We speak to Shankar Prasad, CEO and Founder at Plum about upcoming trends in the skincare and beauty industry
- In the last few years, Indian skincare start-ups and conglomerates have been focusing on ‘Clean Beauty.’
- Plum was one of the first boot-strapped home-grown start-ups to bring veganism to the beauty and skincare industry in India.
- As the focus on sustainability, clean beauty and veganism increases in our country, we speak to Shankar Prasad, CEO and Founder at Plum about upcoming trends in the skincare and beauty industry, and Plum’s goals for 2022 in India.
Launched in 2014, boot-strap start-up Plum caught consumers’ attention for its Kajal in a year and last year, the D2C brand launched its first Exclusive Brand Outlet (EBO) in Mumbai. It now reaches over 225 towns and cities in India through 850+ assisted outlets and over 10,000 unassisted outlets.
The new-age beauty brand has been focusing on bolstering its product portfolio and brand expansion in India and across US, Middle East and South Asia. It recently launched bath and body products and added new products to its skincare line. Based on this new portfolio and existing product range, the brand is aiming to achieve Rs 300 crore annualised revenue run rate by the first quarter of FY23.
A lot of the brand’s growth has come from word-of-mouth and Performance Marketing. However, now after onboarding Mithila Palkar as its first brand ambassador, the brand will start focusing on traditional B2C marketing. Advertising and marketing get about 30-45% of its annual revenue share, which was Rs 225 crore-plus in December 2021, with digital continuing to take the bigger chunk of the pie.
In recent times, consumers have started looking for clean-beauty products that are made using natural products and brands that make a case for sustainability, whose growth is further fuelled by Direct-to-Consumer channels. Globally, as per Brandessense Market Research, the Clean beauty market was estimated to be $5439.6 Million in 2020 and is expected to reach $ 11558.5 Million in 2027, growing at a CAGR of 12.07% from 2020 to 2027. And in India, as per a Statista report, the Natural Cosmetics segment amounts to US$853.9m in 2022. The market is expected to grow annually by 2.90% (CAGR 2022-2026).
As Plum further drives the vegan movement in the beauty segment in India, we speak to Shankar Prasad, CEO and Founder at Plum about upcoming trends in the skincare and beauty industry, and Plum’s goals for 2022.
Q. From performance marketing to B2C communication, how has your marketing strategy changed over the years?
Initially, like all brands, we also started with performance marketing. We only bothered about how much we were selling through the ads that we were running and the communication was completely product-focused. Then, as we evolved, we looked at influencer marketing, launch marketing, launch events, social media marketing, creating a buzz around the brand with fresh new ideas and content marketing. Now, a very important piece is also being added, which is community. I think Plum is one of those few brands which stands for something more than just a product to people, it's almost a way of thinking about being good as a philosophy. And we want to leverage that to build a community of like-minded people who are here not just for the deals, offers and products but also are united by a certain view of life. That’d be one of our focus areas this year.
Q. What does your media plan look like now? How has your marketing budget changed this year?
As a percentage of revenue, marketing spend varies anywhere between 30% to 45% of the overall revenue. While that percentage stays constant, as we continue to grow and scale the absolute number being spent on marketing is going up. There, we are finding a new mix to deploy the budget.
Traditional media will get included now as part of our plan, as early as this quarter or early next quarter. But we continue to be overweighted on digital media because the majority of our sales is still online and a majority of our customers are also online. Also, the measurability of it is very attractive. Therefore, we will continue to focus on digital media first, and then non-traditional media. Slowly, as distribution expands further, we will start looking at more traditional media.
Q. You were one of the first platforms to bring veganism to the beauty industry. How important do you think veganism is to consumers of today?
The popularity of veganism has picked up in the last decade and a half. To us, veganism is an interesting subset of our overall philosophy. When we go out and ask people, ‘What do you think Plum is about?’ The answer is almost unanimously that it stands for real goodness. And veganism is a subset and I feel people make a lot of hue and cry about it. In my understanding, veganism is a simple philosophy where you can get by without interfering with other living beings. That to me is the most simplistic view of veganism. And when it comes to beauty, for example, what you will realise is that compared to foods where it's more difficult to let go of dairy or eggs or meat, in the case of beauty, it is relatively easy to do so. Therefore, I am not saying being vegan as a skincare brand is a technical challenge. It's more sort of a philosophy, a way of life, that is a subset of our overall message of Be Good as a brand. And along with that, veganism, particularly in beauty is a no-brainer to be following. And because vegan formulations are modern formulations, by default, they end up being clean, which is avoiding some ingredients that are not completely safety clear, or where there are doubts about. So, in effect vegan also becomes a proxy for clean in many ways.
Q. Has the trend caught on in Tier II and III markets?
It is very popular in Tier II and III. I was surprised at some of the numbers. The top six metros or cities account for less than 30% of our overall sales. I would have expected that number to be closer to 50. The remaining 70% is a very, very long tail of cities and towns. So there is no particular concentration in any of these geographies. If any, the skew is very profoundly towards the smaller cities and towns. Most of the early adopters tend to come from large cities. But I also noticed that even five-six years ago we were getting orders from places where none of the couriers are available. So to service them, we used to speed post it to them. Now, of course, we have courier services to most cities and towns.
