etc.

Within a span of 8 years, the brand has built a presence in 1300 Modern trade stores and 9,000 general trade stores across 140 cities across India. The company has plans to expand its distribution network to over 200 cities, over 2000 modern trade stores and over 1 lakh general trade stores over the next year. They also plan to extend their portfolio to 220 products across the range of dips, spreads, sauces and bakery products.

Despite accessing good funding from the market Wingreens has managed to deliver a far more sustainable business model. The pandemic has been an issue and an opportunity for the company. At one end the cost of business escalated, on the other the consumer was actually drawn to better cooking because of the rise of in-home dining.

However, all in all the acquisition of Raw Pressery has been a big opportunity towards the sustainability of both companies due to the following reasons:

Raw Pressery and Wingreens Farms have a complimentary set of products with little overlaps giving the combined entity the right to build a Holistic Food and Beverage company that is structured as a House of Brands.
Both company portfolios have a presence in the refrigerated isle and the sampling and activation infrastructure of both companies can be synergized.
Further promoters believe that combining both portfolios should help them reduce their logistics and transportation costs by half.
Also, with the enviable portfolios of both companies there is an opportunity to negotiate better with retailers when it comes to shelf space and commissions.
And finally, most importantly, a strong portfolio combined with significant distribution heft is the magic formula for success in the Indian landscape.

There is a lot to learn from the three Brands that we have investigated, Paper Boat, Raw Pressery and Wingreens Farms. However, the key learnings can be gleaned in the form of the following steps and missteps that entrepreneurs should factor in their plans.

First, as entrepreneurs seek to launch innovative offerings in the Indian market, there remains a large role for storytelling and Brand building. This is something Paper Boat did very well. A large part of the allure of their 3rd product after Frissia (protein water) and Tzinga (energy drinks) was Paper Boat. And the platform of Drinks and Memories allowed them an opportunity to charge a premium and hence build a product that can be fuelled with advertising to command a premium. Perhaps this is where Raw Pressery missed a trick. While a clean label positioning is strong. It would have taken a while to catch up with the consumer.

Secondly, entrepreneurship is not for the faint hearted and business pivots are a part and parcel of the game. Hector beverages showed their resilience in reinventing themselves time and time again. This was perhaps something Raw Pressery took a little longer to do.

Thirdly, distribution expansion alone doesn’t ensure top line growth as Hector Beverages learnt the hard way in the period between 15-16 and 17-18. It has to be complimented with an accessible portfolio and the right branding strategy.

Fourthly, it’s critical to marry your business opportunity with consumer expectations, as Wingreens Farms learnt to their delight, almost by accident when they uncovered the opportunity for a dips market.

Fifth, as one discovers a significant business opportunity, it’s critical to make infrastructure investments to improve technology and set up factories; however it’s critical to keep a keen eye on cash burn and operational profitability. Solving for the right supply and logistics costs, employment costs and marketing spends is critical to build confidence with investors as Raw Pressery learnt to their peril.

Lastly, it’s important to start one’s business through a pilot mode across limited markets or channels, however the final path towards profitability in a market such as India, depends on building a robust distribution infrastructure for expansion.

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