By: Gokul Krishnamoorthy
Founder and CEO Ranju Mohan reveals how the startup is creating sub-categories in fragrances, and how he is leveraging his three decades of experience to create a robust distribution chain – one state at a time.
“From detergents to soaps to deodorants (and more), I must have smelt some 30,000 fragrances in my career,” says Ranju Mohan. Those fragrances were experienced in a career spanning over 30 years, during which he held senior leadership positions at Henkel India (Henko, Margo, Pril were part of the portfolio then), JK Ansell (Kamasutra) and briefly at McNroe Consumer Products (Wildstone, Code). That experience now helps him shortlist the fragrances across air fresheners and grooming today, for his startup Ikigrow Consumers.
“Everyone’s sense of smell and influences on sensibility is different. In a village, there is an exposure and affinity to the smell of the soil. In coastal regions, there is a leaning towards the smell of the sea. Regionally too, the North leans towards rose, South towards sandal, the North East towards tea fragrances and so on. You will never get a fragrance that 100 pc of consumers align with. You have to find the right mix. With one fragrance you can play well in upto 20 pc of the market. Beyond that, you have to add fragrances,” explains Mohan, Founder & CEO of Ikigrow.
It is rare that one SKU can account for 70 pc of the business, he adds, adding the caveat that some categories do tend to become universal.
“Players like us have to understand fragrances, colour codes and all the elements that go into the product story. If you get it right, people will buy into it again and again,” he adds.
Product innovation through category creation on one side and a singular focus on distribution through traditional channels have seen the startup, which set up shop in Q1 2022, on track towards operational profitability in March 2024. From four SKUs at launch, the company now offers 45 SKUs. It is present in over 200 districts of the country across over 170 cities and towns. The target is to keep expanding the distribution reach, while building on its recent foray into modern trade and grow its e-com presence.
Mohan notes, “The early learnings have been good – moving, pivoting, manoeuvring. Today there is clarity about where I will play to win, and how I will play.”
“Marketing needs to make a good story, the sales team has to tell those stories well. Marketing needs to keep it simple for the sales team to be able to tell them well in the market and sell.”
Distribution is King:
The company started off with air fresheners under the brand Iki, and subsequently launched deodorants and perfumes under the brand Badz. The Founder estimates the combined market for these categories in India would account for Rs.15,000 crores. The spaces are dominated by a few major players, while deodorants has an endless long tail.
“In the last five to six years, people have been talking a lot about digital commerce. The Indian market is well and truly dominated by traditional retail, with an estimated 1.2 crore outlets. When companies do D2C, they find it extremely difficult to crack the market and more importantly crack it profitably. Today, everyone in this space who went D2C wants to become (physical) distribution-driven,” avers Mohan.
Ikigrow has a presence across e-commerce marketplaces and will launch its own e-commerce platform next quarter. The primary focus thus far though, has been on building the traditional retail distribution chain.
“I drew on my experience in distribution, on people who had worked with me, people who were willing to partner with me. The experience of the sales team, and putting the right people in the right location, is very important. My field force today is about 75 people, going one state at a time,” says Mohan.
Being bootstrapped also meant being obsessed with the ‘Chronos’ and ‘Kairos’. “We have managed to dribble the ball in focus regions that can give good returns,” he adds.
Ikigrow has managed to establish a presence across markets except the South of India, where it has just kicked off its modern trade play. The market response has given the CEO and his team the confidence to soldier on.
Mohan notes, “Distributors are paying in advance. That tells us that people are willing to believe in the product and trust that it has a future.”
Currently ninety nine percent of the sales comes from traditional retail for Ikigrow. In the next two to three years, the company expects e-commerce to contribute 10 pc of sales, and modern trade 20 pc.
From the current presence in over 20,000 stores, Ikigrow will seek to establish its presence in over 50,000 outlets by the next calendar year.
Crafting Joyful Experiences:
Whether in air fragrances or deodorants, the mission is to deliver joyful experiences, reveals the Founder-CEO. This poses an interesting challenge and opportunities as the segment – especially air fresheners – is evolving, he adds.