Q. Are more brands taking the cruelty-free movement seriously?
Today, by sheer market pressures that have come on brands, most brands are cruelty-free. Also, from a regulatory perspective, it has become mandatory to be cruelty-free. So by definition, almost everybody in the market uses cruelty-free products. Having said so, vegan is still a subset of the market. I think about less than 10% of the market today talks about being vegan or care about being vegan. But the good news is that the remaining 90% of people who may or may not care about veganism, understand that it is a good thing. So, overall, it's a good place to be. And one can only see the concern for clean beauty or any form of conscious beauty, growing. It is only going up and that is a definite trend that we’ve seen.
Q. What kind of changes are you bringing about to make your business more eco-friendly?
Sustainability is sort of baked into our core values. So to begin with, 1% of every sale goes towards wildlife protection. As habitat shrinks, and as we continue to develop as a nation somewhere, I think it's important for us to understand that we are also willy-nilly destroying the biodiversity that has naturally existed, which sustains a lot more species than we can imagine. Second is your recycling program. We are, in fact, the first brand in India to have started a online recycling program, wherein we pick up empties for free and for every bottle empty bottle that you send us, we'll give you shopping credits. The program has been quite successful. The third thing is minimizing the use of packaging; where we don't need a mono carton, we don't put them on a carton, where we can do glass we do glass. See, plastic at the end of the day is a useful material, but one has to be careful with its use. One has to make sure that it is as recyclable as possible, enable that recycling and make it as circular an economy as possible. It's not possible to make it entirely so. But as a brand, we are doing everything we can to make it as sustainable as possible. Sustainability is a journey. It's not as if anybody can raise their hands and say I'm totally sustainable. At the end of the day, we all consume resources. It's really about how thoughtfully and how frugally you consume the resource, and how much you put back into what you're consuming. To that, end of this year, we not just want to do things ourselves, but involve our customers in this quest for sustainability. And the packaging task is ongoing. Until and unless you're able to completely get into recycled mode -- for every single piece of plastic that we use, we can't also say that we are being very sustainable. So that's another thing that's going to be done. Lastly, in terms of the shipping of our DTC orders, that consumes quite a lot of paper and a lot of cushioning material. So efforts are being done there so that we are able to reach order safely to people yet minimize the usage of resources.
Q. Considering that your online recycling program has done well, do you think a brand's ecological footprint is a big decision-making factor for consumers today? What else are consumers expecting from brands of today?
Sustainability in India is not that big on people's minds right now. It is there for a very small subset of people. But it's growing thankfully. Most people today are worried about what ingredients are we using and how proven are those ingredients. Simply saying it is natural is not cutting ice with a lot of people nowadays. So they need proof that it works and is safe. They need somebody trustworthy to come and tell them that this is good on your skin, and it does good things for you. So India is still on this journey toward ‘clean beauty.’ I think sustainability is the next horizon topic. Again, we are a little ahead of our time in talking about sustainability. But believe it or not, it's going to dawn on people sooner than later that it's in our own larger interest that we move towards sustainability. Government regulations, and evolving sort of landscape there is also going to have an impact on how brands and consumers look at sustainability but that to me is some time away.
Q. What do your expansion plans look like? Are you planning to go deeper into the country since a majority of your revenue comes from Tier II and III towns?
So we are currently in about 250-270 cities which we expanded from around 200 at the beginning of the year, so 50% growth there. Not only are we looking to expand this to 320 to 350 but more importantly, deepen our presence in these cities because in most of the cities, I'll probably have one or two outlets whereas the market can support many more. In terms of the number of outlets, we are present at close to 850 assisted points of sale and close to 10,000 unassisted points of sale, we want that number to increase to about 1200 assisted points of sales and about 15,000-20,000 unassisted points of sale sooner than later this year. EBOs, we have one operational and three under fitout. I think by December, we should be looking at at least 15 to 20 operational EBOs. So, there's a good flow of properties that we see and we're moving fast wherever we find a good fit with the brand or the demographic.
Q. What are some of the trends that you're expecting to see in the beauty and skincare industry?
Number one, the movement towards cleaner formulations. Number two, I think I'm expecting consolidation to pick up this year. It already started last year, it will pick up this year, where many more smaller brands will become part of larger agglomerations of brands. Also, from a consumer point of view, people will start gravitating towards more established and proven concepts rather than too much experimentation. I think 2020, as well as 2021, led to a lot of experimentation with people. But at least the top layers of the crowd that have been experimenting a lot, I'm expecting them to start a little bit more of consolidating around fewer brands and fewer concepts as opposed to wildly experimenting. And therefore that will further accelerate this process of consolidation. All the categories that we operate in, whether it is skin, makeup, hair, bath, and body, male grooming, all of them are going to see good growth prospects.
Q. What is your larger vision for the brand?
The larger vision is to be India's most loved, and globally recognized Clean beauty brand.