SUGAR Cosmetics: How Vineeta Singh beat near-bankruptcy to take on multinational brands

Vineeta Singh, co-founder and CEO of SUGAR Cosmetics

Note to readers: The Germ of an Idea is a series about the origins of an entrepreneurial concept - how it was conceived, shaped and launched. The series hopes to inspire thousands of potential Indian entrepreneurs who are on the cusp of starting up or have ventured recently or are in schools and colleges dreaming of becoming founders.

Vineeta Singh, co-founder and CEO of SUGAR Cosmetics, is a marathon runner. She has seemingly taken the best of running principles and applied them to her business and career. For instance, not giving up the race mid-way, varying the pace of the run, sticking to her convictions and not losing sight of the end goal. Talking of conviction, the IIT-Madras and IIM-Ahmedabad alumnus rejected an offer of Rs 1 crore soon after graduating from management school back in 2007 because she wanted to become an entrepreneur.

Years later, Singh and her team came close to winding down SUGAR Cosmetics on multiple occasions as the company faced bankruptcy. But the spirit of running teaches you something important: take that next step no matter what. The 39-year-old, who is also one of the judges of Shark Tank India, not only withstood the currents but also built a rising cosmetic brand. In its Series D round in 2022, the company, which began with a seed fund of Rs 1 crore, raised $50 million from L Catterton, A91 Partners, Elevation Capital and India Quotient at a valuation close to $500 million. Its top line grew 75% to Rs 222 crore in FY22.

Today, SUGAR Cosmetics offers its customers over 550 products, catering to lips, skin, eyes and so on. The company has placed its products in over 40,000 retail outlets, and is looking to bump that up to 1 lakh outlets over the next 12 months. There are also plans to open 250 exclusive stores by the end of FY24.

Though the revenue split between online and offline channels is currently 50:50, soon 60% of the revenue is expected to come from offline stores. SUGAR Cosmetics’ predominant customer profile consists of young Indian women, not just in metros but also in tier-II and tier-III cities and towns, which account for 60-65% of its revenue.

The Germ

SUGAR Cosmetics, the brand Singh co-founded with her husband Kaushik Mukherjee in 2015, wasn’t an idea that found any support from investors initially. The founders formed a parent company called Vellvette Lifestyle Pvt Ltd in 2012 after their earlier venture, Fab Bag, a cosmetic subscription service, ran into rough weather.

At that time, the subscription venture was serving a young demographic band (18-30 years). “Our close proximity to this target group, a closed-loop feedback system, and the ability to send 200 products each year to 100,000 women gave us a unique vantage point,” says Singh. The Indian beauty industry, dominated by multinational brands, had its own constraints with many products not suited for the Indian complexion. “This was why the audience either preferred to source makeup and beauty products from other countries or ended up with incorrect shades that wouldn’t pair with their Indian skin tones,” says Singh.

The feedback that they received from young Indian women during their pilot runs was very clear. They were looking at lipstick shades and other cosmetic products that would go well with their skin tones. They were looking at alternatives to international brands that would withstand the pollution and heat on the streets. “We sensed that mindset shift. This led to SUGAR in 2015,” says Singh. The company’s unusual name was derived from the expression ‘sugar rush’, which happens when someone feels happy and energetic after eating sugar-filled items such as lollies.

Despite the launch, more than 100 potential investors were of the opinion that the idea would not work. “They felt it was a cluttered market. The venture capital funds had told us that per capita consumption of cosmetics in India was 1/8th of any western market or Southeast Asia. In our own board meetings, questions were raised about costs. Building a cosmetic brand from scratch would cost us anything upwards of Rs 50 crore as brand building was an expensive exercise,” says Singh. At that point they had Rs 30 lakh in the company account.

The early days

The initial years, as expected, were tough. SUGAR Cosmetics didn’t have enough capital, fundraising was very hard, and it was close to going bankrupt multiple times. “We didn’t even have money to order stock. The retailers would shoo us away. We shrank our team and our warehouse and we almost shut down,” recalls Singh.

But even in those circumstances, Singh and Mukherjee never doubted the scale of the opportunity before them. “Women were loving what we offered. We got underestimated in the first 2-3 years and that sometimes is an advantage. If you get excess capital early, that can lead to bad habits,” she says.

Their earlier venture Fab Bag was funded by India Quotient. But since Fab Bag had not scaled, they couldn’t support SUGAR Cosmetics. However, the promoters of the fund were willing to give them a sum of Rs 1 crore in their personal capacity. “That gesture gave us the working capital to invest in our products. It was their personal money, so we couldn’t let them down at any cost.”

“I remember in 2012-13, we were hearing reasons like: ‘We don’t invest in solo women founders.’ I am grateful for how things have changed in the last 15 years,” says Singh.

The back story

Singh was born in Gujarat’s Anand district and later brought up in New Delhi — her parents had moved to the national capital in search of better job opportunities. “My parents freaked out when I said I wanted to become an entrepreneur,” she says. Her father, Tej Singh, had spent his entire life trying to discover protein structures to enable development of various drugs that could treat cancer and other diseases.

When she turned down the Rs 1 crore campus placement offer, her parents were astonished. “It’s a lot more common now, but back in 2007, I was just 23, and it felt a little unnerving to be featured on the cover of a prominent magazine for being the first and youngest B-school graduate to decline a Rs 1 crore placement offer.”

The road ahead

The idea is to have one more year of massive growth and then push for profitability, says Singh. The company registered a loss of Rs 76.2 crore in FY22 as against a loss of Rs 21.1 crore in FY21. Its topline, however, grew 75% during the period to Rs 222 crore.

“We are eyeing 100% year-on-year revenue growth over last year and are sharply focusing on offline distribution expansion in line with our omni-channel strategy. We also aim to further expand to international markets such as the US, Russia, GCC and Nepal,” said Singh. The ambition is to become a global cosmetic brand.

Often, it's not about how well you sprint but how well you last the marathon.