Forbes India 15th Anniversary Special

Company Transformations: How Duroflex is unlocking growth in India's sleep solutions market

Duroflex's Managing Director and Sleep Evangelist Mathew Chandy and newly appointed Group CEO Sridhar Balakrishnan, share how the company is transforming, their plans for India's growing sleep solutions market and taking the firm public

Published: Dec 18, 2023 05:07:26 PM IST
Updated: Dec 18, 2023 05:40:37 PM IST

Company Transformations: How Duroflex is unlocking growth in India's sleep solutions marketOur biggest competition is Netflix, the mobile phone, caffeine, alcohol, and all other forms of dopamine, says Mathew Chandy, Duroflex. From left to right: Mathew Chandy and Sridhar Balalkrishnan

The post-pandemic world has witnessed a rising awareness about the power of sleep for health and efficiency. India’s growing sleep solutions market has prompted established and emerging players to dial up their strategies and increase investments in everything from product innovations to marketing and branding, in order to get more people to sleep and sleep better.

In an exclusive conversation with Storyboard18’s editor Delshad Irani, sleep solutions company Duroflex’s Managing Director and Sleep Evangelist, Mathew Chandy, and newly-appointed Group Chief Executive Officer, Sridhar Balakrishnan, discuss the key trends and insights driving the brand's business and marketing strategies and how the company is transforming to meet the expectations of consumers and stakeholders.

Edited excerpts.

Q. Duroflex has been a family-run business for a very long time. Over the past few years, you have been transitioning the business into a more professional setup with a corporate structure. Now that you've roped in Sridhar Balakrishnan as the Group CEO, tell us how this transition has been for you. What are some of the factors that are continuing to drive the transition for Duroflex?

Chandy: I've been in the business for 10 years now. Like you said, we're a third-generation family in the business. One of our early goals was to make sure that we survived way past our third generation, and as you know, most family businesses don't get past the third generation. So, we're 60 years into the business.

I have always believed that a combination of promoters and professionals is what it takes to scale a business across many generations.

So, over the last 10 years, we have constantly professionalised the business and brought in really good professionals from other good industries. It's been a wonderful experience. We have benefited; the professionals have done well with us. Of course, we've sometimes had some misses, but far more hits than misses. The business has grown 10 times in the last 10 years.

And bringing Sridhar on board was just the next step in that direction of professionalizing the business and separating ownership and management. We'd like to list the company in the near future. So, these are all just big, strong steps in that direction.

Q. Sridhar, you've had stints at legacy FMCG firms like Marico and you were previously the CEO and MD of ACC Ltd. Now you have joined Duroflex as Group CEO. What was your motivation to switch categories?

Balakrishnan: If I were to look at the category, the income levels are rising across India. If one were to look at consumers in the last few years, there has been a radical shift in their orientation towards health, of which sleep is an integral part.

So, at least the way we look at it is that this is certainly a tailwind category, which is likely to see a lot of action in the coming times. The second is that I was very impressed with the promoters' vision of becoming thought leaders in the sleep solution space and thereby creating brands that are loved by consumers in the sleep and comfort space.

Also, if one were to look at Duroflex’s track record, a 10x in the last 10 years is a super performance.

If you look at some of the steps that they've taken, whether it's in terms of having an entire range of Duroflex or in terms of launching Sleepyhead to make a foray into the D2C space, I think it indicates a strong orientation towards consumers.

Overall, given the stage of the category it is in and the vision that the promoters have, things seem to be excitingly placed. Hence the choice.

Q. What are some of the goals that you've set for the company and the brands? What's the timeline you are looking at to list the company? What'll get you there?

Chandy: The long-term goal of having grown 10 times in the last 10 years is to try and do that again. That's one thing we'll be working on together. Two years ago, we entered the Rs 1,000 crore club which was a big milestone for us.

So, once again, we're looking forward and saying 1,000 can become 10,000 one day. But it's a long-term goal. We'd like to list the company in the next few years. It could be two years; it could be three years. I think a lot depends on business.

Listing is not a final destination for us. We'll talk about improving the sustainability of our business performance. At the right stage, we'd like to list, probably by 2026.

In terms of what we want to do for the brands, we have a young, fun, quirky, and digital-first brand in Sleepyhead. We'd first like to grow that brand because we think India's is still very young, is still very fun-loving, loves its entertainment, and lifestyle is very important as well. So, I think Sleepyhead will continue to remain a very important, young, and dynamic part of our brand portfolio.

In the recently concluded World Cup, we had a fabulous run where we were selling a lot of recliners as people sat back, rested, and enjoyed the World Cup. So, I think, (we made) some good and strong forays into the comfort space. Duroflex will continue to play a strong role in the health space and the sleep solution space.

