Welcome to the 14th 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 dive into Saket Gore’s 15 years of building Himalaya to the brand it is today. How they grow a category that didn’t exist before, expanding their footprint in Indonesia through general trade, and using consumer insights to fuel relevant product development and marketing strategies.
Sameer Mehta (00:01)
Welcome everybody to Episode 14 of the BRICK by BRICK series by DSG Consumer Partners, where we talk with some of the brightest minds building and those who have already built insurgent brands. For those who don't know anything about DSG Consumer Partners, we are an early stage consumer focused venture capital fund. We invest across India and Southeast Asia, and we manage more than $325 million on behalf of our investors. Till date, we have invested in 83 consumer brands, straddling products and services across India and Southeast Asia, and we've been at it since 2012.
My name is Sameer Mehta and I run our Southeast Asia efforts. And today, which is December 5, 2023, I'm delighted to welcome Saket Gore, who's a friend, but more importantly, he was the former CEO of Himalaya Wellness Company here in the APAC region.
So our title today is "Building Footprint in Uncharted Spaces". Saket and I will cover many aspects of his journey at Himalaya and India and outside of India, more specifically Indonesia. We will cover general trade. We will cover consumer insight. We will cover NPD and innovation. I think you will find it fascinating.
Let's start off with just setting the context a little bit. Saket you spent more than a decade building Himalaya. Walk us through your journey. I think it's really important for our audience who may or may not be as familiar with Himalaya. And it's always interesting when I quiz people on Himalaya how little they know about the origin story. So if you could just set the context for us a little bit, that'd be wonderful.
Saket Gore (01:44)
Perfect. Thanks Sameer. I spent 16 years with Himalaya. Okay, so more than 16 years, I started working for Unilever India and having worked for Unilever India, Himalaya was my company. And this is a sentence which always I like to say, Himalaya is a fantastic organization, which I still consider as my company. So I joined Himalaya Wellness -- It was called as Himalaya drug company, where back in 2017 heading the India consumer products business, and along running the India consumer products business I also run the Russia - Central Asia operations.
A little bit of Himalaya. Himalaya is originally started as a pharmaceutical company way back in 1930 in India, continued to be a pharmaceutical products company. Went on to launch animal health products. And around 2003 is when they launch personal care products in India. Didn't do so well initially and continued to struggle to scale up in India. From 2007, we were lucky, we actually scaled the business from around five and a half, six million dollars to close to around a 100 million dollars in the next five, five and a half years. This is only for India.
During the same time, Himalaya will end up to build almost a 35-40 million dollar business in Russia and Central Asian countries.
In India, folks who have seen the brand there, it was known for its flagship product called Liv.52. It's a pharmaceutical, hepatoprotective product. And along with that, Himalaya went on to build multiple famous brands like Cystone, which is known for dispensing kidney stone as well as for urinary tract infection. It has got Septilin, these are in the health space for building immunity.
When you look at personal care, Himalaya's purifying neem face wash is the number one face wash of India and sorry if I missed out Himalaya actually is the number one face wash brand of India. A journey which began in 2007 at around 2% market share. Today Himalaya is holding almost 35% market share in India.
This is the journey of last 15 years and very recently the Himalaya Baby Care is in July 2023. Himalaya is the number one baby care brand of India, for month of July. So that's -- it has overtaken, dislodged the market leaders of hundred years in India. And so this is a few details about Himalaya India.
So I continue to run Himalaya India from 2007 to 2012, and then I relocated to Singapore to set up Himalaya Asia Pacific operations. So from 2012 onwards, Himalaya extended to almost 16 odd countries, and with a negligible base went on to build almost a 100 million dollar brand across those 16 odd countries. Notably all the ASEAN countries with Singapore, Malaysia, Thailand, Philippines, Indonesia.
Himalaya also went on to launch the products in Mongolia. Mongolia incidentally is a very small country, but extremely important for Himalaya, where Himalaya's throat preparations. Actually, Mongolia is the second highest country for Himalaya in the world. Australia, and not only Australia, extremely proud to say Himalaya is a popular, well-known brand even in South Korea. Perhaps the only non-Asian other brand from Korea, which is made in South Korea. An average Korean actually would have bought a Himalayan product in the last decade. So that's been some of the journey.
