Young consumers drive rise in eco-friendly home and personal care products made by startups

Increasingly, Millennial and Gen Z consumers are turning to new-age eco-friendly home and personal care products such as detergents, hand sanitizers and floor cleaners, ditching legacy brands and providing a new audience for startups in the space .

Beco, Koparo, Bare Necessities, Born Good, Happi Planet and other startups offering plant-based and nontoxic products are rapidly expanding their product lines and investing more in understanding the psychology of emerging users in hopes of gaining and retaining market share.” Industry executives toldMint.

These companies are working hard to ensure that every part of their products, from packaging to ingredients, is safe for the environment. Beco is packaged in 100% recyclable cardboard and uses a special process to distill natural coconut into soap form. Bare Necessities sells a powder-to-liquid concentrate that helps reduce the carbon footprint by eliminating the transportation of heavy containers filled with water.

“Cleaning categories such as floor cleaners, laundry detergents and hand soaps are underserved. A few years ago, there wasn’t much choice in personal care, just a few off-the-shelf products, but not much in terms of choice and quality of ingredients. ,” Beco co-founder Aditya Ruia told us.Mint.

However, some of the products produced by these niche companies, such as fabric softeners and liquid detergents, can cost 20-30% more than widely used detergents such as Surf Excel and Ariel.

Cost of 1 liter liquid laundry detergent from Born Good $$279, while Surf Excel sells for $279 for a 1-liter refill $164. Ruia said Beco was working on introducing smaller packages and offering great deals on bulk packages to enable users to buy more and save more.

promising premise

Investors are taking notice, too. Beco recently raised $10 million from early-stage venture capital firm Tanglin Venture Partners, whose investors include Rukam Capital, Climate Angels and actor Dia Mirza. New Delhi-based Happi Planet has secured $850 million from Fireside Ventures in February to expand its offline business.

Several consumer-focused venture capital firms are evaluating “Shark Tank” feature Koparo and Bengaluru-based Bare Necessities for seed funding, two people familiar with the matter saidMint On condition of anonymity.

Messages sent to Koparo and Bare Necessities remained unanswered.

“Increased awareness and visibility among young people through fast commerce channels has enhanced the appeal of sustainability-focused home care brands. I think this is a very promising premise.” Founder of early-stage venture capital firm Capital A Ankit Kedia said.

Driven by the government’s Clean India Mission initiative, India’s urban and rural home care products market grew nearly 27% from 2015 to 2023, according to Kantar, a research firm that tracks consumer industries.

The needs and preferences of young consumers are changing rapidly, providing room for innovation. Karan, a 37-year-old finance professional living in Hyderabad, recently switched to Beco washing powder after noticing its attractive packaging and variety.

“I wanted to try something new and saw a lot of ads for plant-based products. The products didn’t have strong fragrances, which was good because it meant it used fewer chemicals,” he said.

Dipanjan Basu, co-founder and partner at early-stage venture capital firm Fireside Ventures, said changing demographics are helping clean label brands grow as more nuclear families and young people make their homes far away from their families. And want to know more about the high quality and environmental safety of everyday products.

Additionally, user expectations for these products are changing.

“User needs have changed over the past decade. If you look at the laundry industry, people are not concerned with removing stains but extending the life of their expensive clothes. They want their clothes to last even after 10 to 20 washes. It looks like new,” says Beco’s Ruia.

However, this also brings challenges.

“For example, people’s common psychology is that when clothes have a strong fragrance after being washed, they will think that the clothes are fresh. But adding fragrances to natural extractants is difficult. Changing consumers’ perceptions requires a lot of time and Brand building work,” said Fireside’s Basu.

Basu said adoption of clean label home care products is still slower than in categories such as cosmetics and food, where results are visible almost immediately.

“Here, there is less inertia. Only an evolved consumer would want to change something he has no complaints about. But as consumers look for quality dishwashing and laundry that is chemical-free, safer for children and pets in the home Products, there are definitely early signs of change and I expect this to be a big trend in the next few years,” he noted.

Keep up with the heavy hitters

To be sure, clean label startups are much smaller than traditional companies.

The Indian home care market is dominated by Hindustan Unilever (Wheel Cleaner, Surf Excel, Lifebuoy), Procter & Gamble (Ariel, Tide) and Godrej Consumer Products (Ezee Liquid Cleanser, Magic Hand Sanitizer). While HUL dominates the fabric care segment, Reckitt leads the antibacterial and floor cleaner segments with Dettol and Lysol.

According to Kantar, mass-market products such as detergent bars and washing powder did not grow much in the year to March 2024 as consumption slowed in the country. However, high-end products such as fabric conditioners and dishwashing liquids saw double-digit growth, driven by increased demand from affluent households.

Beko’s income is $25 Crore in FY23, HUL’s Surf Excel crosses this figure $With sales of Rs 8,200 crore in 2022, it controls more than one-fifth of the Indian detergent market.

There are highlights for specific categories under Home and Personal Care. Liquid detergent-dominated Indian fabric care market expected to touch $Existing revenue will increase by Rs 64,000 crore by 2025 $According to estimates by market research firm Mintel, it is Rs 52,000 crore.

“It would be foolish to compete with established players who have mastered distribution strategies for decades. Instead, it would be wise for brands to create their own niches,” said Capital A’s Kedia, adding that the big players in the category have ample reasons for integration.

According to Fireside’s Basu, companies need to continually innovate to discover new use cases.

“There is a lot of innovation in this area in the West. For example, safer detergent products for sensitive skin, safer products for young children and pets at home. There is an innovation gap there,” he added.

Kedia said companies must keep a sharp focus on unit economics because marketing and other expenses can easily eat away at profits.

“No large player has a gross margin of less than 50-60%. So it’s critical to be sustainable in terms of pricing and product,” Kedia said.