As part of the deal, Marico will create and sell a new sub-brand – Kaya Youth, and pay royalty to the skin and wellness chain, a separate listed entity. Marico said it is part of a wider strategy to reduce its dependence from hair and edible oil and also shift focus to the premium portfolio.
“While Kaya has high brand salience, distribution is limited to mostly its own clinics. Marico’s new range will be at a mass-premium level to make it more accessible and also have a wider distribution,” said Saugata Gupta, managing director at Marico. He did not discuss the royalty details.
Marico’s founder Harsh Mariwala started Kaya Clinic, a skin and beauty care firm, in 2002 for skin treatment recommended by dermatologists. It has now expanded into the hair segment as well. Kaya runs more than 100 clinics and clocked sales of Rs 409 crore, with a net loss of Rs 19.8 crore in FY18.
Five years ago, Marico entered into the body care segment under the Parachute Advanced umbrella and has a 5% share in the segment that is still dominated by Hindustan Unilever’s Vaseline and Pond’s, and German company Beiersdorf’s Nivea. The company’s new product range, including skin cream and face wash, will compete directly with the offerings from Hindustan Unilever, Procter and Gamble, L’Oreal, ITC and Vini Cosmetics in the Rs 10,000-crore domestic skincare market.
“Kaya has a thorough understanding of India’s skin and hair care needs. The idea is to use its innovation and customer insights and develop a more scalable brand,” added Gupta.
Within personal care, too, Marico has been introducing premium products — from basic coconut oil to value-added ones and now also innovations such as serum and cream-based hair products – to drive the portfolio. Also, about two years ago, Marico bought a 45% stake in Zed Lifestyle Private, which owned and sold a range of products under the Beardo brand in categories such as oil, wax and balm for beards. It also makes scalp, hair, face and skin products. However, skin cream, especially for the face, is a relatively new category for Marico, analysts said.
“While it is a positive move, the products will still remain niche and work mostly in e-commerce and modern trade channels where the fight for shelf space is not as aggressive as in general trade,” said Abneesh Roy, senior vice-president, institutional equities at Edelweiss Securities.