Sameer Mehta (05:42)
Saket Gore (05:47)
Slightly different countries like South Asian countries like Bangladesh. Bangladesh is a country which again Himalaya has gone up to built it for personal care range in Bangladesh. So it is overtaken even Unilever in Bangladesh to become the number one brand.
Sameer Mehta (06:05)
It's amazing. It's a very interesting story. When before I met you, I knew vaguely about Himalaya. I knew vaguely about some of the products. But, you know, I always found it interesting how you straddle so many categories, so many markets. But again, you were in India for the first several decades. And, you know, one thing that we keep reminding our founders is, focus on one market, go deep before you go wide. And I think Himalaya is a great example of doing that. Let's talk a little bit about a specific product category or innovation, if you will. So I want you to talk a little bit about face wash. Because you innovated, or when you were at Himalaya, innovated on face wash as a category. It was a category that frankly didn't exist, from what I can make out. So talk to us a little bit about the consumer around why face wash, and how you started with that insight and then how you sort of percolated that insight and built a business around it.
Saket Gore (07:07)
See, way back in 2000, face washes were introduced in India way back in 1994 by Ponds. Unilever India launched the first face wash of India under the brand name Ponds. It followed with multiple other brands. There were roughly around 7-8 different brands available. And multinationals like J&J had Clean & Clear, Unilever had Ponds, L'Oreal was available, Garnier were available.
Positioning of face wash is, it was seen as a winter product. India doesn't have many months of winter, strong winter but especially in northern parts of India consumers don't prefer to use a soap on their face because the skin gets very tight and the way this category was positioned was it was positioned as a winter brand only or products to be used only during winter time.
The reason I'm spending some time on this is, we came up with a unique formulation, is that this is soap free. Second thing what we spoke is, if we want to work in this category, we need to make this a 365-day a year category, it can't be a 60-day category
Sameer Mehta (08:22)
So it has to be repositioned from a winter only category to something very different.
Saket Gore (08:25)
Absolutely. So we said what do consumers do because India... most of India doesn't have severe winter. But then why should we look at face washing as a segment only for 60-days a year? So along with this, what people India is a hot humid weather market. Consumers sweat a lot through the year and obviously if consumers sweat a lot,they have oily skin. Along with oily skin they also tend to have acne. Now acne or what it's seen in India or called in India is pimples. A pimple is a genetic problem, okay, that is to do with Indian skin. So nobody was addressing for a specific benefit, so we reposition the face wash to a 365-day product. So we said this is a soap free formulation, you can use it through the year. Second is you get acne through the year, so whenever you have acne, you should use a Himalaya Purifying Neem Face Wash and because you should not get acne, stroke pimple, you should actually use a Himalaya Face Wash.
Sameer Mehta (09:36)
How did you communicate this? This is some time ago, right? This is not in the age of the digital age where you can communicate with, there's no digital, right? This is pre-internet. So was it, is it all over the airwaves? I mean, TV still holds pride of place in India. Was it radio? Was it above the--was it billboards? Walk us through how you communicated this repositioning to the average consumer.
Saket Gore (10:05)
So we have obviously when I go take back to 2007 Himalaya was not well large company. It was, the segment was dominated, I mentioned, by multinational like L'Oreal and Unilever, they would advertise on television. Himalaya worked on two aspects, we said we would actually make a fantastic product and ensure that consumers try that.
So we created something called as wet sampling where we would at multiple retail outlets. There were not many malls those days, but we would actually go to universities and colleges and get--those days were girls, because the products were targeted for girls, we would get them to try the product. Just make a girl wash her face with a Himalaya Neem face wash. It would actually create wonders.
Okay, to take away the layer of oil, it would actually ensure that the skin is bright. And we would get those 120-seconds because a consumer takes around 100-seconds to wash his or her face, and we get the next 20 seconds to talk to her. And that was a time when we would actually brief her about the product, and then give her with a 15ml tube saying why don't you go and use it.
