BS READS: How Beardo shaped hair grooming biz into an investors' gold mine

Topics BS Reads | Marico | Beards

Beardo started as a direct-to-consumer brand with two products initially — the Beardo Beard Oil and Beard Wash.
Early last month, men’s grooming start-up Beardo was acquired by Marico, delivering a stellar exit for both, the founders and early investors in the company.

Beardo, whose ad campaign with Suniel Shetty sporting a perfectly groomed beard and a luscious crop of hair, gathered a lot of social media attention, consists of products ranging from beard waxes to beard-shaping tools.

The company attained profitability in a segment almost non-existent a few years ago. As a crude proxy for the segment’s popularity, most of the Rakhi gift hamper deals for brothers on most popular ecommerce websites were shaving and grooming kits.

The pandemic has been an unlikely ally. As barbers and salons remained shut, Philips reported a 60-70 per cent spike in trimmers. Indian men had begun experimenting to attain a designer stubble from the comfort of their homes, with Virat Kohli or Kartik Aryan for inspiration.

In July, Marico completed its acquisition of Beardo, having first invested in the company in 2017. This nascent segment has delivered a slew of exits to its investors in the past few years. Men’s grooming has been an underdog in the overall grooming segment. With Beardo’s acquisition and the multi-bagger returns, it has catalysed into a hotly contested space.

Building from scratch

Men’s grooming has largely been limited to shaving creams and blades for decades. More recently, trimmers have been the latest addition that gained some traction. Grooming and personal care has never been a high-spend category for the male consumer, who largely subsists on generic consumer brands.

All that began to change in 2015 with the success of Dollar Shave Club in the US. Launched in 2012, the start-up had built a disruptive digital brand and turned the traditional men’s grooming industry upside-down with its direct-to-consumer marketing tactics — delivering razors and other personal grooming products to customers directly on a subscription-based model. The company’s contribution in creating this category is immense, having been credited with eating into Gilette’s market share.

In 2016, Unilever acquired Dollar Shaving Club for a massive $1 billion, its second biggest acquisition in the US, after it bought haircare maker Alberto Culver for $3.7 billion in 2011.

On cue, two Ahmedabad-based entrepreneurs, Ashutosh Valani and Priyank Shah, launched a direct-to-consumer brand 2015, in this very niche category. It started with products for beards before transforming into a full-stack men's grooming company.

Beardo’s big hairy audacious goals

Beardo is the duo's second entrepreneurial stint. Valani and Shah ran an online website portal,, trading in electronics, backpacks, other gadgets and accessories. Later, they started selling products on e-commerce platforms like Flipkart and Amazon.

“While trading on e-commerce platforms, we saw the potential in men’s grooming. We were trading in at least 13 categories, of which men’s grooming was the fastest-growing among all,” Valani told Business Standard.

While shaving is an obvious initial product for most firms wanting to enter this space, serving as the initial hook for the consumer, personal care and grooming are a natural progression. These are also products with comparatively higher margins and have higher chances of building loyalty, as they do not have to compete with Goliaths like Gilette.

“Not only did we see demand potential in the segment but also a lack of range of products. While the overall personal grooming market was dominated by women-focused brands, the men’s grooming products were mainly deodorants and shaving products,” Valani added.

Ripples of the Dollar Shave Club deal were felt back home, with several Indian companies taking a crack at men’s grooming. Besides Beardo, Delhi (NCR)-based Bombay Shaving Company, The Man Company, and Ustraa (by Happily Unmarried) are some of the brands launched at the time. More recently, Times Group-owned MensXP has also launched a men’s grooming vertical.

“Skincare, body care, personal care, and beauty products are all very strong categories, not only in India but across the world. The male grooming category, which used to be limited to face creams and fragrance, has now expanded to various niches that are all doing very well," said Arvind Singhal, chairman and managing director at Technopak Advisors.

According to the Associated Chambers of Commerce and Industry of India (Assocham), the market for men's grooming products is one of the fastest-growing categories in the country, and it is expected to reach Rs 35,000 crore in coming three years.

Beardo’s D2C bet

Beardo started as a direct-to-consumer brand with two products initially — the Beardo Beard Oil and Beard Wash. Currently, it retails over 45 brands and 80-plus SKUs across various personal-care categories.

Considering the high price point of products sold by Beardo and its peers, going digital first helps target the comparatively posh audience who would have the stomach to spend Rs 500 on a Sheesham beard comb. Selling in kiranas flooded with Rs 20 razors would make little sense.

“Creating a strong brand presence within a span of three years was our target and we successfully managed to achieve it. We always made sure that whatever product solution we provide has to be well thought, well-communicated to create acceptance,” Valani said.

Although it started as a digital-first brand, Beardo gradually increased its offline presence as well. Currently, Beardo products are available in over 10,000 salons and 45,000-plus retail stores across India.

The D2C approach also helps the company control customer experience and mining feedback for the product’s journey, without suffering the usual vagaries of selling on a horizontal e-commerce platform.

“While the bigger companies were offering products in packaged form, they created services in the same space. They focused on the niche upper end of need and offered services, which is what Beardo started with. What makes them stand out is their ability to focus at the service end,” said Harish Bijoor, branding strategy expert and founder of Harish Bijoor Consults.

And this service or experience is important – that’s where the company charges its premium.

“Online distribution is becoming huge, especially post-Covid, and this is something established FMCG brands struggle to crack,” says Shantanu Deshpande, founder and CEO, Bombay Shaving Co.

