Welcome to the 15th episode of ‘BRICK by BRICK: Building Insurgent Brands'. Join us as we talk to the brightest minds across the world about building enduring consumer brands.

In this episode, we will hear insights from Viksita Singh Menon about the ever-evolving landscape of Beauty for Millennials and Gen Zs in Southeast Asia.

Tune in as we discuss:

• The unique dynamics of young consumer needs and behaviors observed in Southeast Asia.
• Navigating the competitive landscape and strategies for beauty insurgent brands to thrive.
• Adapting to the post-COVID consumer, meeting demands for interactive online experiences and personalized shopping journeys.
• The power of online platforms, notably TikTok, for brand discovery and engagement, emphasizing the importance of a robust content strategy.
• Anticipated future trends in beauty, including the growing influence of AI and the increasing emphasis on sustainability in product offerings.

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Transcript:

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Viksita (00:00)

Gen Zs and millennials are getting even more conscious about taking care of their skin and they are willing to invest to start early.

Sameer (00:08)

What are you seeing in terms of evolving consumer needs?

Viksita (00:11)

Gone are the days where the consumer will only want to buy a brand or a product because it comes from a big MNC brand. I don't think they do that now. They don't look at any product from that lens, they look at saying, what does it bring to the table?

And at the end of the day, they're just going to give it back to you.

One of it which I feel is universal, but which will take everybody by storm is everything about AI and tech in our space.

—Introduction break—

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Sameer (00:55)

Welcome everyone to episode 15 of the BRICK by BRICK series by DSG Consumer Partners, where we talk with some of the brightest minds building insurgent brands. For those who don't know DSG Consumer Partners, we're an early-stage consumer focused venture capital fund investing across India and Southeast Asia. We manage more than $325 million on behalf of our investors and have invested in 84 insurgent brands till date, straddling consumer products and services since 2012.

My name is Sameer Mehta and I run our Southeast Asia efforts and I'm delighted to welcome Viksita Singh Menon, the General Manager for Southeast Asia for Paula's Choice Skin Care. Today we will be talking about Millennial and Gen Z beauty and wellness in Southeast Asia, which is Viksita's home, if you will, and the home of where I invest.

Viksita, just before we get started, I think it'll be useful for people to understand your journey, your career in beauty specifically. I think if you can walk us over the last 15 years what you've been up to and why, you are really well placed to have this dialogue with me.

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Viksita (01:58)

Sure. Thanks. So thank you, Sameer, and thank you, DSG, for having me. I'm very happy and excited to be here and share more with you about our ever-evolving industry and the dynamic Gen Zs and Millennials.

I started my career close to now 20 years back, and yes, that does make me sound really old. Fresh out of an MBA institute, I think the dream at that time for any marketer major was to join an FMCG company, sell the usual soaps and shampoos in general trade.

And that's precisely what I started my career with. Over the past 20 years, I've had the privilege and honor to work on some of the very known and prestigious brands in the industry across India, across Asia Pacific region, straddling different categories and different price positioning in the market, be it luxury, masstige, or even mass brands.

And the final frontier, I would say, got me to Paula’s Choice close to two years back with a single -minded objective of being able to contribute and create impact from all the learnings that one has been able to harness over the past several years and to see this wonderful brand. And I sometimes definitely say it's one of the best kept secrets in skincare and to see it grow exponentially within the region.

I think what makes me passionate about this industry is that there's just never a dull moment here. Contrary to popular perception, you know, where everyone says, oh, it's FMCG and oh, it would be, you know, the usual 8-10 % growth -- I've seen it evolve. I've seen trends and fads come and go and seen its dynamism in all its glory.

I myself am a beauty junkie, so I view this business from a business owner's point of view and also as a consumer, which I think makes it very interesting for me always.

Sameer (04:00)

Excellent. Thank you for that background, Viksita. Maybe for our viewers or listeners who may not be familiar with both Paula's Choice, as well as how it fits into Unilever Prestige, I think if you can help the audience understand that and how one of the world's largest FMCG has set up its efforts around luxury skincare, I think that would be quite instructive for the audience.

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Viksita (04:23)

So Unilever Prestige is the luxury-slash-prestige division of Unilever where we have a motley of nine to 10 brands, which Unilever has acquired over the last now 8 to 10 years. The simple reason being when you look at mass, of course, we know that Unilever is a behemoth and a force to reckon with. But when you look at overall beauty, which includes luxury, masstige, as well as mass, Unilever is not in that top three where it would want to be.

