SUGAR Cosmetics’ 75% valuation reset shows how discount-led growth and mall-heavy stores hurt India’s D2C beauty brands, and what to fix.
Four years ago, SUGAR Cosmetics was the poster child of India’s D2C boom, valued near INR 3,000 crore and visible everywhere.
This September, A91 Partners led an INR 145 crore round at INR 755 crore post-money, Entrackr reported. That is 75% below the peak.
Revenue slipped from INR 505 crore in FY24 to INR 404 crore in FY25, while net loss nearly doubled to INR 135 crore.
The diagnosis begins with loyalty.
Colour cosmetics shoppers switch shades and brands freely, so every repeat sale must be bought again through advertising.
Online, about 40% of sales, runs on promoted and discounted products. That trains buyers to wait for offers and erodes pricing power.
To escape rising acquisition costs, SUGAR doubled its exclusive stores to 200 by June 2023, 91% of them inside high-rent malls.
Mall rents, beauty advisors and field teams do not shrink when sales do. Meanwhile general trade, at 35% of revenue, remained its most profitable channel.
S. Shriram, CEO & Founder, Miles2Go Consulting Services, said, “D2C brands must protect price before chasing volume. Earn the repeat purchase through hero SKUs, and build reach through distributors and shop-in-shops before signing mall leases.”
“Offline is not a sales channel for a digital brand; it is a discovery engine. Measure every store by the online sales it lifts in its catchment. Kiosks and multi-brand shelves do that at a fraction of mall rentals,” he added.
With an existing investor doubling down and a realistic valuation, SUGAR can now rebuild on unit economics rather than headline scale.
Editor’s Note
SUGAR did not have a valuation problem. It had a rent problem. In beauty, a store is a marketing expense, not a sales channel.
The 2021 playbook of raise, discount and expand has expired. Capital now rewards brands that earn the second sale without buying it again.
SUGAR still owns a name Indian women recognise.
If it counts repeat buyers instead of stores, the picture is far from over.
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