Sameer Mehta (11:23)
Saket Gore (11:25)
So that is how actually we did this whole campaign where we took city after city. So India is a large country, but we actually identified that we need to do it city after city. We would go to college, or college and university, because we did not have money for advertisement. Very honestly, we couldn't afford television advertisement.
Sameer Mehta (11:43)
Got it. No, I think this is fascinating. When we were preparing for this session, when I was talking to my colleagues, many of them were like, why are we talking to Himalaya? It's such a massive company. Will the storytelling of Himalaya resonate with our audience? And who is our audience, our audience tend to be young founders in our portfolio, other founders building consumer brands across India and Southeast Asia, even if they're not in our portfolio. And often, they may get stuck saying, well, Himalaya is a very big company. I think your point is valid. Or trying to understand, help people understand that at that point in time, we were not, you were not a big company, right? And you had your own challenges and you had things that you had to overcome.
I think the other important point, I just want to highlight this because we get sick and tired of saying it, I think, and our founders get sick and tired of hearing it from us, is when you're convinced about your product truth, in which in this case was, we have a superior product, but we need people to try it, to believe it. Right.
And how do you figure out a way of getting sampling done in an effective way, in a way that can be scaled to some extent, and can give you feedback cycles from the consumer fast enough to feel good about whether what you're doing works or whether you need some adjustments to your process. That's super interesting
Saket Gore (13:07)
If I may add, so Sameer, sorry here is the one of the questions which everybody asks is why face wash. And my comment here is that obviously there were other categories in personal care which were already taken. So there was a hair care taken, there was oral care taken, skin care were taken. The whole insight was India had a hot humid weather market. The first step of looking good is actually having a clean skin. And we Himalaya always worked on categories which were at very early stage of evolution.
Because especially when you're small, you need to actually look at categories which are likely to become large. If you already are stepping into a large category, chances of you succeeding are relatively lower because the category has its own challenges where multinationals or other bigger larger brands invest money. So that is what we actually did. I thought it was worth it.
Sameer Mehta (14:05)
That's quite interesting, right? Because when we invest, often we get pitched from founders -- oh, look at this category, it's so large, it's still growing at 4%, 5%, 6%. If it's a mature category, there are 3%, 4%, 5%, large incumbents who own large shares each, we can be nimble and sophisticated. And if it's a large category and we get 3%, 4%, 5% market share, we'll become a very big player. I think you're making -- you're advising against that approach. You're saying, find something that is small today, but there are good reasons to believe will become significantly larger. And if you can be an early upstart there, you will grow disproportionately with the category growth and hopefully build something of consequence.
Saket Gore (14:48)
Just to put numbers in perspective, when we started working on the face wash category, it was roughly around 25 million dollars in India. Today it is a 300 million dollar category. So last 15 years, the category has gone from 25 million to 300 million dollars. And Himalaya being the pioneer in terms of working there, has actually gone from a 2% market share to 35% market share. So you can see the company is, or Himalaya has built face wash in India, the category is grown and obviously it has helped to get you a platform on which other products of Himalaya also have grown.
Sameer Mehta (15:27)
Got it. No, very interesting. And at DSG, we think about two ways of approaching problems. One is category reinvention, which is when you have a sleepy category that may not have seen a lot of innovation, may not have seen a lot of interesting consumer insight brought to bear. How do you reinvent that category.
And the other part, which is more interesting part, quite frankly, although more difficult to build and invest against, is category creation, where it's to invent something that really nobody has figured out yet and sometimes even drive the consumer to a need they never knew they had. And that can be super interesting.
So on that subject, I want to shift focus a little bit to Southeast Asia, which is sort of what I focus on and what half of our focus at DSG. You had success in India with face wash, specifically Neem. Those of you from India will understand what that is. Those of you who are not, I recommend you Google it. How did you take that approach that succeeded well for you in India and applied it against Indonesia? And talk first, perhaps, about why Indonesia, right? Why was Indonesia interesting beyond the usual large numbers of people, young people, growing income, the usual macro stuff, right? But you could have done this anywhere else. You chose Indonesia. And then how, or rather, what adjustments did you have to make to be able to succeed in Indonesia. I know privately you've told me about the long journey it took to succeed in Indonesia, if you won't mind sharing that with the audience, the audience always learns more from difficulties and uphill climbs rather than the easy stories. So that would be wonderful.