So it could have been a journey of either starting from scratch or taking learnings from already big brands, which had made a name for themselves and acquire them and build that portfolio, which is what Unilever prestige did quite well. It has very notable brands such as Dermalogica, Tatcha, Living Proof, Hourglass, Garancia and the most recent one is actually K18 which got acquired and Paula's Choice actually was acquired by them in June of 2021 with the hope that firstly we understand the online and the DTC business very well.

And that was really the gap and the understanding which, you know, the brands that they currently have, there was that gap which existed, which Paula’s Choice has fitted beautifully. It's also very well positioned between Masstige and Luxury in terms of its positioning. And that's a sweet spot, you know, where consumers are concerned. And I think the third part is it's a brand which is very well known in US.

The cornerstone of this brand is all about education, is about transparency, it's about empowering the consumers with the full information to be able to make that informed decision. US is our biggest market, but it was unexplored and not tapped as well in other markets, Southeast Asia being one of them. So that's where it fit in to the Unilever Prestige portfolio. And the task on hand for myself, of course, was to get on board and spread the awareness and the brand love in this region. 

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Sameer (06:49)

Amazing. Thank you for that. It's a good segue to my next question, which is around, let's try and focus in on our region. You and I both live in Singapore. You handle a market that is very, very, very diverse here in Southeast Asia. Everywhere from Singapore -- $100,000 per capita income, to Vietnam, Philippines, Indonesia -- $3, $4, $5,000 per capita income. It may as well be different planets in some respects.

But talk to us a little bit about what don't people -- from the outside looking into Southeast Asia, understand about Southeast Asia from a beauty and personal care perspective. As someone who is so steeped in it as you are, I think you'll be best placed to help us understand what's different about our region relative to Europe, relative to the US.

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Viksita (07:38)

Yeah, I think you said it really well, Sameer. The first part I think everyone needs to understand is that Southeast Asia is a region. It's not a single country, right? Exactly as what you said. There is a Vietnam, there is an Indonesia, and then there are also like a Thailand, which is the biggest skincare market. It's same-same, but yet very different. No two markets or countries I can say are identical or the same.

And that's not only in terms of geography, but also in terms of retail landscape, the consumer need, the beauty concerns that exist for consumers, or even the stage at which consumers are in terms of their beauty evolution. We've got close to 2.5 billion people, of course, if I include India. But what makes it really, really special is that we're a very young population.

And I think that's really something which sets us apart from a Europe or a US that our median age is close to 32 years. Which is why all brands, big companies want to tap in on this region because we want to tap in on our consumers young. So I think that's something which is very, very unique.

I think the second part is the personal disposable income or the per capita income of consumers here is growing. So we had, of course, the low income and the upper income one, which was a flat belly, so to speak. And we're seeing that shift where the upper income one in the next, I would say, 10 years is going to double or triple. So clearly, the consumer here is understanding that we can spend and we would like to spend on discretionary spending such as beauty. So I think that's something which sets it apart.

I also think it's a land of multiple religions, ethnicities, demographics, all of which have a bearing for consumers and the need requirement. I think the classical case, which is best known for our region is how Halal for Indonesia and Malaysia made its mark. It came out of nowhere, but how a lot of international brands also took onto that trend and made actually their production facilities Halal certified.

But I think the one thing which is consistent and uniform about this region is the hot and humid climate. You know, I think that is, that sets it, that unifies it, so to speak. And I also feel that has a very strong impact on beauty. For example, heavy textures, emulsions in terms of creams, they don't work for our climate, you know, something which works very well for, let's say China or Japan.

Here what works is lighter textures, ease of absorption, sun care, which is really needed for our climate. I think that's what makes Southeast Asia unique and different.

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Sameer (10:40)

Excellent. Building on that, we do a lot of consumer research at DSG. In fact, we worked with Meta and with Bain not too long ago to survey 9,000 consumers across 6 markets. We learned some interesting things in that survey, and I encourage people to go to our website and pull it up and learn more. But one was there's this transition that seems to be happening from user needs such as acne and brightening products to almost anti-aging at a very, very young age, I would say.

