Daybreak - Four-year-old Minimalist does for skincare what L’Oréal couldn’t

Episode Date: June 17, 2024

Last week, Foxtale, an Indian D2C skincare company secured an $18 million funding in its series B round. Meanwhile, news also broke that the Deepika Padukone-led 82°E is planning to raise around $6 million from new and existing investors. Scores of new age skincare and beauty brands have cropped up since the pandemic and all of them harp on the science of skincare and their whole appeal is transparency.Among them one brand stands out: Minimalist. It is an active ingredients based skincare company that sells products named after the ingredients like niacianamide, retinol, glycolic acid, salicylic acid, etc. It launched around the end of 2020, and within a span of eight months, it built a 1000 crore rupees business. But for years, legacy brands like Ponds and Loreal have been selling products with similar ingredients. The only difference was they either didn't launch them in India or they kept the ingredient names hidden away in tiny fonts at the back of the bottles.Minimalist came around and changed that. And now, seeing the success of brands like Minimalist, legacy brands are rethinking their strategy.Tune in.Also listen to: Daybreak Special: Why aren't we scared of chemicals in our skincare anymore?

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Ramon Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production.

Sita and I are still reeling from the intensity of our first studio recording. Intermission launches on March 23rd. To get alert, as soon as we release our first video. episode, please follow intermission on Spotify and Apple Podcasts or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. Startup beauty brands are on a role in India. Last week, Foxtail, a D2C skincare company, secured an $18 million funding in its series B round. Meanwhile, news also broke out that

the Deepika Padakon led 80,2. degree east is planning to raise around $6 million from new and existing investors. Scores and scores of new age skincare and beauty brands have cropped up since the pandemic. And all of them harp on the science of skincare and their whole appeal is transparency. Transparency about the ingredients that go into each of their products. If you're a regular listener of daybreak, you'll remember that a month or so ago, my co-host Rahil and I had dedicated an entire Friday special episode to this. Now, among these new age brands, one that really stands out is the minimalist.

It launched around the end of 2020 and within a span of eight months it built a 1000-crawrupee business. And what's even more surprising is that the brand has remained in the green, meaning profitable from the very first month itself. And that's not all. is the most interesting part. You see, the minimalist is an active ingredients-based skincare company. So, it sells things like neosyanamide for brightening, retinoles for fine lines, vitamin C, glycolyc acid, salicylic acid, you get the drift. Its products are named after these ingredients. But for years, legacy brands like Pons and L'Oreal have also been selling

products with similar ingredients. The only difference being is that they either did not launch them in India, or they kept the name of these ingredients hidden away in tiny font at the back of the product. Minimalist came around and broke that mold. And now, seeing the success of brands like minimalist, legacy brands are rethinking their strategy. In today's episode, we take a closer look at how all of this is playing out. Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nick Dar Sharma, and I Don't Chase the New Sight. Instead, every day of the week, my colleague Rahal Philippos and I will come to you with one business story that is worth understanding and worth your time.

Today is Monday, the 17th of June. So what is the secret behind the minimalist success? My colleague, the Ken reporter Noha Bobre, spoke to Anish Shet, the co-founder of Dr. Sheds, a dermatocical skincare company. He said, it is nothing new really. Minimalist is a high-quality brand that comes at a low price. which is what Indians love. So yeah, it hit the bull's eye.

It came in at the right time, at the right place, with the right kind of messaging. This was at a time when skin care was all about natural ingredients. And that is because no beauty and personal care company was ready for a conversation about the chemicals that they were putting in their products. Plus, a big myth that chemicals are bad got busted to indicate that not all chemicals are actually bad. We spoke about this extensively in the special episode of daybreak that I mentioned earlier. I'll link it to the show notes of this one. So when Minimalists launched its products during the pandemic, the market was ready for it. Noha spoke to the co-founder Mohate Yadav and he told

her that initially they felt that it would take a lot of time to create awareness and educate people about active and skincare. But there were a large number of customers already ready. so that zero to one journey was not very challenging for the minimalist. The company also has the advantage of controlling prices of most of its products in the 300 to 700 range because it manufactures them in-house. Priyanka Agarwal, who was a brand manager for L'Oreal, told us how a L'Oreal cannot do this because it imports its products. She also pointed out how minimalist success has also got a lot to do with the rigorous

quality checks that the company conducts as compared to other brands. In fact, Yadav told the Ken that the minimalist works with a 25-member research and development team. These are people with prior experience from L'Oreal and S.A. Lauder. They invest 2 to 5% of their business in R&D. The company has one manufacturing facility in Jaipur and it is currently developing a second one. In the next segment, we talk about what legacy brands are up. up to. Stay tuned. Let's take Ferrin Lovely, for example. Hindustan Unilever, the FMCG giant introduced it to the Indian market as early as 1975. While near cyanamide, which is also known as

vitamin B3, was the product's main ingredient, the packaging said advanced multivitamins. They did not want to name the chemicals because people just assumed that they're bad. But even now when things have changed, Fair and Lovely, which now goes by Glow and Lovely, still has the words advanced multivitamin printed on it, and not the active ingredients. But the shifting consumer preference from natural ingredients to active ones like retinol and vitamin C, and the success that brands like minimalist have seen in India have prompted legacy players to adapt to the market trends. Some have resorted to changing the packaging of their products like Ponce. Even L'Oreal, the world's largest beauty and cosmetics company doubled down on the

Indian market with the launch of its dermatological beauty brand called Saravi in November last year. Meanwhile, it was also selling the French brand La Roche Posse known for being a dermatological skincare brand in India. It also relaunched its luxury skincare arm Langcombe in 2022 because of the demand for premium skincare brands. Neutrogena, which is owned by Johnson & Johnson upgraded its popular moisturiser to add hyalronic acid last year. OLE from Procter & Gamble also introduced products like the Regeneres Retanol 24 Night Cream in its premium range. HUL or Hindustan Unilever launched Acne Squad and Active Ingredient Based Product in October 2022 and Novology, a dermatocytical brand in May 2023. But being a legacy brand has its own disadvantage.

Some one from Hindustan Unilever who did not want to be named told us that the company is so big and so bureaucratic in nature that instead of taking a speedy approach like other D2C brands, they end up always being late to the party. So what can these big brands do? Legacy brands can actually take notes from what India's digital first beauty company, Hunasa consumer, has done with its more than a billion dollars worth Mama Earth. Instead of diluting Mama Earth, which has always marketed its products as being toxin-free and natural, HONASA built brands like Aquilogica and Derma Company and acquired Dr. Shets in May 22. This was to cater to specific skin concern and target this particular demographic. The company also leveraged the Mama Earth Distribution Network to penetrate these brands offline. In the six months to September 2020,

Only 13% of Hunasa's revenue came from its new products like salicylic acid serum and face wash among others from the active-based skincare category. Meanwhile, minimalist needs to scale and grow more categories. And that is exactly what it's doing. It has plans to open 100 exclusive beauty outlets across the country by next year to create an Omni Channel presence. It is already available in offline stores like Health and Glow across. across India and has started expanding through minimalist global in other markets like the US,

the UK, Southeast Asia and the Gulf. So, is minimalist eyeing to be India's next Hindustan Unilever or L'Oreal? Mohit Yadav definitely believes so. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters and podcast extras. To subscribe, head to the ken.com and click on the red subscribe button on top of the Ken website.

Today's episode was hosted by Snigda Sharma and edited by Rajiv Siyah.