**Bengaluru: Honasa Consumer Ltd. Enhances Direct Distribution Strategy**
Honasa Consumer Ltd., the parent company of personal care brands like Mamaearth, Aqualogica, and The Derma Co, is focused on expanding its direct distribution system, with noticeable effects expected in the upcoming quarters, according to founder and CEO Varun Alagh. During the company’s third-quarter earnings call, Alagh stated, “We are witnessing the initial stages of scaling up direct distribution. We anticipate that the full impact of this transition will become evident in the next few quarters, and the general trade system will begin to regain traction.”
In the third quarter of FY24, Honasa transitioned to a direct distribution model in the top 50 cities, moving away from its previous dependence on super stockists to improve efficiency and quality. Although this shift was designed to enhance long-term margins and streamline operations, it initially affected the company’s revenue. Alagh noted that nearly 85% of the inventory correction was completed last quarter, and the company successfully appointed direct distributors in these key cities.
In July, reports indicated that Mamaearth’s distributors expressed concerns regarding excessive inventory levels and delays in replacing damaged, unsold, and expired stock. In a subsequent interview, Alagh mentioned that the company is working to reduce the inventory holding period from 90 to 40 days through a new distribution strategy called ‘Project Neev.’
Currently, Honasa reports that 7-8% of its overall sales come from quick commerce, an increase from 4-5% in the previous quarter, and expects this sales channel to surpass its e-commerce business, according to Alagh.
In the December quarter, Honasa’s profit after tax remained stable year-on-year at ₹26 crore, recovering from a loss of ₹24.3 crore in Q2FY25. Revenue from operations increased by 6% to ₹517.5 crore in the third quarter, up from ₹488.2 crore a year earlier. During the September-quarter earnings call, Alagh indicated that the company plans to make significant changes to its product lineup, marketing strategies, and investment distribution across categories to rejuvenate growth for its flagship Mamaearth brand, which had underperformed in that quarter.
On Wednesday, Honasa’s shares rose by 2.43%, closing at ₹205.78 each on the National Stock Exchange.
