Daybreak - Sleepwell isn’t sleeping on the mattress business anymore

Episode Date: August 27, 2023

The mattress industry in India this year is valued at around $2.5 billion and growing at a CAGR of 10%. Up to 9 million mattresses are sold in the country every year. Among the top brands in the mattress market is Sleepwell, owned by Sheela Foam, the largest manufacturer of Polyurethane Foams (PU) in Asia Pacific. Despite having a fourth of the market share and conditions ripe for innovating and growing, the company had been in a limbo of sorts.Until last month, when it announced it was acquiring a 95% stake in Kurl-On, another popular mattress maker.What's in this deal for Sleepwell?Tune in.RecommendationUp all night: Capitalising on India’s big sleep gapDaybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

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 Raman 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 Podcast 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. You spend one third of your life on it and you certainly spend a lot of time figuring out which one to buy. You know what I'm talking about, right? That large, usually rectangular thing that is placed on top of a bed to support a person who,

is lying down? A mattress? Yes. As many as 9 million mattresses are sold in India every year. And the industry in the country this year has been valued at around $2.5 billion and is growing at a compound annual growth rate of 10%. Now, if I asked you to name the top three mattress brands in India off the top of your head right now, which ones would they be? I'm quite sure that you thought of Sleepwell and Curlon. Last month, the company that owned Sleepwell announced that it was acquiring a 95% stake in Curlon for over 2,000 crore rupees. Sleepwell already had a 25% share of the country's mattress market,

and with this deal, it will now control 40% of the market and become the undisputed leader. That is all well and good, but what else is in this deal for Sleepwell? Welcome to Daybreak, a business podcast from The Ken. I'm your host Nick Da Sharma and I don't chase the news cycle. Instead, thrice a week on Mondays, Wednesdays and Fridays, I will come to you with one business story that is worth understanding and worth your time. Today is Monday, the 28th of August. The thing that owns sleep well is called Sheila foam,

and it makes a bunch of other things apart from mattresses. It manufactures foam for a wide range of users from railway berths, two car seats. The 50-plus-year-old company is the largest manufacturer's polyurethane foams in Asia-Pacific. And over the years, the company has established itself on the top in industries like mattresses, of course, automotives, footwear, lingerie, and furniture. Sheila firm's growth prospects in the future are looking quite bright right now thanks to this diverse portfolio that it has. Because of this, many say it. as a company with many opportunities out there waiting to be taken. But out of all of these products

that it makes, it is sleep well that it is most known for. The mattress brand is and has been for a while among the top three in the country. It controls a fourth of the country's mattress market, which is why it is a bit surprising that Sheila foam did not take better advantage of an opportunity that almost seemed like it was tailor-made for it. My colleague and the Ken writer, Ruhi Kandahari, wrote about this recently in one of the editions of her newsletter inciting incident. She says that over the past few years, the organized mattress business has seen something of an upturn.

And that is because of this growing realization for the need for a well-designed mattress that keeps us comfortable, helps us with good posture, and also helps us get enough quality. quality sleep. The overall mattress sector has been growing at about 11% over the last five years, but the organized mattress market has expanded by 17%. So you would automatically assume that a well-established brand like Sleepwell would do well in such market conditions, right? But Sheila forms revenue numbers for its mattress business from 2020 to 2020-23 do not really reflect this market trend. But finally, the company seems to be. getting out of this limbo with this new acquisition. Sleepwell's earlier brand narrative was mostly

about its exclusive stores. Now, Sheila foam is moving beyond it. It is changing its narrative to suit this new world where mattress design these days is starting to sound a bit like science fiction. You know what I'm talking about? New sleep technology, memory foam, smart mattresses and God knows what else. So what else is in this deal for sleepwear? A part of it. from becoming the market leader, of course. Stay tuned to find out. Based on the public statements that both the companies Curlorn and Sleepwell have been making, it is a happy marriage. Sheila Foam, the owner of Sleepwell, will acquire a majority stake in Curl On enterprises for about 2,000 crore rupees and this will give it about a 40% share of India's mattress market. It will also

give it access to its stores that sell Curlone products, which is an important factor since Sleepwell's exclusive stores have not been attracting the kind of footfall that would drive high sales growth. But most importantly, this deal will give Sleepwell access to Curlon's research unit. An article by Money Control had pointed out how Curlons' biggest strength is their research and development division. This unit spends a lot of time working and studying products to make sure that they satisfy the audience's needs. And to improve the client experience, they have adopted blockchain and augmented reality technology.

The article says how rubberized choir, spring, foam, and therapeutic mattresses are all a part of the Curlons product line. And as a part of its commitment to sustainability, Curlon is also investing in carbon footprint mapping. They've been working with startups to make sustainable products out of agricultural waste. But this is not the only move that Sheila Foam is making. It is also going to be spending about 300 crore rupees on buying one-third of the furniture rental startup for Lenko.

Like I said earlier, Sheila Foam has a diverse portfolio and furniture makes up about 20% of the brand's revenue. The new expansion plan for Sheila Foam's mattress business, though, is quite clear. It wants to be bigger than the biggest and get itself ready to face a whole new host of innovative competition, both online and offline. A startup called a sleep company, for example, is currently developing mattresses that use neither memory latex nor spring foam, but a patented technology that uses a gel-like material, which it claims provides a better sleeping experience.

There are other companies also developing mattresses with lockers to store cash safely, or speakers installed to allow you to listen to music while sleep. So with more and more startups entering this industry, product innovation has taken the front seat. S Balachandar, the CEO of Repose Mattress Company, had told again back in 2019 that the involvement of startups in bringing innovations, including compressing, rollbacking, inner spring beds, latex alternative foam, individually pocketed spring technology has helped increase mattress sales. Startups have been focusing on creating niche products with all kinds of benefits. So now with its recent moves, it seems like Sheila Foam, the owner of Sleepwell, is finally catching up.

Dear listeners, I found a fascinating story that Ken had written back in 2019 on startups that focus on sleep technology. I'm linking it to the show notes of this episode so you can read it. Thank you for listening and see you on Wednesday. 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, subscriber-only apps and podcast extras. Head to the Ken.com and click on the red subscribe button on the top of the website.

I am Snigda Sharma, your host, and today's episode was edited by my colleague Rajiv Sien.