From Setbacks to Success: An Inspiring Pivot Journey of SUGAR Cosmetics
Join us on a captivating journey as we explore the remarkable transformation of a startup, from its humble beginnings as a beauty subscription service called FAB BAG to becoming one of India’s foremost makeup brands, SUGAR Cosmetics. This incredible journey is filled with challenges, triumphs, and invaluable lessons that can inspire and guide any entrepreneurial soul. But before we dive into their awe-inspiring voyage, let us introduce you to the brilliant minds behind SUGAR Cosmetics, who have reshaped India’s beauty industry.
Beginnings👣
Both Vineeta and Kaushik, SUGAR’s co-founders, have impressive academic backgrounds. While Vineeta completed her B. Tech from IIT Madras, Kaushik graduated from BITS Pilani and the two of them first crossed paths while pursuing their MBA from IIM Ahmedabad. Despite receiving lucrative job offers during their campus placements in 2007/2008, they took the bold decision of pursuing entrepreneurship.
However, their journey was far from smooth sailing. They encountered several business failures before finally achieving success with SUGAR. During a particularly challenging period in his journey, Kaushik briefly worked at McKinsey before returning to entrepreneurship.
FAB BAG’s Birth and Fund Raise 💰
In 2012, during a casual coffee meeting in Powai, Mumbai, Vineeta and Kaushik, now a married couple, stumbled upon an exciting idea. Vineeta’s passion for the beauty industry and Kaushik’s vision to revolutionize brand—customer interactions in India merged seamlessly. They drew inspiration from the thriving beauty subscription businesses in the USA and UK, which at the time boasted an impressive 1 million monthly subscribers. Back then, the availability of beauty products in India was limited, and platforms like Nykaa were yet to be launched. Motivated by this market gap, the duo embarked on creating FAB BAG, a beauty discovery and subscription platform that offered carefully curated bags filled with top-rated products for women aged 21 to 30. Their ambitious goal was to attract 100,000 subscribers in India.
In the quest to secure funding for FAB BAG, Kaushik reached out to an angel investor who expressed willingness to introduce him to a venture capital firm. To his surprise, Kaushik got connected to Anand Lunia at IndiaQuotient, who had rejected his previous business idea in 2008. Pessimistic about Anand’s willingness to provide funding this time, Kaushik shared his concerns with Vineeta.
To their surprise, Anand and Madhukar, the founding partners of IndiaQuotient, attentively listened to Kaushik and Vineeta, recognizing the potential of their idea. They understood the unique business model, which was distinct from typical e-commerce ventures. Kaushik says, “Besides providing funds, Anand and Madhukar took genuine interest in all aspects of the business and even offered invaluable guidance on business metrics, product quality, and packaging.”
FAB BAG made significant strides after establishing collaborations with renowned international brands.
By 2014, the company achieved profitability, generating $1 million in revenue. Despite this success, scaling up the business from there presented a formidable challenge due to the high costs associated with acquiring new customers. The founders realized that the high burn rate would eventually hinder their ability to procure new products, leading to a decline in the subscriber base and a gradual erosion of the business. Simultaneously, fundraising proved pretty challenging as investors questioned the scalability of the venture, and the unfavorable funding climate of 2015 further compounded the future uncertainty.
Pivot to SUGAR⏩
While doing an in-depth analysis of FAB BAG subscribers’ data, Vineeta identified a prevalent customer desire for transfer-proof and long-lasting makeup. She noticed a recurring frustration among women: the constant need to reapply makeup throughout the day. As the FAB BAG team delved further into this, they uncovered a significant gap in the market. Existing makeup brands, whether international or local, failed to adequately cater to Indian skin tones or align with the Indian way of life. This left women with limited options, either resorting to importing expensive makeup products or settling for shades that didn’t complement their complexion.
This realization ignited a spark of inspiration in Vineeta and Kaushik, leading them to conceive the idea of launching SUGAR: a range of makeup products that not only catered to local preferences but also boasted long-lasting, transfer-proof formulations.