Saket Gore (17:12)
Yeah, okay. I think it's a very interesting question and I suggest that I will be, I'll share this particular story which I shared with you in private is we succeeded in India and obviously when we moved to Southeast Asia or ASEAN countries, we realized that Indonesia has got let's say 280 million people and XYZ, and that was not the reason why we chose Indonesia. If you recall, like I said, Neem Facewash actually addressed acne proble. And when we were looking around we saw that almost 8 out of 10 consumers in Indonesia suffer from acne.
Sameer Mehta (17:50)
Both male and female.
Saket Gore (17:52)
Male as well as female. And rest of the world what you notice is acne... most consumers suffer from acne during puberty and maybe by age of 23-24 it no longer bothers them. But for some genetical reasons, Indonesians, almost 80% of the population suffers from acne up to age of 50. It could be due to food habits, it could be for other reasons, we are not getting into that. Now this obviously was something which was interesting. And we realized that the face wash category there again was around $250 million and all multinationals were focusing on whitening space.
Okay, so obviously we came out thumping our chest that okay, we are going to succeed because we succeeded in India. We got a fantastic product, let us make inroads in Indonesia. Very honestly didn't succeed. Okay. That's a... I'll be honest to say that it was a very difficult uphill task. Because no multinational letting you enter the category and take away market share from there, especially when there is a new brand.
You're talking about ingredient which is called Neem, which is not known in Indonesia, and consumers were not budging. Very honestly, we made five years of good attempt. It didn't succeed. And that's when we actually started wondering what is the reason, because the same strategy worked in India, it's not working in Indonesia. The problem is perhaps 5 times larger than India. Why should Indonesian consumers not try our product is when we realize that okay, consumers are seeking a solution for acne. They are not saying I want a face wash for acne. Now it took almost a couple of million dollars of marketing investment before we actually realized that consumer said I want a product for my--a solution for my acne. You can't keep coming by saying I have a face wash, try this face wash.
Okay, so then we chose said okay, if multinationals are not going to let us make inroads in their market, how do we crack open Indonesia is then we said we will look at it in two ways. One is go back to the time and tested strategy of actually getting consumers to try the product. Wet sampling, we have a fantastic product. If you try the product, people love it. So we said we will again do wet sampling. We actually segmented Indonesia into around 20 odd region. Each region, we started going to universities, set up a booth there, get consumers to try the product. So that was the first route.
Second, we said we will avoid Jakarta. Because Jakarta is a very pampered region. So consumers there obviously are getting exposed by multiple messages. So we actually took over regions like Surabaya, we went to Bandung, we went to Kalimantan, we went to other smaller cities where consumers were not exposed to these activities and consumers actually welcomed us with open arms. They were willing to listen. They were willing to hear what we were talking and that is the route actually we took.
To help us what we also took is we took a help of a relatively small celebrity. Somebody who had lot of credibility, okay, not the glamorous one, not a dermatologist, but somebody who had done some work on skin care. That celebrity suffered from acne during her lifespan and actually she would come and talk about her struggle with acne.
Sameer Mehta (21:45.358)
Saket Gore (21:46.296)
So these were two routes that we actually did. And we realized that outside of Jakarta, our market share suddenly started galloping.
There is one aspect somewhere which I missed out. Actually, what I wanted to speak is we said we will not only focus on face wash because the consumer wanted a acne solution. So we said we would actually start talking about a product, which is a mask. It's a clay based mask. So it has the same ingredient, which is neem and turmeric. It's a product where you leave behind the product on your face to dry and wash it after 10 minutes. The reason it was done is during an early conversation you mentioned nobody knows about neem in Indonesia, nobody had heard. So hence the credibility of neem in Indonesia was very low. So everybody said if you want to succeed in acne face wash, I am going to use this product for 60 seconds, how will it work?
Now that was a common belief that this face wash will not work on acne. So we actually had a product which is a clay based mask, same ingredients, it was a leave on product which you would leave it on your face for 10 minutes. So the product would stay on the face for 10 minutes and you wash it off. So face wash in the clay format.
