From net revenue of under Rs.20 cr in FY 22, you had stated in November 2022 that you expected a fivefold increase in FY23 to Rs.90 to 100 cr. What has the number been? What is the targeted growth?
For FY23-24, we are looking to go up about Rs.140 to 150 cr. It’s much more of an omnichannel approach where we are obviously looking at online and retail to grow fast, much higher and faster than what it was in the last year. That’s been the trend where the consumers are now looking at products in the retail sector as well. And also because the category we are in, we feel that retail could form a very significant part with actual look and feel of the product.
We see about 60 to 70 pc growth coming from online because that will always be our driver. Around 30 odd percent will now start getting contributed from retail.
There are a range of products listed online, with top sellers being Anti-Aging Combo, Men’s Booster Pack and Beauty Inside Out. How do you bucket your vast and varied portfolio and how much does each contribute?
There are five big functional categories that we have bucketed ourselves in. One is gut health; anything to do with gut which is literally the largest problem with every Indian out there. Second is in terms of beauty and women’s wellness. This is where your collagen and the biotin beauty range come in. Third is in terms of sleep issues and fourth is sports nutrition. Then there are the rest of the others which is essentially your kids nutrition and sexual wellness.
Gut and beauty contribute the largest, almost about 60 pc of our overall sales.
Wellbeing Nutrition offers supplements for kids as well. How has that segment grown?
It kind of took time for it to build up because kids are always secondary audiences, parents are the primary audience. And for them to consume something would obviously take time. In the last seven to eight months with retail, specifically, the kids range has grown really well. We've probably looked at about a 70 to 80 pc growth in kids range year on year. Predominantly because when you have stores like Guardian, Apolo, 1MG, medical stores which are keeping this product. The Disney collaboration and the stores give that extra credibility for the parents to pick it up. And obviously, we've always positioned it as a product which is better than your gummies out there because any gummies will obviously have a lot of sugar in them. We are also trying to expand the kids’ range. So you will see more products, supplements for kids during this financial year coming out.
Around the fundraise announcement from HUL and Fireside Ventures, physical retail presence was stated to be in 3,000 stores with plans to go up to 5,000 stores. What kind of store formats are these? What is the count now?
We are in the planning phase for that. But essentially, us as a brand, we are most suited to a modern retail trade. Those are the kind of stores where we feel that we fit in better than the general trades. So a lot of our efforts to grow and expand over the next year will be across the modern trade sector. And that's where you're going to see the growth. So right now we are across the pharmacy chains, across modern trade stores like WH Smith at the airports. The intent would be to grow further with them and much deeper across the top 10 cities. Currently, we are between 2,000 and 2,500 stores. We have just expanded ourselves across Apollo pharmacies. Upwards of 400 or 500 Apollo pharmacies are also keeping our products now. By the end of the year, we hope to be in around 6,000 to 7,000 stores.
Which cities and towns are these stores in? Where else are you planning retail expansion?
The stores are spread across your top 10 cities and metros – all your eight metros and then with an extended arm of Jaipur, Chandigarh, Lucknow.
We have also just recently got into CSD canteens as well for the armed forces. Essentially our expansion would be across all independent modern trade stores apart from the chain ones and large format pharmacies like Apollo and Guardian.
We will also find local pharmacy chains but not individual general trade pharmacies. I think there’s enough universe there in India right now for us to penetrate. That would be phase one and obviously then we will take it from there.
Which cities are driving online growth?
Down South is a big market for us which is Chennai, Hyderabad and Bengaluru. And then obviously Mumbai and Delhi which are the second largest and what we've seen recently is some of the tier two or tier one towns like Jaipur, Chandigarh, Lucknow, Indore have also started growing for us.
Predominantly, tier 1 is where I would say we are very heavy on and we are gradually moving among the tier 2 towns. But the growth predominantly comes from these top 10 cities.
Is the offline expansion aligned with this?
Yes, they're in line with the top 10 cities that I mentioned. So we just want to strengthen our hold among the cities first. And then we will slowly and slowly move into the deeper markets
Do you have exclusive stores or plans for exclusive brand outlets? Have you explored the franchise route?
We do not plan to have exclusive stores. I don’t think India right now is at a stage where nutrition falls under a category of having an independent store but I think we will be across all important touch points for consumers. Anywhere we feel that there is a touch point from a lifestyle standpoint, we would want to be there. We have a very specific approach for each of the destinations where we are. We will continue expanding our foothold to places where people least expect but they have time to look at the portfolio.
What is the share of online and offline and where do you expect the shares going forward?
We have been exposed to about 10 to 20 pc of the potential population online for us. Our overall business will be 60 to 70 pc skewed towards online. But we're looking at about 20 to 30 pc coming from retail. We expect online to grow to 2.5x for the next year.