Kaushik credits Anand and Madhukar for playing a significant role in naming their company — SUGAR. Initially, the founders presented several names to the investors, including Kickass Cosmetics, Pepper, Fabulicious, and Stoke. Anand and Madhukar provided feedback, and the founders then shared the name options with 30 people, with SUGAR getting ultimately chosen as the best fit for the brand.
The kajal and eyeliner categories in the beauty industry are highly competitive. When SUGAR introduced its own kajal and eyeliner, it strategically targeted to convert FAB BAG’s loyal base of 15,000 young female subscribers who had a proven passion for discovering new brands. What set SUGAR apart from the competition was its decision to manufacture the product in Germany. This ‘Made in Germany’ tag created a strong appeal at the time and drew attention to the quality and craftsmanship of the product.
Kaushik emphasizes the paramount importance of clear messaging in marketing a business. When reflecting on SUGAR’s case, it took him only 5 seconds to communicate that they sell beauty products, whereas explaining the intricacies of FAB BAG’s subscription business used to take significantly more time, around 5 minutes.
Kaushik emphasizes, “An easily understandable message can open up a huge market.”
In 2016, SUGAR introduced a liquid lipstick from a Greek brand to FAB BAG’s subscribers and saw an overwhelmingly positive response. Identifying the opportunity, they decided to create their own liquid lipstick product manufactured in India. By mid-2016, SUGAR launched its own liquid lipstick, and it quickly became a favorite among customers.
However, towards the end of 2016, SUGAR had depleted its funds and found itself in a challenging situation. They urgently needed funds to fulfill their obligations to their manufacturing partners in Germany.
When the company was on the verge of closure, Kaushik received a call from Madhukar. He explained that IndiaQuotient couldn’t provide further investment because it was accountable to its Limited Partners (investors in the fund). However, Madhukar expressed his and Anand’s desire to help and offered to lend SUGAR INR 1 crore from their savings. In Kaushik’s words, “This lifeline saved the business.”
One fine day in 2017, Anand called Kaushik from Singapore and informed him about a potential investor ready for their Series A funding. Kaushik recalls, “It was Anand who facilitated our next round of investment”, and emphasizes, “Today, our story is well-known, and we receive a lot of inbound interest. But without the early support of Anand and Madhukar, our story wouldn’t have existed.”
Fast forward to the present day, SUGAR Cosmetics has become one of India’s fastest-growing beauty brands. It boasts a workforce of 2,500 employees, with 75% of them being women. The company’s retail presence has expanded to over 45,000 touchpoints across 550 cities in India, generating an annual run rate of Rs. 550 crores. As one of the top three cosmetics brands in India, SUGAR now has its sights set on international markets, including the US, the UAE, Russia, and Nepal. Kaushik proudly highlights that SUGAR has delivered an impressive 117 times return to their earliest investor, IndiaQuotient.
When asked for advice for fellow entrepreneurs, Kaushik says,
“A pivot is often viewed as a challenging and uncomfortable process that occurs out of necessity. People may not put in their best efforts when making a pivot under compulsion. However, a successful pivot must come from the heart, not just on paper. When pivoting, you must be prepared to assume that the old business model is gone and not coming back. By embracing the new direction wholeheartedly, you can increase your chances of success.”
This incredible journey of Kaushik and Vineeta is a shining example of how perseverance can sometimes takes a slightly longer & tiring path but eventually leads to success. Despite facing multiple setbacks, the duo exhibited unwavering determination and relentlessly pursued their dreams.
We extend our heartfelt wishes to the entire SUGAR Cosmetics team for their continued success in all their future endeavors.
SUGAR Cosmetic’s story is the third in IndiaQuotient’s latest series on entrepreneurial pivots, where we aim to uncover inspiring tales of entrepreneurs who have successfully pivoted their businesses towards success. If you haven’t already, check out the first & second stories in the series which talk about the incredible journeys of PagarBook’s & Oakter’s founders. Stay tuned for more!
