Likely Profitable, Rs450cr Of Revenue Target In FY24: TAE Founder
After the onset of the pandemic, Direct-to-Consumer (D2C) brands have taken the lead in capitalising on the shift in consumer behaviour. There has been a notable trend towards health-conscious products. The Ayurveda Experience (TAE), recognising this shift, achieved impressive financial results. The brand has clocked revenue of Rs 270 crore in FY23.
TEA was founded by Rishab Chopra in 2010. The brand's journey has been intriguing. It initially wasn't a D2C Ayurveda brand but rather a platform that sold courses on Indian philosophy. Eventually, it transitioned to selling courses on Ayurveda in Australia and North America.
Pivot
In 2015, TEA pivoted to selling third-party Ayurveda brands and products on its platform. Sensing an opportunity for authentic and unique Ayurveda products, it pivoted again in 2017 and introduced its own products. TAE encompasses four brands: Ayuttva, Purism, A. Modernica, and Varaasa.
During an interview with BW Businessworld, Rishab Chopra, TAE's Co-founder, disclosed the company's revenue, he said that the trailing twelve months of the company is around Rs 317 crore. Looking ahead to FY24, he stated that the startup is targeting revenue of USD 56 million (around Rs 450 crore).
Chopra attributed the revenue growth to existing markets like Europe and North America, where the US, Canada, and Australia witnessed over 50 per cent year-on-year growth. Furthermore, the brand experienced over 140 per cent growth in Europe and over 100 per cent in India.
TAE's latest brand, A. Modernica, introduced in 2021, contributes to over 18 per cent of its revenue. Its most experienced brand, Iyura, accounts for around 80 per cent of the platform’s revenue. Despite market uncertainties such as restructuring, funding challenges, and intense competition, TAE achieved its remarkable revenue by optimising expenditure in areas like marketing and product development. Chopra emphasised the importance of efficient marketing spending in reducing customer acquisition costs.
"We have optimised channels such as marketing and product development and focused on reducing the customer acquisition cost. We have ensured optimal marketing spends, which helps us bring down the customer acquisition cost," he said.
Close To Profitability
Chopra highlighted that the global funding landscape encouraged brands to optimise their marketing spending and work more diligently towards profitability targets. He noted that the company is profitable in most regions and, on a trailing twelve-month basis, has recorded a negative 2 per cent EBITDA. Sharing TAE's target, he said that the band is likely to be profitable in FY24.
TAE's commitment to research and development played a pivotal role in product adoption, with the brand recently adding 16 new products to its portfolio. Post-pandemic, D2C brands have been exploring ways to offer an omnichannel experience. Traditional methods like brick-and-mortar stores have regained relevance. Recognising this, TAE has opened two offline stores in the USA in 2022.
Overseas markets have shown a growing preference for health-conscious herbal products. Chopra attributed this shift to consumers in developed countries prioritising Ayurveda due to the authenticity, quality of ingredients, manufacturing processes, and product efficacy.
Right Channel Strategy
Chopra pointed out the lack of a suitable marketplace connecting the right customer base to Ayurveda brands. TAE's success is attributed to owning the platform on which they sell. This visibility has enabled them to scale effectively.
The use of Ayurvedic products is expected to rise, despite challenges like standardisation and lack of clinical data. Increasing awareness of Ayurveda's benefits, the popularity of holistic products, and rising disposable incomes globally are driving this trend. Chopra identified ingredient quality, reliable manufacturing, and ensuring active ingredients in end products as major challenges for Ayurveda's growth.
Ayurvedic products are gaining traction internationally, particularly in the US, Europe, and the Middle East. TAE raised USD 6 million in funding in December to explore new markets. Ayurvedic products are gaining popularity in both India and abroad. The market in India is valued at USD 6.5 billion and projected to reach USD 21.12 billion by 2028.
