Vineeta Singh, CEO and co-founder of SUGAR Cosmetics, likes to run. Even during the worst days of the pandemic, when things seemed to be falling apart spectacularly all around us, she has been putting on her running shoes and going for a quick sprint around the complex of her parents’ home in Delhi, where the Mumbai-based entrepreneur is currently living. “Whenever there is a stressful situation, I like to go for a run. You could say I am a running junkie,” says Singh. “A lot of people meditate to relieve stress. For me, running is meditative. It does have that breath work, you know, and you are sort of one with yourself and you get that clear, peaceful time. When your entire schedule gets disrupted and there is a lot of stress, running is the one thing that happens at the same time every day—and it grounds me.”
That’s not to say Singh, 37, isn’t struggling like the rest of us, including with thoughts like “is it okay to talk about lipstick sales right now?” In the two weeks between the time we set up this conversation and actually met over a Zoom call, the world around us had taken a sharp nosedive. While covid-19 cases were rising alarmingly when we first discussed this interview, things were far worse by the time we spoke. All of us knew someone who was in bad shape, social media was flooded with calls for hospital beds and oxygen cylinders, and it was difficult to pretend it was business as usual. The strain in Singh’s voice is palpable as she says: “I did wonder, you know…it’s very hard. Most of our team members, their families, are impacted. So it is a pretty gloomy period.”
But at some point, the runner in her probably takes over, along with her passion and enthusiasm for the business she has built from the ground up; a business that many consider to be ground-breaking in terms of its consumer focus, sales model and product innovation, as well as the kind of cult following it has created among its user base. Set up in 2015, SUGAR Cosmetics, founded by Singh and her husband and fellow Indian Institute of Management (IIM), Ahmedabad alumnus Kaushik Mukherjee, saw ₹100 crore in revenue in the financial year 2019-20, and has firmly established itself as the front-runner in the direct-to-consumer cosmetics and personal care business.
It has created a model for other brands through many of the strategies that mark out the most successful indie brands in the age of Instagram: its direct engagement with customers, listening, and reacting, to their needs and aspirations, working with influencers, creating content around the brand (the make-up tutorials and videos on its app consistently get a high number of views and the app itself has over one million downloads). They have essentially created a digital-first make-up brand that speaks to the millennial customer in her own language.
The brand clocked 60% growth in sales month-on-month in the third and fourth quarters of 2020 (compared to the same period in 2019), during the pandemic—which brings us, naturally, to the so-called “Lipstick Index”. Coined by Leonard Lauder, former chairman of the board of cosmetics giant Estée Lauder, during the global recession of the early 2000s, the Lipstick Index is the theory that lipstick sales can be an economic indicator as growth in sales of make-up and beauty products tends to be inversely proportional to economic health—consumers make relatively inexpensive but feel-good purchases to counter the general economic gloom.
Singh agrees that going at least by SUGAR’s growth during the pandemic, it works. “Oh yes, it’s real. When we speak to our consumers, who are mainly young millennial women, they all say that make-up is anyway something they do for themselves because it makes them feel good, feel happier. When they use a lipstick like our most popular red, the Scarlett O’Hara—named after the Gone With the Wind character, yes—it elevates their mood, makes them more confident,” says Singh. And while lipsticks per se haven’t grown as much as they were jumping month-on-month pre-pandemic—Singh says there has been a “5% shift from lips to face”—they have done much better than the numbers projected at the beginning of the pandemic, based on the idea that no one would buy lipsticks, with people staying indoors and wearing masks outdoors. “They still represent around 45% of our sales,” says Singh.
“The good thing is that we do have a lot of these transfer-proof lipsticks and I have had so many doctors telling me that they wear the liquid lipstick under their mask, and, you know, it just makes them feel better about their day.” She also surmises that with people spending less on things like travelling, eating out and going to the movies, cosmetics and skincare have done well during the pandemic.
