Darling to doubtful: The story of Honasa's struggles
Subscribe to enjoy similar stories. Honasa Consumer Ltd, the parent company of the well-known D2C brand Mamaearth, crashed 60% in the last few weeks. Here’s the story of what could have happened.
First, the basics. A D2C or direct-to-consumer brand typically reaches its customers through online channel–marketplaces, brand stores, etc. India has a young population with the participation of women in the labor force increasing.
Meanwhile, India's wireless data subscribers have increased to 91.1 crore this year from 84.6 crore in FY24, according to government data. All these factors point towards a boom for D2C brands operating in beauty and skin-care niche, of which Mamaearth is a part. But the capital flowing to this category and the competition in this industry are aplenty.
In 2023, D2C beauty and skincare brands raised $160.1 million across 41 funding rounds, while a year earlier, the mop-up was a whopping $439.3 million across 73 rounds, according to data research and analysis firm Tracxn. Can Honasa, also the parent of brands including Aqualogica and The Derma Co, stand out amid all the competition? We believe there are signs that it might be struggling. That D2C channel is growing is well understood.
That D2C brands catering to the beaty and skin care niche are growing is also well understood. What is not understood is how Mamaearth plans to grow, especially in the offline retail channel. To grow beyond ₹2,000 crore of revenue, it needs to master the offline game.
It must rely on distributors and stockists & super stockists–the middlemen. However, as a part of its project Neev, it aims to reach consumers more directly, even offline, by removing the super-stockist layer. This has created some problems.
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