So I want to delve into that with you a little bit, because often there is this misnomer that, oh, Southeast Asia is a follower region, which is trends will get generated in North Asia, in the US, and then Southeast Asians will just follow. I disagree a little bit. I think on some of these need states, Southeast Asians are on the cutting edge. What are you seeing in terms of evolving consumer needs from your lens of running a, you know, an amazing luxury brand yourself, but also as trying to observe where the consumer is today and where they might be five years from now in preparing for that evolution.

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Viksita (11:49)

Yeah, you're right. We used to see that a lot in mass market where fairness was still the numero uno category. But as people make their journey towards masstige or luxury brands, we see that change happen where people are wanting to spend and invest more in valorized and more expensive brands because they just feel something as critical as anti-aging requires more investment. We do see that.

So I agree, I think anti-aging is definitely on the rise. It's no longer about curative anti-aging, it's a lot more about preventive. Gen Zs and millennials are getting even more conscious about taking care of their skin and they are willing to invest to start early. It's now no longer about getting rid of wrinkles or fine lines. It's about ensuring that that first fine line is delayed as much as possible. No longer do consumers feel that anti-aging is a cream for their mums. I grew up where I was always like, okay, I'll be using one particular cream, but my mum is going to be using the anti -aging cream. And there was always that fine line and demarcation, but that's no longer the case.

They are looking for solutions as early as their early or even mid 20s, because they want to delay anti-aging as far as possible. But I think there also brands have a role to play. And I think the biggest role that they have to play is on educating consumers, where they have to actually tell them that anti-aging is no longer a taboo word.

You know, everyone's going to age, you know, it's something which is a very natural process. We all have to embrace it with open arms at some stage or the other, it's inevitable. So it's our duty as brands to share information with consumers very transparently and for them to really understand that anti-aging is a lot more than just wrinkles. It's about for example, it's about skin pigmentation. It's about skin brightening. It's about dark spot removal.

And I think that shift is happening where the Gen Zs and millennials are learning more. And they are understanding that it's no longer just about getting that under eye dark circles or fine lines removed. And brands have to play that role.

The other part is I think brands are also trying their best to give different franchises to cater to each of these consumers. So there may be certain franchises within a brand which caters to let's say the 20s or the 30s, which has different ingredients for sensitive skin, which is not as harsh or not as old as let's say a 40 year old. So they may have, for example, fruit extracts in it, or they may have fruit derived antioxidants in that franchise.

But for the advanced offering which brands could offer, they may require stronger ingredients, be it niacinamide, be it retinoids, for example, ceramides, which would be there. And that change I see now in brands taking place where what they're sharing with consumers, even in terms of, I would say, the spokesperson that they use, it's now no longer that you have someone in their 40s only, you know, looking at anti-aging. They're okay to take people even in their early 30s, you know, to talk about preventive anti-aging. And I see that shift happening for sure.

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Sameer (15:37)

Thank you for sharing that with us. As part of the same research, one of the other things that consistently shines through is a big emphasis on value for money. So while Southeast Asia and India are amongst the world's youngest, most optimistic, fastest growing parts of the world, the reality of our region still is that the belly of the market still has limited dollars to spend today.

10 years from now, 20 years from now, we all are optimistic that that will change in a transformative way. But today, value for money is still really important. How do you see that playing out, especially as you tackle a luxury brand building exercise, right? Where if people start going purely on the basis of dollars per hundred grams or active ingredients, then that math starts becoming challenging. How do you ascribe, you talked about valorization, but how do you get the young consumer who has limited wallet today, convinced to take the plunge to pay up, right? Talk to us a little bit about how you create that in the minds of the consumer. 

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Viksita (16:43)

Yeah, you're right. You know, when I look at overall beauty, BPC, what we call Southeast Asia today is under 10% of the overall global market. You know, we're just close to about 50 billion euros. But if you actually further funnel it down, less than 10% of that is what we call premium beauty, 90 % of it is still mass beauty. You know, that is what you and I are going to find in the kirana store or let's say closer to home in a Watson's, a Guardian, you know, that's what's really, as you said, the biggest part of the market. So one way to look at it is it's small, the other way that I try to look at it it’s got tremendous potential for us to, you know, grow.