The brand is also opening up a large export opportunity with sales to markets like UAE, UK, Germany, and USA. How big is exports for Wellbeing Nutrition? What are the targets (even as a pc of overall sales)?
Currently it only forms about 4 to 5 pc of our overall portfolio. But in the coming two years that will change. Our products are very well suited for the US and UAE markets, specifically. US is a big market for vitamins and supplements at about $60 billion. In both the US and UK, we would obviously initiate online penetration through Amazon and Walmart, which we've already started. A year down the line this 5 pc could become 8 to 9 pc. But the year after that is where we feel this will probably be 15 to 20 pc of our portfolio. But in the coming year the focus is on India and looking at organically growing the export market and then be ready for the year after that to expand that.
How big would you estimate the overall D2C healthcare / wellness space in India to be? What would be your share?
Health and wellness is a lot more, not just the sector that we are in. It’s a $6-$7 billion market right now in India, which is growing at about 10 to 15 pc. For every brand, there's a category with which we compete. We would safely assume in our small universe that we should be right now penetrating at about 8 to 10 pc. But that's a very broad estimate. Over the next three years, we would like to be close to about 30 to 40 pc. At least 30 pc where out of every 10 consumers, three or four are consumers of Wellbeing. So that would be the goal for us – to reach 3x over the next two to three years.
Is it safe to assume that profitability is not the immediate focus now as you are in investment mode? By when do you see operational profitability?
Obviously, this year is the year of scale. But as a brand our philosophy has always been to maintain profitability as well. By the end of the year, we would like to be on a profitable path. Obviously for the next six months we would like to grow and then start looking towards profitability. But as an ethos, you will never find Wellbeing not keep an eye on that, which is why retail becomes very, very important.
Reportedly, the brand plans to increase its ad spend (by more than 400 percent) to approximately Rs 40 to 50 crore. What will be the media mix? What is the share of digital?
Our focus this year is a lot towards creating brand content. When you start the brand in any B2C journey, it's more focused towards the low hanging fruit, which is performance marketing. But this year the focus is more about building brand content which is about overall Wellbeing Nutrition. It's about educating people about each of these categories. It’s about educating more through video content about why you need a gut health supplement, and what kind of supplements are available.
In terms of our spend, 60 to 70 pc will go back into online. And only about 10 to 20 pc will be for retail and any other activities. We also plan to be available at a lot of events on ground around fitness and health.
If required, some celebrities would also be hired for doing films. But the intent is to create that top line top funnel where people understand why Wellbeing exists and what it intends to do.
Celebrity “investors” like Dulquer Salman, Rakul Preet Singh and Mira Kapoor are said to have invested in your products. What is their involvement as “investors”?
We will end the contracts with them next month. It was a one year arrangement with them where they were investors in the brand and obviously there were deliverables. They have spoken about the brand, propagated it, which worked really well for us. The tenure ends next month and then we obviously will look at newer celebs in case we feel the need to penetrate certain markets. Southern market would be a big focus for us so we might find a few celebrities also coming on board to increase our awareness. Right from content to promoting us across platforms, there’s a lot that’s been done there by these celebrities.
Is ‘plant-based’ a USP in categories like nutrition anymore, with multiple players in the fray? How does Wellbeing differentiate its offering?
Wellbeing products are clean and transparent. The ingredients that we are sourcing are 90 pc imported. We will be premium because we try to maintain the quality of the highest level and then the efficacy is also higher. From a product standpoint, everything that we launch, we will make sure that we are following all those norms. But also second is a lot of technology and innovation where we are far ahead of others. For example, no one else looked at the oral thin strips format, which is now literally patented to us because no other player has been able to replicate that. Also, slow capsules is another innovation where there is a sustained delayed release of nutrients in your body over the next eight hours.
There's innovation and technology on one side and natural sourcing which is clinically studied on the other side. These are the two combinations that eventually make us stand apart. And then you go into aesthetics and all obviously in terms of packaging and design, but that’s secondary. For a consumer it's important to know what he's eating, whether it's clean or not and then is there efficacy or not. Then the format comes as a second choice.
Who is the TG? Does the choice of endorsers hint at a young and well-heeled audience?
I think our core TG will be 26 to 44 years. While a lot of 18 to 24-year olds have started becoming conscious of wellness, 26 to 44 is our core TG. People are on their journey of either exploring health and wellness or they've already moved into it and they're educated enough that they are looking at better options to consume. It's an equal split between men and women.
What are the expansion plans for the brand? Are you planning any new product lines?
We plan to launch almost 20 products during the year across different formats. I can't reveal the products, but I can reveal categories. Kids is one category, gut is another. There'll be a lot towards critical illnesses as another category but across different formats. And obviously, some new innovation formats as well.