Esme bullish on cosmetics brand Blue Heaven

Samara Capital had in 2019 bought majority stakes in two Delhi-based fast moving consumer goods firms, Blue Heaven Cosmetics Pvt Ltd and Nature’s Essence Pvt. Ltd, with the aim of building a large-scale mass-market personal care platform. Samara later created Esme that houses the two acquired businesses.

Blue Heaven, the larger of the two, sells a range of coloured cosmetics such as mascara, lip colour, foundation sticks, compact powders; Nature’s Essence is much smaller catering to salons.

“In this financial year, Blue Heaven will be a ₹300 crore brand; we acquired it for ₹140 crore in 2019. So, despite covid-19, we more than doubled the business. I believe in a five-year horizon, Blue Heave has an opportunity to be a ₹1,000 crore brand,” said Amit Chopra, CEO and managing director, Esme Consumer. “Penetration of makeup is still very low in India. So the opportunity to drive more consumers to use makeup is immense,” he added.

India’s beauty and personal care market has exploded in recent years, propelled by growing consumer awareness and wider availability of products. E-commerce sites have further fuelled demand for such products.

Estimates by Motilal Oswal Financial Services Ltd suggest that the country’s beauty and personal care market is set to reach ₹2 trillion by 2025.

However, India still remains a value market. Chopra explains the company’s target consumers could be anywhere between 200-300 million individuals. These could be first-time consumers of makeup looking to experiment with affordable brands and try different formats.

Large incumbent players already hold a sway over the market with brands such as Hindustan Unilever Ltd’s Lakme and Loreal’s Maybelline dominating the market. These brands have also moved to premuimize their portfolio to tap into consumers seeking wider variety of products and formats. With the multinationals serving the higher end of the market, Chopra said an affordable play in the beauty and personal care space, was an opportunity waiting to be tapped.

“In 2018, while everybody was talking about premiumization; we found that consumers in ‘Bharat’ i.e. tier two, tier three India (and SEC B and C) were growing big time, especially women. Literacy was growing, there was explosion of social media, women had access to various kinds of content through social media platforms such as Facebook and Instagram, etc. Therefore, it was our belief that beauty and personal care category will grow, and within that, the lower end of the consumer will grow even more dramatically,” he added.

For instance, a Blue Heaven lipstick costs ₹165; Maybelline lipsticks can cost anywhere between Rs329 to ₹599 and more. American brand MAC retails lipsticks at a price point of Rs1950 in India.

Chopra said having in-house manufacturing capabilities, including an R&D centre as well as tie-ups with local vendors for packaging helps keep manufacturing costs low.

Meanwhile, the company is looking at expanding across categories as well as improving geographical spread of the brand. Currently populous states of Bihar and Uttar Pradesh are among Blue Heaven’s top markets. Growing reach in southern markets will be key focus going forward.

It recently carved out a more Blue Heaven &—an attempt to upgrade consumers to emerging categories such as cheek tints, primers and brow gels. “All the categories that we are in our under-penetrated still. We believe that driving penetration and getting more people to consume our products, will remain the corner of stone of how Blue Heaven or Nature’s Essence will grow. That will require innovations around improving accessibility, and also around using digital influencers,” he said.

Meanwhile, ESME Group’s revenue grew to ₹332.4 crore in FY22 up from Rs248.15 crore in FY21. The company has a substantial market share in the tier 1 and tier 2 cities, majorly in the North and East regions. ESME plans to diversify its geographical presence in South and West through its distribution channels, according to a report by India Ratings & Research.