From a consumer standpoint, you're absolutely right. The consumer today is super informed and aware. I think with the proliferation of social media and with just so many brands being available in the market, they want to make informed decisions. I personally feel more than value for money, they are a value seeking consumer. They want the value equation to be out there. Now, one part of it is the value equation related to price. But the other part that I always feel is they're always looking for the best bang for the buck. They're just looking at that. So I feel that they are willing to experiment from mass to masstige as long as they are seeing that value coming from that brand. Now, what do I mean by that,

For example, is this brand, I'm okay to spend, let's say $50 more, but for example, can I get more out of that brand? I wanted only, let's say, a hydration product, but can I get hydration and whitening or hydration and anti -aging in that same product? You know, so I am wanting more value to come from that brand.

I've spoken to a lot of Gen Z's and Millennials and I asked them that, you know, okay, you were buying products from a Watson's, what made you go to a freestanding store? What made you go to a Sephora? First of course is they say that, you know, they want to try and experiment. But the other bit is they're saying, yeah, it's okay if I'm spending all that more, I eventually get some kind of GWP, I get some freebie, I get some samples, you know, from that.

And they use those products on a day to day basis. So they may actually view saying, yes, I am going for $50 more, but I'm also getting more value in terms of freebies or samples, which I can then say last me longer, and I'm therefore getting the best value out of it.

Sameer (19:28)

So not necessarily value for money, but value seeking. I like that distinction. Building on that a little bit, one common refrain we get as consumer investors is why bother building brands? The young consumer is so fickle, they have no loyalty, they will move across brands very, very fast. And as you know, one of the tenets of consumer brand building on the long term is to have a cohort of loyal consumers that the percentage can vary depending on category to category to category. And there are, I think, strong distinctions between cosmetics versus skincare in our realm.

But talk to me a little bit about your perception. If I were to give you this supposition that young consumers are disloyal -- let me be a bit provocative, would you agree, would you disagree in what you see? And if you agree, then what do you do about it? Because that really impacts your business.

Viksita (20:27)

Yeah, correct. I think they are loyal or disloyal pertaining to.. it's very category centric, you know, very category specific. I see more brand switching or disloyalty happen in categories like makeup because it's a very experimental, fun and dynamic category. I may use one brand of lipstick on one particular day, but I'm okay to try something else on another day, which is completely different format because it's playful. It's about my look, how am I going to dress on a particular day, and I don't mind experimenting with it.

Haircare is another category where I haven't seen such strong brand loyalty because as a category, people are seeking the best value there. I worked on a haircare brand where, you won't believe it, but we could give – we could give like a pressure cooker as a freebie, you know, it would work because people loved that deal. They would just say that it's hair care at the end of the day, you know, it's not something which, which is touching my skin. I'm using it as a product, it's a well reputed brand, but I'm getting like an amazing, amazing deal -- I'm going to buy it. And it used to soar and everybody was like, no, but you know, you are just, you're just buying share.

So at that time, no, our trend used to go up after that. So I think haircare and makeup for me are the two categories where consumers are probably not as loyal. But skincare for me, I think is way more personal for them. Way more personal because it directly has a correlation with how their skin looks, feels, and it's about skin health for them. So I have seen much more loyalty for them and the number one -- I mean, we used to do a lot of research, the number one thing they would say is, does it suit my skin? If it suits my skin, I'm going to stick to it.

Where I think the, not disloyalty, but where they're willing to experiment is when they would want to expand the repertoire. They would want to expand the regimen. So for example, I am fixated to say this moisturizer is amazing, but I'm okay to try a serum along with it. I'm okay if you want me to try an eye cream, you know, with it.

I'm okay to see, okay, you want me to layer a suncare product or so on it. I could try that. Many a times it used to happen with the same brand, you know, because you believe so much in that brand. But I feel the repeat rate, which we have seen in skincare, especially even for my brand, if I may say, have been really high versus what I have seen for haircare and makeup.

And that is where I think the power of the brand and its functional effectiveness comes into play. Our role for any insurgent new brand is always about new customer acquisition. It is about getting them because then you have to believe in the power of your brand to say once they try it, they're going to come back for sure.

Sameer (23:38)

So, you know, you talked about an important thing, especially in our region, where making high quality products available at fair prices, there's still a big job to be done there, right? I mean, we're still in the early throes in our opinion on that front.

And I want you to think a little bit about -- because you are at an interesting vantage point, right, while you are representing a very large company, the brand you are representing within that is more of an insurgent, if I may use that word. How do you see the battlefield playing out? Pick a market that you want to talk about, whether it's Indonesia, Philippines, Vietnam.

