ET reported on Wednesday about a slew of early-to-mid stage consumer brands finalising their funding rounds, signalling a rebound in dealmaking momentum.
The fast-growing company, which is expected to cross Rs 300 crore in gross revenue in the current fiscal, expects to deploy the fresh capital towards adding new categories and growing the brand’s presence across online channels, Mazumdar said.
To be sure, gross revenue excludes discounts but does not exclude channel margins from Foxtale’s marketplace sales. Almost half of the company’s business comes from its own website, while 40% comes from online marketplaces and quick commerce platforms. Offline sales make up for the remaining 10%.
“We have 18-20 SKUs (stock-keeping units) all in skincare. Just five months ago we launched body care as a category, and have achieved a run rate of Rs 40 crore in that category. We expect to move into a few more categories in the next two years,” she said.
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The fundraise for the 2021-founded company also comes at a time when the crowded beauty and personal care industry in India is undergoing a reset with larger direct-to-consumer (D2C) brands in this space either witnessing a slowdown in growth or consolidating.ET reported on January 8 that Wow Skin Science is looking for a strategic buyer with its investors looking to exit the startup that has witnessed a palpable slowdown in its business. Meanwhile, rapidly-growing skincare brand Minimalist has held discussions with Hindustan Unilever for a potential acquisition valuing it at Rs 3,000 crore (around $350 million).
Listed beauty and personal care company Honasa Consumer, which owns the Mamaearth brand, is undergoing its own set of issues with its offline distribution and slowdown in its flagship brand, which has been followed by multiple senior level executives stepping down.
The consolidation in the sector throws light on new-age brands facing challenges on scaling up beyond a point.
Mazumdar said that while Foxtale has been a late entrant in the beauty and skincare segment, it has positioned itself to grow beyond the Rs 300-crore sales milestone.
“We entered this space quite late…we had a lot of learnings as a result of that. We’ve always been clear that to become a Rs 1,000 crore brand (in beauty and personal care), it’s critical to crack categories like cleansers and moisturisers and not just serums. Our serums do extremely well but we are going very strong on daily drivers like cleansers and moisturisers,” she said.
Mazumdar also pointed out that even though there was a consumption slowdown for products at lower price points, the mass-premium segment, in which Foxtale is positioned, has been seeing tailwinds over the last two to three years.
This has been further accelerated by the emergence of quick commerce, where brands across categories are clocking rapid growth.
Foxtale has launched on quick commerce platforms over the last six months, and has witnessed six-to-sevenfold growth on this channel since then, Mazumdar said. However, larger online marketplaces like Amazon, Myntra and Nykaa still continue to be an important part of its channel mix, she added.
“Only some categories in skincare offer themselves to the last-minute need…but many categories are a lot more thoughtful. Customers don’t spend a lot of time on quick commerce apps, they know what they need. For us, the products with the highest retention sell on quick commerce but for new products the credibility is built through other platforms,” she said.