So we overcome two barriers. One is we explain to consumer that this is a leave-on product. So it stays on your face for 10 minutes. It's going to go and work on your acne. So we overcome that challenge. Second is we actually... 2017-18 is when we started working on this. That was the Instagram boom. So we used to put up good photo booths everywhere. So this particular product actually is a dark green color product. It actually makes very funny looking product on the face. And all the students there would actually click photographs and post it on Instagram.
Sameer Mehta (23:40)
Saket Gore (23:41.236)
So these are a few things which we did slightly differently. Principle was same, have a fantastic product, get consumer to try it and don't take competition head on.
Sameer Mehta (23:52)
But it's very interesting and I appreciate the candor and the humility in saying it didn't work for many years because we thought we had a playbook from India, and we were going to copy and paste that playbook to Indonesia because the problem statement was five times as big, why won't it work? And I think that's just an important lesson for all founders listening in, right. Just because something has worked in your home market, because you had insight, you had repetitions, you had trial and error, don't assume that playbook will work perfectly if you've transported to another region. And often we find founders and even investors for that matter make mistakes by assuming it will work perfectly. And then many tiers, a lot of wasted capital later, you have to go back to basics and then start smaller, which is sort of what you did, right.
Talk to me a little bit about general trade, right. I mean, one of the few people I know was actually done a lot of work in general trade in Indonesia. At DSG we love general trade. Many of our investments that have done really well have been general trade focused. For the benefit of the audience, what I mean by general trade, a very short proxy for it is any shopping environment which doesn't have a centralized point of sale system, a computerized point of sale system, I consider general trade. If somebody writes you an invoice by hand, if somebody accepts only cash, and so on and so forth. And many markets in our region, India, most of Southeast Asia, with the exception of Singapore, Malaysia, are still general trade dominant environments. But that is where the consumer is. That is where the consumer shops. To build a large business without being able to address the general trade environment, we think is quite hard.
Talk to us a little bit about how you thought about general trade in Indonesia, because you had to do it. What are some of maybe the top three lessons learned about handling general trade that you would advise a founder or a group of founders who have made some progress in modern trade in Jakarta or online in Indonesia, but now are trying to think about how am I going to tackle general trade across this complex island?
Saket Gore (26:12)
Okay, so Indonesia, you have the national modern trade, so I'm not going to talk about that. And general trade, when you're looking at a mom & pop store, okay, the learning has been is general trade loves credit.
Sameer Mehta (26:29)
Saket Gore (26:30)
They love credit because they believe that these are typically small families who set up one outlet. Typically, most of them have only one single outlet and they're trying to manage their working capital. As founders, as organizations, we do not understand them because we are at a distance. It is always better to go through a local distributor.
The distributor understands them better. They know which are the retail outlets where they should extend credit or where they should actually not extend credit. It is a lot of times brands choose to save that 10% which they would pass it onto a distributor as their margin. It is better to actually pass on that additional margin to the distributor, but they are able to extend credit and they are able to manage the rotations far better for general trade in our opinion. That is what should be done in Indonesia. I'll add on some here is general trade has a biggest challenge is they believe that they're facing competition for modern trade, larger format stores, as well as larger companies do not speak to them.
So when I was actually talking about sampling activity, when I was talking about providing additional inputs, a lot of multinational or larger brands actually have these leaflets or brochures which they leave behind at modern trade outlets which perhaps get dumped. They never reach the consumers. If you hand over any product information leaflet at a general trade, I would say the success rate of that reaching the consumer is almost 90%.
Sameer Mehta (28:21)
Saket Gore (28:22)
Sampling activity through general trade, I would say is 50%-60% of the samples actually end up being passed on to the consumer, because the retailer, their general trade person believes that when he or she is handing over a sample or information to the consumer, the consumer feels valued. And that is why he or she would keep coming back to their outlet.