“There is a trend of premiumisation and change in preferences, across consumer segments. We have to create a range of products. We decided to create sub-categories. When you create new stories, it is easier for retailers to buy in. Better quality and sensorials become additional legs for distribution,” he adds.
The stated focus areas that drive the business are three: distribution, image and profit. The basic air freshener product offering natural fragrances like rose and lavender sees intense competition and if one has to compete on prices. Newer players are invariably asked for discounts by distributors and retailers, noted Mohan. Hence Ikigrow decided to develop a ‘Scent of India’ range, in addition to the ‘Scent of nature’ offerings.
“India is a holistic spiritual market, driven by elements like camphor, meant for space purification. So we created products for the space where instead of burning something, you can spray the product before or during puja, spreading a feeling of purity around us,” reveals the CEO.
Ikigrow’s ‘Space Purfier’ range comprises of Loban, Oud and Camphor fragrances. These are priced at a premium of 20 pc over the base range. These also account for 30 to 40 pc of sales for the company within air purifiers. What this also does is open up the product to retailers in the space of prayer essentials, thereby allowing a Rs.70 SKU of Badz perfume and Iki pocket purifiers into such stores.
The grooming space is admittedly even more competitive. There too, Ikigrow saw opportunity in creating a sub-segment of mini perfume boxes.
“Badz is a product for Gen Z – bold, adventurous, zesty and lovable cohorts. I don’t think anyone has the packaging and the design that we do. In terms of sensorials, we have created about 22 fragrances that have passed the threshold of consumer desirability. We have launched 11 fragrances, in about 18 formats. The deodorants were launched later, and they constitute about 40 pc of our total sales today,” Mohan explains.
The summer season is a big driver of sales for the category and Ikigrow wants to ride the wave by extending Badz to newer categories.
Modern Trade and Future Expansion:
“Marketing needs to make a good story, the sales team has to tell those stories well. Marketing needs to keep it simple for the sales team to be able to tell them well in the market and sell,” reflects the Founder.
Mohan has not just chosen sales colleagues from his past for the new venture, but also agency partners. A recent digital campaign (pictured) by marketing consultancy Blue Noodles created a bit of buzz for Iki air fresheners.
The Ikigrow team is still figuring out entry into modern trade and has started off with the South of India. The placement and offtake has been ‘very good’ says the CEO. Expansion will be focused on the region first, followed by a national play beginning next quarter.
“With modern trade, we need to enter in a measured manner in line with our production and distribution capabilities. If we make a commitment, we need to deliver,” explains Mohan.
The manufacturing is currently being done outside Mumbai. The intent is to follow the trends in successful stores, both in smaller retail and modern trade, and build on the learnings. Mohan believes that if one gets the model right, one is in a good space.
The bootstrapped company is open to collaborations and investors as it grows but not in a hurry to get funding.
“Being bootstrapped teaches you to be frugal,” notes the FMCG veteran. “It teaches you to use your resources to the best of their ability. As you grow, you need specialists to support the growth. We will be looking at bringing in investors but slowly. We are doubling every six months now. Then there is the 2x opportunity in summer. We will expand the offerings to 20-odd fragrances. The next month will be our biggest to date, in terms of sales,” he adds.
Mohan believes that getting the product right was the first step and getting the distribution in place was the next. There were some hiccups along the way but he is satisfied with the growth so far. He underlines that this is just the beginning and there’s a lot more to be done.
Besides singular focus on retail, the company is using digital channels to promote Iki and Badz and is in no hurry to drive traditional mass media advertising. The CEO cedes that it will have to be done as the company scales, but he also reminds us that when he was helming Kamasutra deodorants, there was no advertising for the first four years. The brand still became number one, he underlines.
Badz and Iki cater to different audiences. A large chunk of Iki buyers are women. The category of air fresheners is growing faster than deodorants, notes Mohan.
“There are a lot of sub-segments booming within air fresheners. Like car perfumes, for instance. While in categories like deodorants pricing is a big factor (with design, fragrance in place), for car fragrances no one asks for the price. There are a lot of opportunities for cross promotions in fragrances,” he adds.
He can smell them, in the not-so-distant future.
(MN4U Syndicate)