Local insurgents coming up such as Colourette in Philippines, such as Rose All Day in Indonesia. The national champions like the Wardah in Indonesia, and there are other equivalents in other markets. And then of course, the MNC giants, right, both the L'Oreal of the world who are purely beauty personal care focused and the Unilever of the world who straddle many, many categories, right. But everybody as I see it is competing for the same young consumer who will have wallet in the future.

How do you see that shaking out and what should the insurgents think a lot about as young upstarts and what should the incumbents think about as they see all these insurgents coming of age?

Viksita (24:48)

Yeah, you're absolutely right. I feel this journey actually started close to 7-8 years back, and I still remember seeing a Nielsen report in one of the categories. We saw each of the big brand players having a particular market share, but then we started seeing a huge part in what Nielsen used to classify as others, you know, which used to be there. And year on year, we saw the pie growing, you know, from 25% to 30% to 35% to 40%.

And when we deep dive, we said, who are these others, you know, because it's none of the big brands. It was purely coming from the likes of, as you said, either a Wardah or a Mistine, you know, which were coming from nowhere. They were taking a very locally relevant insight and building brands which were appealing, which were strong functionally.

And they were tapping in on that big segment. And it goes back to the consumer, right? The consumer, I think, gone are the days where the consumer will only want to buy a brand or a product because it comes from a big MNC brand. I don't think they do that now. They don't look at any product from that lens, they look at saying, what does it bring to the table?

You know, what is the value proposition and what is that USP which this brand is bringing to us? Be it, be it for example, clean beauty. Is it that, is it all about education transparency? Is it that they're bringing the latest innovation, for example, to the market? Is it the potency of the ingredients? You know, what is that edge which the brand stands for and how are they communicating it to me in the most feasible and relevant manner. Which would mean -- For example, user generated content or using KOLs or using latest channels like a TikTok, you know, to talk to consumers. I think that's what people are, what consumers today are seeking.

So I definitely feel that for any big MNC, it's no longer about understanding what is happening with the top four or five big brands. It's really understanding what is happening, you know, with the local insurgent brands and national insurgent.

I shared with you, right? I was recently in India on a work trip. And what really, really struck me there was precisely this, that it's now when you walk into a mall, you only see three to four shops of the big brands out there. But what you are seeing is, for example, the Mamaearth, which are proliferating, or for example, Sugar Cosmetics, or any of those brands, or even like you hear people talk about 82E official, you know, where they are wanting to try, experiment new brands and products as long as they deliver. So competition is definitely now expanding.

Sameer (27:50)

Yeah, I hear you and that's one of the reasons why we are so excited about the category, right? Because we are the voice of the insurgent trying to take share, trying to create space where there might be, where historically people would have thought how is this even going to be possible, right? One of the important playbooks for most of these brands, especially if they're started by relatively young people -- let's call it 25 to 35 year olds, is online discovery as a tool, right?

Beauty and personal care products are light. They are easy to transport. They don't cost that much to ship, right? And they are visually very arresting when wrapped around with a persona or a figure who can communicate and entertain you and so on and so forth, right? So as you see, you know, how you think about the discovery, or rather the overall funnel, right? Let's start from discovery, awareness, trial, and then hopefully repeat.

How do you see the impact of -- and in Southeast Asia, we cannot get away from the fact that TikTok is an unbelievable phenomenon in our region. If those of you who don't know, come and check out the TikTok action in our region, it's spectacular.

What do you see as the advantages for local insurgents when it comes to using live content like that? And I have another, I think, double-click question, which is a question that I constantly have when I see brands with active TikTok presence, right? Is that really brand building or is that generating sales? And generating sales are important, don't get me wrong, but generating sales in of itself doesn't translate into brand building. Other things have to happen. I'm curious to hear your perspective, because I'm sure you're tracking the space actively.

Viksita (29:36)

I feel the space of online marketing and the way consumers really dabbled with online space changed post COVID or during COVID. I would say initially prior to COVID, it was all about use it as a secondary means of creating brand awareness, you know, just let the people know it serves as an awareness engine. Do some, you know, search, do SEO, do SEM, and probably, you know, do a few banners, dynamic rich content on some sites. That's about it. That's what it used to be. I feel COVID totally changed that because people had to shop online, you know, and when they wanted to shop online, don't get me wrong, they were still demanding.

So they were still demanding to say that it's not that because I have to shop online and you are just going to show me something which is awareness, I'm going to buy the product. No, they wanted to know, for example, I want to buy this lipstick, but show me how it's going to look. You know, I want to be able to see it on an app to be able to see does it suit me, does it not? And I think that's where the change really happened.