So these were two areas which actually worked for us in general trade. However, I'll be honest here that in Indonesia, there is Alfamart and there is Indomaret. These are the two large small format retailers which are dominating. If you need to make inroads into so-called trade, general trade, you need to succeed in one of them. And my advice would be to not go with the number one brand, go with the number two retailer because they are more hungry. Work with Alfamart, do not go for a national presence, go for city-wise presence, and that actually succeeds very well. This has been, or at least Himalaya's past experience there that most brands want to have a pan-Indonesia presence, they want to succeed quickly in all 27-30 countries or cities, which is not the case.
Sameer Mehta (29:52)
Yeah, it's interesting when I often talk to founders about width of distribution versus depth of distribution, right. Which is a simpler way of saying that is how many doors, the vanity metric is how many doors am I available in. The actual metric that matters to you, that matters to the retailer who's supporting you, that matters to the end consumer, is what is the rate of sale in the doors that you already present in, right. And that balance, I think, is hard to strike of course, because the vanity metric is nice, I'm in $10,000, $20,000, what have you. But figuring out the rate of sale that you need to be at for your category is really, really important for you to succeed with the retailer. And you cannot succeed if the retailer does not succeed within your category, right?
Saket Gore (30:40)
A very good example is look at a city like Medan. Medan I think is the third largest city of Indonesia. It is on nobody's radar. Okay, if you ask why, because it doesn't have fancy outlets. It's actually dominated by a lot of spread out general trade. So the way we would actually measure our success is what is our market share in Medan. Because that way we became important in Medan, we became important in Semarang, we became important in Surabaya, we became important in Bandung. And that is how we slowly started surrounding the market, then entered towards Jakarta.
Sameer Mehta (31:22)
I see. Very interesting strategy. I mean, very, I would say, atypical in my opinion based on what we see. What we usually see is obviously, you know, upper tier Jakarta as the focus and then hoping that becomes aspirational for the rest and that you slowly but surely try to build modern trade and then maybe you experiment with general trade. But I think the wiring of what you need to succeed in general trade also is quite different. And it takes a particular kind of person, a particular set of experiences to be able to learn how to manage, select the right sub distributor, know how to manage that sub distributor, and build a win-win situation with them, and then how do you roll it out sustainably. So very, very interesting.
Saket Gore (32:14)
So, if I may, I will add something here. Let's say when you, most brands make a mistake where they appoint a distributor and then have a completely hands-off approach. My suggestion or learning has been that, if let's say you were to appoint a sub-distributor in a city, you still need to have your own team member who actually works with the distributor.
That way Indonesia has got a long deep pipeline. You would never know when your product is getting stuck. Whereas it is your own person who should be feeding you back information, irrespective of what the distributor says. These are investments to be made on day one. They are actually far more valuable. They give you the right feedback. Your own employer gives you the right feedback sooner than what you might hear from the distributor after six months.
Sameer Mehta (33:03)
I see, I see. No, very, very interesting. And separately, you and I will talk about to couple of companies that would benefit from some of this thinking.
We're now in 2023, soon to be 2024. We are a handful of days away from the new year. So it's impossible for us not to talk about online versus offline. I have a lot of founders who meet us who say offline is too difficult. Why would I ever bother with the physical trade. For some categories, the online penetration is fairly high, 25%, 30%, 35%. It's adding 2%, 3% every year. Why don't I just focus purely online and ignore offline completely? This happens a lot in beauty and wellness categories because it's a high margin product. Often, it is easy to transport, right, it is not heavy. it is not breakable. So there is a way in which to be able to move it all over the islands. To take the Indonesia example, although you could take examples in Philippines, examples in Vietnam, examples even in India.
How do you think about online and offline split? If you were to advise a founder who comes from the online first environment, right. They're younger perhaps, that's what they know best, how do you speak to them about the importance of offline or how to prepare for going offline?
Saket Gore (34:31.317)
See I have just a rough thumb rule, if you have a product, and I'm just trying to put from a Singapore perspective, if a product is priced below S$15, one five, you will never make money.
This I'm just sharing an experience, we've done all the mathematics. If your product is priced anywhere below one five, that is 15 SGD, you would never make money because all the cost that you add up actually comes there.
Sameer Mehta (35:02)
I see. And this is in the online world.