Facebook and Instagram marketing have also been effective enablers for such digitally native brands. Beardo, with its strong digital campaigns and social media presence, did just the same. Not only it created strong loyalty among its target audience, its popularity also translated into hard numbers — both topline and profits.

Beardo posted an operating profit of around Rs 13,000 on a topline of Rs 23 crore in 2017-18. The topline has now more than tripled to Rs 78.5 crore in 2019-20 and the company has posted net profits in the last two fiscals.

Built on an initial investment of mere Rs three crore, Beardo sold at an estimated valuation of Rs 350-400 crore in a two-phased acquisition by Marico. The estimated acquisition price of Rs 350-400 crore, valued Beardo at 4-4.5x of its revenues in 2019-20.

Venture Catalysts, the first external investor in the company with a total investment of Rs 2.5 crore in the company in 2016, pocketed around 5-6x returns, while Snapdeal co-founders, Kunal Bahl and Rohit Bansal, who also invested during the period, exited at somewhere between Rs 5–7 crore for the Rs 50 lakh they had invested.

“When we zeroed in on Beardo, the male grooming market in India was negligent but had a huge potential. Beardo's unit economics was very strong and the revenues were multiplying 1-1.5x every month,” said Apoorv Ranjan Sharma, Venture Catalyst.

Marico’s keen eye on the sector

Marico was an early identifier of potential in the men's grooming segment, with a history of acquiring brands in that segment.

It had bought X-Men, a male-grooming brand in 2011. Later, it also bought Set Wet and Zatak from Reckitt Benckiser by acquiring Paras Pharmaceuticals in 2012.

Even in its international markets, Marico had earlier acquired ‘Fiancee’ in 2016, a hair styling product portfolio in Egypt. Similarly, its Malaysian unit had acquired another man-focused hairstyling brand, Code 10, from Colgate Palmolive in 2010.

In 2018, Marico has also picked up a minority stake in another start-up, Revofit, a health and wellness app, leveraging the latter's expertise in fitness solutions, healthy eating and stay-fit products.

All these acquisitions, including Beardo, follow a similar playbook – a strong digital presence, high on youth appeal, and presence in a niche category.

“This (Beardo investment) is in line with our emerging focus of venture investments into start-ups to incubate new engines of growth,” Saugata Gupta, MD and CEO of Marico had said when the company announced its initial investment in Beardo.

Marico has so far been able to integrate these personal care brands with its existing portfolio and digital-first has been the recent focus area. In May 2018, Marico made its first bet into a digital exclusive brand Studio X from its Set Wet product portfolio.

However, with Beardo, Marico does not want to rock a sailing boat too much. “We will be keeping Beardo as a standalone unit and have no plans to merge it with Marico, to keep the agility and its startup essence intact,” Marico’s spokesperson told Business Standard.

The leadership for Beardo has been handed over to Marico’s veteran Sujot Malhotra, who took over as the firm's chief business officer. Malhotra has spent over a decade in Marico.

“Only thing that has changed after we handed over the business to Marico is the top-level management, with me and Priyank exiting. The reason for them (Marico) to buy Beardo was how we operated and created the brand, and even they want to operate it as a standalone unit,” said Valani.

The old-timers want to groom up

The Indian traditional FMCG players have been keenly observing the developments in the US and also watching the Indian start-ups grow. Post-Dollar Shaving Club’s acquisition, Indian FMCG players also followed suit, resulting in the slurry of deals.

Marico took the lead and acquired a 45 per cent stake in Beardo in March 2017. It was followed by Wipro Consumer Care buying a 20 per cent in Ustraa in November and Emami picking up 30 per cent in The Man Company, a month later.

In April 2018, Colgate-Palmolive (Asia Pacific) bought a 14 per cent stake in Bombay Shaving Company. More recently, Wipro also bought a stake in LetsShave, where it invested in February this year.

In March 2020, Marico bought the remaining 55 per cent stake in Beardo, to become the only FMCG player to completely acquire a digital-first men’s grooming brand.

Traditional FMCG players buying into new-age start-ups has become the norm in this category. While the FMCG companies get an already established brand, the new-age start-ups get a ready-made distribution network to expand their reach.

There have been some organic moves into this space too. For example, Veet has recently launched a male-centric version of its popular hair-removal product. But these are still early steps, and quite late in the day.

“It’s very hard for established companies to try something new, whether it is a new product line, a new category or a new distribution channel. Also, it is easier for a new brand to acquire customers in a niche segment than an old brand. So, the way they go for inorganic brand acquisition,” says Deshpande of Bombay Shaving Co. The e-tailer now sells sheet masks, face serums, and foot care kits for men too.

With these acquisitions, the innovators are now firmly in the hold of the dominators.

“Players in these niche spaces cannot forever remain in the niche-holes of their creation. This is best leveraged with the power of powerful brand marketing on their own, or through the already established marketing machines of bigger players in the mass market game. Therefore, this interest is mutual. For the larger player, there is a presence in the services game, and for the niche start-up, this is an opportunity to play the real game, the bigger game, sitting on the shoulders of the biggies,” Bijoor said.

Beardo’s co-founders candidly admit that they had been looking to build a company to sell. “We always knew what we wanted. We were looking to make an exit within 7-10 years, but it happened a little earlier than we had expected,” Valani added.

According to Valani, it is just a beginning. In any particular product category, there can be two or three market leaders at most, and other players either consolidate or keep operating on a much smaller scale. The men’s grooming segment will take at least ten more years to reach that stage of maturity.

The next couple of years would determine if men’s grooming can break out as an independent category with companies reaching valuations similar to trailblazer Dollar Shave Club or be limited to become fodder for the FMCG giants.


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