Honasa said that Ayuga saw no major uptick in search trends and faced difficulties in gaining traction, which lead to the discontinuation of the brand starting June 2024
Honasa CEO Varun Alagh said that discontinuing Ayuga will not have a “material impact” on the D2C unicorn’s profit and loss statement
This is the second major discontinuation of a portfolio brand by Honasa, after it secretly pulled the plug on its first and the most expensive acquisition, Momspresso, last year
Listed D2C unicorn Mamaearth’s parent Honasa Consumer on Friday (August 9) said it is discontinuing its ayurvedic beauty products brand Ayuga.
“Rationalising our brand portfolio by discontinuing Ayuga to focus on building other opportunities,” said Honasa in its quarterly financial results for the first quarter (Q1) of the financial year 2024-25 (FY25).
In an investor presentation, Honasa cited the failure to establish a product-market fit (PMF) for “sunsetting” the brand. It said Ayuga saw no major uptick in search trends and faced difficulties in gaining traction, leading to the D2C major discontinuing the brand starting June 2024.
With this, Honasa will now effectively have six brands in its kitty – Mamaearth, Auqalogica, The Derma Co, Dr Sheth’s, BBlunt, and the recently-launched colour cosmetics brand Staze.
Speaking during the a post-earnings call, Honasa cofounder and CEO Varun Alagh said that discontinuing Ayuga will not have a “material impact” on the D2C unicorn’s profit and loss statement.
“Our read on the brand when we launched Ayuga was that the high trust in ayurveda will be the underlying lever for brand acceptance. However, customer and search trends over the last six months showed that inclination towards certain ayurveda concepts like kumkumadi (a herbal oil) are continuously declining,” said Alagh.
He added that while older formulations such as kumkumadi no longer appeal to users in terms of skincare efficacy, natural ingredients such as turmeric, multani mitti and rice water are witnessing heavy traction.
Alagh also said that Honasa will not shy away from taking “objective and strategic calls like this (shutting down Ayuga)” in the future if any of its portfolio products do not “make sense” and do not “create long-term value”.
It is pertinent to note that Ayuga was launched by Honasa in 2021 in collaboration with investor Shilpa Shetty Kundra as an ayurvedic skincare brand, targeted primarily at millennials.
As per the company, the brand was relaunched in December 2023 based on “consumer feedback, with sharper focus on ingredients”. However, the strategy seems to have failed to take off, resulting in the discontinuation of the skincare line.
Interestingly, this is the second major discontinuation of a portfolio brand by Honasa. Last year, ahead of its initial public offering (IPO), the company secretly pulled the plug on its first and the most expensive acquisition, Momspresso. as part of its larger strategy to trim losses and strengthen revenues.
During the earnings call, Alagh, as per Livemint, also said that Honasa is working to lower the holding period of inventory for distributors to 40 days from 90 days currently.
Alagh reportedly said that the company is pivoting its distribution model from super-stockists to direct distributors (announced in Q4 FY24 earnings). The new distribution model will streamline its supply chain and help bring down the holding period, he added. He also acknowledged that Honasa’s overall inventory with distributors is higher than that of other FMCG companies.
The CEO also added that Honasa has signed a partnership with listed logistics major Delhivery to use its mother warehouse.
“We can’t take the risk that we reduce inventory because our ability to service distributors goes away. That is what we’re working on. We have a partnership with Delhivery where we are doing some supply chain enhancement. Post that, over the next few quarters is where the next phase of inventory reduction will take place,” Alagh reportedly added.
This comes a month after reports surfaced that the company’s distributors had flagged concerns over excessive inventory dispatched by the company and complaints over delays in replacing damaged, unsold, and expired stock.
As per reports, the All-India Consumer Products Distributors Federation claimed that distributors were stuck with 90 days’ worth of stocks or goods even as the typical norm was 20-30 days of supply.
Honasa Consumer reported a 62.9% jump in its profit after tax (PAT) to INR 40.2 Cr in Q1 FY25 as against INR 24.7 Cr in the year-ago quarter. Meanwhile, revenue from operations rose 19.3% year-on-year (YoY) to INR 554 Cr in the quarter under review.
Shares of the D2C unicorn closed 4.58% lower at INR 473.60 on the BSE on Friday (August 9).