Saket Gore (35:05)
Online. I'm referring only online world. There are slightly more premium products because you have fixed costs of shipment, you have other fixed costs. So unless you are above S$15, you will never break even also. Irrespective of what you do and the competition online is going to continue to increase on. Okay, so this is one thumb rule that we actually learned.
Second is as you rightly said, online penetration level is still one-fourth, 25%. And if you go back to what we spoke about general trade, consumers still love to actually touch and feel the product. Okay, and especially when it comes to beauty care product, the consumer may know the brand, but they still love to talk to somebody and just share their experience.
And consumers in my opinion, whether it is anywhere upwards of 25 years old, still loves to talk and share their experience. Okay, and a lot of beauty products actually have a promoter in a store who share their experience, talk to them. And that in my opinion in the Southeast Asian world, consumers still love to do that.
Building a brand exclusively online in my opinion is tougher. One is to make money. Second is scaling up because penetration level on numbers is fine but consumers still are hesitant to buy unknown brands online. So scaling up beyond 5-7 million dollars is not going to be easy if you actually need to reach beyond 10%-12% of the audience. These are my learnings.
Sameer Mehta (36:48)
No, I think that's, it's very interesting. I think I would say it's broadly aligned with how we think at DSG. The numbers might vary a little bit per market, but that's semantics. I think it's been very interesting to observe the influence that horizontal e-commerce, vertical e-commerce, and now live commerce in the form of TikTok as the most prominent example has had on shopper behavior and the shopper journey. But it's interesting, I often challenge founders that, is that a sales channel or are you building real brand equity through that experience? And I don't know the answer. I'm willing to be open-minded, but so far in our region it appears to our reading of the situation that, they are indeed very powerful sales channels and you cannot opt not to participate at all, but they may not be the channels where you actually build brand equity.
Which ultimately is what makes your business valuable in the beauty and wellness space, right. It's nothing else. So super interesting.
I wanna, for the last 10 minutes, I wanna shift focus a little bit to innovation, right. We already talked a little bit about thinking about consumer insight, repositioning. But now let's talk a little bit about what I found the most interesting innovation in Himalaya because it came from the outside, not from India, which is PartySmart.
So for those audience members who might not know what PartySmart is, PartySmart is a liver protection product which helps you line your liver before you drink and recover after you drink. I may or may not occasionally have PartySmart. I won't confirm or deny. But I found it very interesting because when you shared with me that it was an innovation that came from outside. Because the need state was clear outside than it was within. And what I mean by that is India versus the rest of the world.
So talk to us a little bit about the innovation, why you felt you had a right to succeed, right. Given that the market in India was quite small for it and all things considered. And how PartySmart is situated today.
Saket Gore (39:08)
Okay, so one point is that PartySmart is an anti hangover product. Okay, I'm calling anti hangover product and I will talk about the format slightly different. And some of the R&D folks, Sameer, would not like what you would have said right now. It doesn't coat the liver.
Sameer Mehta (39:23)
Good thing I'm not an R&D guy.
Saket Gore (39:25)
We are not R&D folks, we are marketers. The function of the product is very different, but it's an anti hangover product. And I will talk more about this. Some folks, especially in Asia, have this problem called Asian flush. The moment they consume some alcohol, their face actually turns red and it becomes very embarrassing. And it's to do with a particular gene that is noticed in Japanese, Korean consumers, and some amount of Chinese origin people.
So one is to do with Asian flush where your face starts suddenly turning red. You might have one pint of beer, you might have let's say one shot of any drink and you suddenly start looking red is one. Second is a lot of people start having 3, 4, 5 units of alcohol every day and they would obviously be hungover next day. And with social drinking increasing, you can't be missing out on work or you can't be missing out on next day, and hence the need for anti hangover products.
Now this was something which was not noticed in India earlier, the R&D was based in India for Himalaya. And obviously because the Asian flush was not mostly noticed among Indian consumers and perhaps the hangover challenge didn't exist in India. And I'm not saying for whatever reason, societal acceptance of hangover was different. Whereas when we started looking at the Korean market, we realized that consumers actually consume almost 13 units of alcohol every week. Now this is the highest in the world. And they also suffer from Asian flush, almost two out of three people suffer from Asian flush.
