The beauty ecommerce startup had narrowed its loss YoY to INR 21.1 Cr in FY21

Led by a 2.8X surge in advertising and promotional expenses to INR 96.6 Cr, SUGAR Cosmetics’ total expenses increased to INR 298.1 Cr

SUGAR Cosmetic’s operating revenue jumped 75% to INR 221.1 Cr in FY22

Digital-first beauty ecommerce brand SUGAR Cosmetics, operated by Vellvette Lifestyle, reported widening of its loss to INR 75 Cr in the financial year 2021-2022 (FY22) from INR 21.1 Cr in the prior fiscal year despite a rise in its sales.

SUGAR Cosmetics had managed to narrow its loss year-on-year (YoY) in FY21. However, it failed to maintain the momentum on the back of a significant rise in expenses, particularly in advertisement and promotions.

The startup reported a 255% YoY jump in its loss despite posting almost a 75% surge in operating revenue – from the sale of its cosmetic and beauty products – to INR 221.1 Cr in FY22. The figure stood at INR 126.4 Cr in FY21.

The startup, founded in 2015, offers a range of beauty products for makeup, skincare, and more. After primarily working as a D2C brand early on, SUGAR Cosmetics adopted an omnichannel strategy in 2017. Led by Vineeta Singh and Kaushik Mukherjee, SUGAR Cosmetics has partnered with several stores across the country and has also opened over 45K retail outlets in India. It also sells its products on marketplaces including Amazon, Flipkart, and Nykaa.

While the startup also has an international presence, it earns a majority of its revenue from India. 

In FY22, SUGAR Cosmetics generated a total operating revenue of INR 210.9 Cr from India as against INR 117.6 Cr in FY21. India contributed over 95% to its total revenue from operations.

On the other hand, the rest of the world contributed INR 10.2 Cr to its total operating revenue in FY22, an increase of over 16% YoY. In 2019, SUGAR Cosmetics expanded its offline presence to Russia. The brand also has an online presence in the US.

However, the startup’s aggressive expansion strategy, in India and abroad, came at the cost of a significant rise in expenses. SUGAR Cosmetics’ total expenses doubled to INR 298.1 Cr in FY22 from INR 148.9 Cr in FY21.

Expenses on advertisement and promotions rose 2.8X to INR 96.6 Cr in FY22 from INR 34.4 Cr in FY21.

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It is pertinent to note that in FY22, SUGAR Cosmetics roped in Bollywood actor Taapsee Pannu for one of its major TV ad campaigns. Besides, the startup has also been aggressively promoting itself on social media platforms.

Recently, it also signed Ranveer Singh as a brand ambassador after the Bollywood actor invested in it. Besides, actor Tamannaah Bhatia also marked her entry for a recent SUGAR Cosmetics TV commercial. 

The strategy of getting an actor as an investor, who in turn also becomes brand ambassador, seems to be a new trend among the beauty startups, with SUGAR Cosmetics’ competitors like Nykaa, Mamaearth, and Plum also taking similar steps.

In FY22, SUGAR Cosmetics spent INR 78.8 Cr towards the purchases of stock in trade as against INR 47.4 Cr spent in the last fiscal year, which is in line with the startup aggressively growing its offline presence and diversifying its product portfolio.

The startup also reported a 1.8X surge in its employee benefit expenses to INR 35.2 Cr in FY22 from INR 19.2 Cr in FY21, a majority of which was in the form of salaries and wages.

Besides, SUGAR Cosmetics spent INR 1.6 Cr during FY22 on the employee stock option scheme (ESOP). With a growing online and offline presence, SUGAR Cosmetics’ freight charges increased almost 62% to INR 10.6 Cr in FY22.

Recently, SUGAR Cosmetics closed its $50 Mn Series D funding round led by the Asia fund of L Catterton with participation from existing investors like Elevation Capital, A91 Partners, and India Quotient. The startup has raised almost $100 Mn in aggregate so far. 


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