It is this deep understanding of customer preferences and connect with the millennial audience that enabled SUGAR to step into a crowded category dominated by huge global companies, from Lakmé to L’Oréal. “In the last five years, this whole thing of young brands emerging and trying to create a niche for themselves has become more acceptable, and there’s more news around it in the media, there is more VC funding. But when we launched SUGAR back in 2015, it did seem like quite a crazy idea to say that you could even think about going up in a market where all the major FMCG players, from L’Oréal to Unilever to P&G, exist,” says Singh. What gave them confidence was the observation that these companies sold make-up as a commodity; it was all about marketing, “how much louder you could speak,” as Singh puts it. But Singh and Mukherjee, who were then running the e-commerce company FAB BAG, a subscription service for make-up and personal care products, noticed that millennial women approach make-up very differently from their moms. They are far more educated about the product, they engage deeply by trying and reviewing new products, and they are interested in far greater levels of customisation—many more shades of foundations and BB Creams, concealers and highlighters that suit their exact skin tones—than were being offered by the legacy brands.
“We saw that make-up was moving from being occasion-wear to everyday- wear. It wasn’t considered crass to wear make-up to work, for instance, and these women were stepping out a lot more, so they wanted products that would work for the Indian weather, Indian pollution, and last them from morning to evening,” says Singh. There was also growing confidence in buying make-up online.
“And the legacy brands were just not focusing on these things. Take foundation, for instance—they would do their research in a few areas of India where make-up sales are higher and create products for the dominant skin tones, like just five-six shades. That seemed like such a glaring opportunity—when we launched a foundation stick, we released it in 22 shades because we knew that women were struggling to find products that would suit them, not wash them out, and be long-lasting.”
Today, building for millennials has become the norm for many product categories—and SUGAR was among the early movers. That doesn’t mean their products are not for older women, Singh quickly clarifies, but it helps to know who your consumer is. “When you make everything for everyone, you end up making something that doesn’t work for anyone,” says Singh. “Our obsession with that consumer helps us have very vocal consumers who love to talk about our brand. They are our biggest cheerleaders.”
The IIT, Madras and IIM, Ahmedabad graduate, a mother of two boys under 10, is a role model for many of her millennial customers today. But she had become famous much earlier—as a 23-year-old in 2007—when she turned down a pre-placement offer of ₹1 crore per annum in favour of becoming an entrepreneur. “I was very passionate about the idea of being an entrepreneur but I was also very clueless about what I wanted to do,” says Singh. “I am glad I took that plunge right away because entrepreneurship is something where you have to slog at, fail a few times before you start to see any kind of success...even if I started later, it would have taken me that long to make those mistakes—and I don’t think there is any way to bypass that process.”
One of the early learnings came from starting her first company out of pragmatism rather than passion. She always wanted to create a consumer brand for women, and she initially thought it would be selling lingerie online. But in 2007 the idea didn’t take off, they weren’t able to raise funding, and the pressure to start something, anything, that would generate revenue led to Singh starting an HR company, Quetzal Online Pvt. Ltd, with a classmate from IIM, Ahmedabad. “It didn’t scale and that’s when I finally decided to follow my passion and do something I am excited about. That has been one of the biggest learnings—that entrepreneurship is a long, hard journey, so you might as well do something you love and have fun. I did something purely for the money and it sucked,” says Singh.
In 2012, Singh and Mukherjee started the subscription service FAB BAG, pivoting to SUGAR in 2015. FAB BAG, which still has around 3,500 monthly subscribers (at its peak, it had around 16,000), showed there was an opportunity for a cosmetics brand for millennials. There have been critical moments for the company—what the startup world calls “near-death moments”—especially in 2016, when they had just pivoted from running a subscription service to manufacturing and selling their own products, and had little runway money left. They rode over that period with the help of some emergency funding from their existing investors and the rest, as they say, is history—with a fresh round of Series-C funding worth $21 million (around ₹150 crore) in February, SUGAR has been able to prove itself a solid bet in Indian VC circles.
“Bouncing back from any failure, and still putting in as much optimism into the new thing, is hard but I think that’s what makes winners who they are,” says Singh. It’s not difficult to imagine her dealing with a crisis by strapping on her running shoes, putting on some Scarlett O’Hara and going for a run—because that’s her motto. Gotta keep running.