Hence Koreans actually had invented local drinks. There were 100 ml cans like, you have Coke cans or 7up cans. There were some local brand which were offering a drink, which was refrigerated and you had to have this particular drink before you started drinking. You could imagine I was struggling to explain the process or how difficult it is to actually do that, that whenever you had to start drinking with your friends and colleagues, you first had to go look for this product, have to drink it, and then you could start drinking.
So this actually explained the inconvenience to the consumers. There was a genuine need for a product where I could start drinking anywhere I want and not actually start looking around for this particular product.
So we identified that the category size was almost $240 or $1 million, and third largest market in the world after USA and Japan. Consumers wanted convenience and a brand like Himalaya wanted to offer a herbal safer option to that. And we said, how could we actually turn the market around on its head and look at convenience, because I can't say I'm going to go out with my friends today and definitely I'm going to get drunk. You don't start planning to get a hangover, or you don't always plan that I'm going to go out with my friends and colleagues.
So we created this format where you could carry this anti-hangover product in your pocket. So it was available in a gummy format and consumers could actually have it anytime whenever they actually wanted to drink. Before drinks, during drinks, after you drink. All the products available in the Korean markets had to be consumed before you started drinking.
Sameer Mehta (43:05)
Saket Gore (43:05)
So this was the innovation which we created saying you could actually have the product. One is you could carry the product in your pocket, you could have it anytime you want. Before you started drinking, during your drinking, or after drinking. So that actually overcome all the challenges that consumer had with the existing format of having a 100ml shot. That is how actually we looked at this market.
Traditional view of brand Himalaya would have never looked at the product segment, but if consumers wanted to address this particular problem, which is Asian flush is a relatively health and lifestyle problem, you could not neglect it.
And hence we looked at this market from outside in. And a lot of folks from research and development actually had never heard of this particular challenge because they had never experienced it. So we actually have to go to Korea, see the actual drinking process, see how people drank and then came out of this product.
Sameer Mehta (44:11)
Interesting. But again, what I think is interesting to me is the deep consumer insight of problem. And again, everything you've talked today I think has been interesting for me because it's all led by product truth and deep functional benefit, which is often those of us in beauty, personal care, wellness are accused of offering products that are hard to prove their efficacy. Can they actually work? Do they actually deliver what is stated on the packaging?
I think you've talked a lot about, hey, we have to start from a need state that is clear and that is identifiable. And then what are the points of friction that you have to start eliminating in the consumer journey to be able to get a better outcome for everybody involved.
I know PartySmart started in Korea with this particular set of formats, but its success then eventually meant that it has been exported to almost all the operating countries in Himalaya. Is that correct?
Saket Gore (45:10)
That's correct, I think it's available close to now 50+ countries. There was one aspect I suppose I forgot is, see the existing product in Korea were available in drinks format and they had to be refrigerated. PartySmart obviously became a...you could stock it anywhere you want. And the product actually was stocked along with the, in the liquor bins, or next to the liquor products, next to the beer cans. So it automatically helped us actually to be retailed and whenever consumers are picking up their drink, they could also pick up a PartySmart. So that was an area which I missed out here, earlier to mention.
Sameer Mehta (45:54)
No, excellent, excellent. Saket, I wanna thank you for your time, always deeply insightful whenever I spend time speaking to you. I'm sure the founders and the audience members will benefit from this when this gets released in a week or so's time. If people wanna reach out to you, what is the best way for people to get in touch with you?
Saket Gore (46:14)
Thanks, I mean, you could share with them my email ID. They could just write in to me, and I'll be happy to talk more. I would be happy to share my experience. And if at all I can help them in any format to help their business grow, I'll be happy to do that. Let's put it that way.
Sameer Mehta (46:35)
Excellent. Saket, thanks a lot for spending some time with us. Really appreciate it. Early Happy New Year to you and I will see you in 2024.
Saket Gore (46:44)
See you in 2024. Have a good evening. Bye bye. Thank you. Take care.
Sameer Mehta (46:46)
Thank you very much. Take care.
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