Nykaa cements position in key segments with investments in Dot & Key, Earth Rhythm

Chief executive and managing director Falguni Nayar announced on August 13 that it has increased its investment in two beauty brands.

Nykaa would acquire an additional 39% stake in Dot & Key for INR265.3Cr (USD31.6m), increasing its stake to 90%.

The company first acquired a 51% stake in Dot & Key in 2021 since then, the firm has seen the brand grow by nine-times in three years.

Additionally, Nayar said the firm was acquiring majority stake in Earth Rhythm.

It first took a minority stake of 18.57% in 2022 and the latest acquisition would make the brand a subsidiary of Nykaa.

With both brands, the company will be able tos reinforce its position in important segments of the beauty and personal care market in India.

For instance, Dot & Key strengthens Nykaa in various skin care areas.

“What we like about Dot & Key is that it has a differentiated assortment, like vitamin C or sunscreen, SPF-based lip balms, cooling watermelon sunscreen… it also tends to focus on pore categories like sunscreen and moisturisers, which constitutes a very large part of the skin care category. This gives Nykaa presence in some very important categories,” said Nayar, who is also executive chairperson of Nykaa.

Nayar believes the brand’s growth will continue to accelerate and highlighted the brand’s effective research and development efforts.

“Dot & Key has also invested in innovation and R&D abilities on their own. Twenty-eight new SKUs were created by these team in the 2024 financial year alone and they accounted for 30% of net-sales value for the brand.”

She added that the brand has cultivated a loyal consumer base.

“We are aware that this brand retains 45 to 50% of their customers. This is based on their own website data as well as on the Nykaa platform, and it's a very exciting number from a customer retention perspective,” said Nayar.

Good for people and planet

Furthermore, the firm’s majority acquisition of Earth Rhythm would boost its standing in the sustainable beauty space, which is growing quickly in India.

The brand was acquire for INR44.5Cr (USD5.3m).

“What we like about this brand is that it has a very differentiated positioning. It's sustainable and inclusive. It's certified organic, plant-based and 99% plastic free. It's good for you and good for the Earth. Earth Rhythm isn't just their name, but a commitment to producing the purest, healthiest products and educating everyone on why being earth conscious is so important, and that's what we like about the positioning of this brand,” said Nayar.

She added that the brand “offers advantages to the planet conscious customer”.

The brand has grown by eight times over the last three years, albeit from a small base, said Nayar.

The firm’s R&D has been focused on sustainable beauty solutions, targeting issues such as water and packaging waste.

“They also have many firsts in their repertoire, such as India’s first water-free sun spray and breakthrough products such as the gel to milk series and the phyto series,” said Nayar.

She concluded: “I think the brand’s true might in terms of distribution, performance, and marketing is not yet in the brand. With the ownership by Nykaa, many of these will follow next.”