D2C Brand mCaffeine’s Loss Widens 61% To INR 92 Cr In FY23, Sales At INR 205 Cr

D2C beauty and personal care (BPC) brand mCaffeine reported a widened standalone net loss of INR 91.6 Cr in the financial year 2022-23 (FY23), up 61.5% from INR 56.7 Cr in the previous year on the back of a sharp rise in employee costs and advertisement expenses.

mCaffeine’s sales revenue jumped 51.8% to INR 205.2 Cr during the year under review from INR 135.2 Cr in FY22. 

Founded in 2016, mCaffeine sells caffeine-infused skin and hair care products on its website and various online marketplaces such as Amazon and Nykaa. It earns a majority of its revenue from the sale of its product. Including other non-operating income, mCaffeine’s total revenue stood at INR 210.1 Cr in FY23, an increase of 54.7% year-on-year (YoY).

At the end of FY22, mCaffeine had announced raising over $31 Mn (INR 240 Cr) as part of its Series C funding round, led by Paragon Partners with participation from Singularity Growth Opportunities Fund, Sharrp Ventures, and others. The startup had then said that its primary plan was to use the funds to ramp up its R&D and expand its distribution channel.

The startup’s business expansion cost was visible in its FY23 financials.

Zooming Into Expenses

mCaffeine spent INR 301.7 Cr in total in FY23, almost a 57% jump from INR 192.4 Cr it spent the year before, with ad expenses contributing a whopping 42%.

Advertising Promotional Expenses: The startup doubled down on its brand promotion activities in FY23, which resulted in a 74% increase in its advertising and promotional expenses. It spent INR 126.5 Cr on this bucket in FY23 as against INR 72.7 Cr in FY22.

It is pertinent to note that mCaffeine roped in Indian actor Alia Bhatt in March 2022 for promotion of its products. In FY23, it launched multiple ad campaigns with Bhatt.

Employee Cost: While employee benefit expenses comprised a little over 13% of the startup’s total expenses, mCaffeine’s spending in the bucket almost doubled to INR 39.6 Cr in FY23 from INR 20 Cr in the previous year.

In that, the startup spent INR 29.5 Cr on salaries and wages while INR 8.1 Cr was spent on share-based payments.

Purchases Of Stock-in-Trade: mCaffeine’s spending towards purchasing its finished goods also increased 50% YoY to INR 81.3 Cr in FY23.

On the other hand, the startup produced more goods than it managed to sell during the year under review. Its inventories of finished goods, work-in-progress and stock-in-trade stood at negative INR 10.6 Cr in FY23 as against INR 2.5 Cr a year ago.

Legal Professional Charges: The startup’s spending in this bucket declined 43.2% YoY to  INR 4.2 Cr in FY23.

Miscellaneous Expenses: mCaffeine’s miscellaneous expenses comprise its warehousing and product delivery charges, commission charges, product development costs, and others. Overall, this startup’s spending in this bucket jumped 44.6% YoY to INR 51.2 Cr in FY23.

Amid its business expansion, mCaffeine’s parent PEP Technologies also joined hands with actor Kriti Sanon in 2023. Sanon launched a premium skincare brand Hyphen, with PEP Technologies investing INR 30 Cr and holding a majority stake in it.

mCaffeine competes with hundreds of D2C BPC brands in the market today, including listed D2C unicorn Mamaearth, WOW Skin Science, 82°E, Pilgrim, and others.

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