Today, I view online medium all across the consumer funnel. So I see it as an awareness generator for sure. Because a lot of people, and especially for Southeast Asia, I would have to say, they not only are online, but they shop online as well. So, you know, there's a big percentage which shops online. I would say it's awareness. But for channels like TikTok that you mentioned, I view them a lot about engagement. You know, so it's about the TikTok trend, which has gone viral, how swiftly and how much in an agile manner can brands lap onto that. You know, can you make sure that you have a strong content strategy, where for 30 days of the month, you've got content, you know, which is going on, for example, once every day, you know, to really, really be top of mind for the consumer to say it's on on point, it's on trend. You start seeing them getting engaged, you know, to say, OK, what an amazing ad you've done. I love this shade. You start engaging with your consumer.

We do see traction also happen in terms of conversion, eventually in terms of ROAS and returns on ad spends. That's what we monitor, you know, to say that, okay, it's great to know engagement is spiralling, but is it really being able to give out that ROI? Which is where I think Insurgent brands have that role to play because for them, they only have this much limited A&P, right? If they have limited A&P, they are going to want to put it on channels which are going to be able to deliver that ROI, which at least I can very confidently say the digital media is leaps and bounds ahead of let's say traditional media. So what we would see in terms of even five, six, seven, eight ROAS, which can happen on it, we would never get that on TV or print or out of home. So I see online bit straddling all three, awareness, also engagement and also conversion.

But as of today, I would say it's much more in terms of the bottom and the mid-tier, which is happening. And then the conversion part of course plays a role, but would be third.

Sameer (33:04)

Got it, got it. No, very interesting. In fact, all the brands that we saw come of age during COVID -- and come of age is a strong word, many of them are still quite small in the scheme of things, but went from, let's say, micro businesses to now small businesses. Interestingly, all of them as the pull forward from COVID online has now receded, right? And it's back to its long -term trend lines. Everybody's exploring offline as well, especially in beauty and personal care because this is a very personal category, right? As you correctly said, how does it look on me? How does it make me feel? Often it's a communal purchase, you know, have a bunch of friends going out and it's also, you know, entertainment -- a way to pass time.

A lot of our brands are thinking about how to go physical, but how to marry that consumer journey from irrespective where you meet me as a brand, I need to be able to follow through with you. The consumer no longer cares, in my opinion, whether you are online first, offline first, they expect to be met where they want to be met. Simple, right? And as a young brand, or even as a mature brand, you have to be able to straddle those worlds.

What are some of the best practices you've seen of brands that do that really well? Both the online play as well as the offline play, keeping in mind that the blocking and tackling is very different, but the consumer is the same increasingly.

Viksita (34:28)

So the shift, yes, omnichannel is back and how… I come from the traditional FMCG bit, which used to be physical first and then digital -- so digital was the second play, into a brand now, which is digital first and then physical. But I see that happen a lot now where consumers are demanding. We coined this term, which we say surround the consumer at every touch point, you have to surround them, when they step out of your home, if they see a bus, with your branding, that's the first touch point. If they're going on Grab, you know, they have to have, let's say the ad at that particular place. If they've gone, let's say to Google and they're searching something it's got to be. So you've got to add every touch points around them.

The question really becomes, what is that right strategy for which brand? I can speak for us, for us, of course, it was digital first, but we have a recipe for growth where after a particular point, that's the time that we feel physical presence is important for the consumer to be able to go, touch, feel, product, expand to the repertoire.

I think it is very important now because post-COVID people have started going back to shop. People have started wanting to go and experiment a lot more with the textures, with the finishes, and they would like to see that happen in stores as well. They're still experimental, I would say, because even when they go to stores, you will more often than not always see them on their phone because they may actually go to the store to try the product, but then they'll go to the site to probably see, okay, which is the best value, and then, you know, maybe buy it online. So they do do that. Even if you see assortments of brands which are digital centric, you will always see that change that in the more popular beauty retailers or so, they may actually give an assortment, which is just half of what is available digitally.

You know, because they believe they will go there, they'll try the product, but eventually to expand the repertoire, they'll probably go back, you know, to their website or the DTC one. So I don't know if there's a best practice per se, but I think it's very important in today's day and age to crack that model of -- if you are first digital, when is it that you should actually venture into the physical space?

