Sugar Cosmetics, a cult favourite beauty brands amongst Gen Z and Millennial consumers in India, and one of the country’s largest beauty companies, has closed USD 50 million Series D fundraise led by the Asia fund of L Catterton.

The upsized round saw strong interest from multiple private equity funds with continued participation from existing investors - A91 Partners, Elevation Capital, and India Quotient - firmly placing the company on track to further capitalize on its growth momentum in the rapidly expanding beauty and personal care market in India,” said L Catterton, a global private equity firm part-owned by LVMH, in a statement.

Omnichannel model

Sugar Cosmetics offers an extensive portfolio of beauty products across the lips, eyes, face, nails and skin categories and has more than quadrupled sales over the past three years. Products are sourced from suppliers in Germany, Italy, India, USA and Korea, and are sold online and through a network of 40,000 retail outlets across 550 Indian cities. “The company’s effective use of new-age, impact-focused content marketing has helped it develop lasting emotional connections with a diverse range of consumer cohorts,” highlighted L Catterton.

L Catterton, which is mostly focused on middle market companies and emerging high-growth enterprises, intends to build on their strategic relationship with LVMH to help Sugar Cosmetics to embark on their next stage of growth amid the expansion of India’s beauty and personal care market. L Catterton has significant experience investing globally in the beauty and personal care industry. Their current and past investments in the space include Il Makiage, Intercos, The Honest Company, Tula, Bliss, CI Flavors, Elemis, Etvos, Function of Beauty, Marubi, Merit, and Sociolla, among others.

Burgeoning cosmetics market

The move comes at a time when the Indian cosmetics and toiletries market is at an inflection point,” commented Bobby Verghese, Consumer Analyst at GlobalData.

Driven by consumers who are increasingly making cosmetics and skincare a part of their daily repertoire and experimenting with different types of products, India’s beauty and personal care market has expanded considerably over the past five years. Rising adoption of online shopping and greater product penetration in secondary cities are also contributing to the market’s enlargement.

According to GlobalData, sales of beauty products grew by 5.6% CAGR [1] during 2015-2020, with value sales rising from US 11.1 billion in 2015 to USD 14.6 billion in 2020, when COVID-19 arrived. With the pandemic restrictions easing gradually, GlobalData forecasts the cosmetics and toiletries sales in India to grow by 7.2% CAGR over 2020-2025 to reach USD 20.6 billion in 2025.

Startups such as Sugar Cosmetics and Nykaa are well positioned to tap the fast-paced growth in online beauty retail through their mastery of the omnichannel distribution model,” conluded Verghese.