Because it's the easiest thing to do. You know, like honestly, today there can be pharmacists, there can be retailers who will just be like, no, we want your brand, please, you know, come in. And it's the easiest thing to do, you know, for us to just launch immediately, get that fight, get the, you know, initial bid. The real part is how do you maintain and sustain that productivity? Which is why it has to be at that right stage. Every brand should be very choiceful about which partner to really partner with. You know, it shouldn't be that you spread yourself thin.

Sameer (37:54)

I completely agree. We talk about vanity metrics and non-vanity metrics. So for example, the classic vanity metric for traditional trade is doors. How many doors am I available? Everybody loves that. I'm in 5,000 doors, 10,000 doors. Pick a big, large, audacious number. What actually really matters is what's your sell through relative to the category norms in various different slices. Because you can really hyper segment that.

And that's when you know whether something is working or not working and you are of course correct before you have a lot of money sitting out there with long lead times, long working capital cycles. So it's really important and it's something we spend a lot of time with our companies on, because this is where we think you can make a lot of mistakes that are hard to unwind.

Viksita (38:40)

Absolutely. Because I have seen brands have tremendous one or two year growth because they're new brands, you know, and of course they have the buzz around it. But come year two or year three, the long tail, which you know, the category and the retailer carries. And at the end of the day, they're just going to give it back to you. You know, there'll be no questions asked. They will just be like, sorry, you know, you've got to take it back. It's close to six months expiry, seven months.

We don't have that luxury of it being, for example, an electronics code which doesn't have that expiry. So you're also always dealing with that caveat, and which is why extremely mindful of how one would want to launch in the physical space.

Sameer (39:24)

Yeah, Viksita, last question before we wrap up, I know this is a Friday night. So as you think ahead, if I could ask you to go into your crystal ball and say, OK, five years from now, what are two or three things that will surprise us about beauty and personal care in India or Southeast Asia? Pick whichever market, maybe one on each, that are non-consensus, are not obvious. Some of the other things we've talked about today are obvious, right, young, optimistic, more spend, more wallet. But what are some of the non-consensus things that you think will surprise us?

Viksita (39:50)

One of it, which I feel is universal, but which will take everybody by storm is everything about AI and tech in our space. You know, the way the consumer is going to even consume not only media, but the way they're going to consume beauty is going to be very, very different.

I was recently in a store again in India and they were doing a tech experience of being able to create fragrances live. So it was just a space which was out there and they had machine to be able to immediately infuse what type of fragrance do you want? And you would just kind of pick up each of the models and then it concocted a fragrance out of a motley of brands and gave it to us.

So I feel AI and tech can not only in a physical space, I'll also say in a digital space. Personalization, how are we going to be able to personalize beauty for consumers in an online and in an offline space, is what I feel will definitely take the world by storm. And that will happen with the power of data that we have, which is again what sets a lot of brands which own consumer data in with a head start, I would say. So I would say AI and tech, and I would say the entire personalization journey would be the two big things which I can I can see as big trends.

And I think secondly, what would be how consumer views and will demand brands to be socially, ethically, and sustainably responsible. We're seeing that in beauty happen a lot. When I do a change in packaging, for example, our client servicing team is very well prepared to know that, okay, why did we make the change on a sustainability angle and what can we communicate and share. Because the consumer wants to know, why have we done it? So I think these two for sure.

Sameer (42:15)

Yeah, no, I tend to agree. I think in sustainability, the dichotomy we see right now is nobody says no, but are they willing to pay a little bit more if it adds cost to your supply chain? I would say in Southeast Asia, still time, work to be done. People are not ready yet. So if it's price parity and it's more sustainable, great. It's not at price parity, some work to be done.

I think we have thought a little bit about implications for AI and beauty. Personalization, of course, is the holy grail, right, which is to produce a product for an N of one, right, which is completely dialed into their specificities. I'm waiting, because a lot of people have tried. We have tried as investors in the past as well, and we have not succeeded yet. But maybe this new compute platform, and I think that's what it's going to be, which will really radically change the world over the next 10, 15, 20 years, you pick a time that you're comfortable with, and there's no reason why it won't affect this space as well.

Thanks. Excellent, Viksita. Thanks a lot for your time. Really appreciate it. People can find you on LinkedIn will connect you when we put this online. We'll put this out there. Thanks a lot again for spending time with us on a Friday. And I look forward to speaking to you again.

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