Duroflex will play a slightly more serious and evolved role as a sleep expert. We have a wonderful team of designers and medical professionals who help us design products and experiences around that.

Also read: Duroflex: Bouncing back

Q. Sridhar, what are the goals that you have in mind, especially when Matthew was talking about sustainably growing the business?

I'll break it into two parts. I think one is the long-term vision for the business. I think it's to position Duroflex as a thought leader in the sleep solution space and to ensure that Sleepyhead and Duroflex become the most loved consumer brands in the sleep and comfort space.

We strongly believe that if we grow 10x in the next 10 years, we will be the largest brand in the sleep and comfort space in the years to come.

In terms of immediate priorities, I think one is to grow profitably, which means how do we strengthen our core market in the South and how do we grow more profitably in the rest of India?

It's also important to set up the organisation for the IPO in terms of sustained consistent business performance, building new engines of growth, putting together a top-class team, and ensuring that we put in systems and processes that ensure that we can deliver sustainably.

So these are the long-term and short-term priorities. In terms of clear specifics, we intend to embark on a visioning exercise over the next few months to chart out what our milestones will be in the growth journey in the coming years.

Q. You mentioned other growth engines for the company. We spoke about Sleepyhead, a digital-first brand that is youthful and targeting a new generation of Indian consumers who want it all. Let's face it, they want to sleep, they want to watch Netflix, and they want to do everything. What are some of the other growth engines that you have in mind? Furthemore, Duroflex has gone from just a regional brand to a national brand. Where are you seeing the growth potential?

Balakrishnan: I'll address it at two levels. One is from a brand standpoint. We all strongly believe that India is a large market, and this pace is going to grow.

With both of these brands positioned very well, I think we have the opportunity to address a much larger consumer base as compared to what we would have been able to with just one brand in our portfolio. The beauty of it is the way these brands have been marketed. We all feel that there is an opportunity to sharpen differentiation and address a larger consumer base.

We've gotten into furniture. Going forward, we will figure out the adjacencies that could lend themselves to extensions of both brands. That's a work-in-progress. But certainly, mattresses and furniture are two areas where we believe there is a lot of scope for us to grow.

Q. Mathew, do you have a more conscious way of detaching Duroflex from Sleepyhead and Sleepyhead from Duroflex? What are your thoughts on that?

I wish I had absolute clarity, but both brands grew up with a certain level of detachment because they grew in very different business units. And it was intentional as well. Sleepyhead was meant to be the younger of the two and is much more of a lifestyle brand.

So, it didn't draw a lot on Duroflex. So, both brands grew up on their own. Both have achieved scale.

Q. In terms of Sleepyhead, what does it contribute to the overall business, and where does it stand now?

Chandy: In terms of revenue, Sleepyhead is a nearly Rs 200 crore brand. It's about 15 percent of our revenues. Through Sleepyhead, I think the entire group became far more digital and far more D2C. So, overall, D2C is now one-third of our revenues. Sleepyhead is 15 percent of that and we do an almost equivalent business in Duroflex as well.

Balakrishnan: Both brands are very differentiated in terms of the consumer audience they target. So, they will continue to operate and cater to different consumer segments. But, I think, where there is scope for synergies is in the rest of the value chain, whether it's in terms of manufacturing, third-party procurement, or the supply chain.

So it's a tricky balance between ensuring that both brands continue to retain their identities in the consumer's mind and extracting efficiencies through consolidation in the entire value chain.

So, that's how we're looking at it going forward.

Chandy: I think there's another opportunity where you're young, you're kind of Netflixing and chilling, and you think more about Sleepyhead. And as you grow a little older and your health starts to deteriorate a little bit, you realise that sleep is actually pretty important. There's an opportunity to transition a Sleepyhead customer to Duroflex. It's not an easy transition, but I think one will find a way to do it over time.

Also read: How Wakefit has become product of Chaitanya Ramalingegowda's trust in consumers

Q. It's really interesting because your greatest competition is perhaps not other companies operating in the same category but the Netflixes of the world, right?

Chandy: Our biggest competition is Netflix, the mobile phone, caffeine, alcohol, and all other forms of dopamine.

What are some of the key marketing initiatives that you have charted out for the company? You had Alia Bhatt not too long ago as a brand ambassador. Then you had the campaign with Virat Kohli, which fared well for the brand, where you leveraged the ICC Men’s Cricket World Cup 2023. What were some of the measures of success for that campaign? How did it happen, and what was the rationale behind bringing Virat on board?

Chandy: Virat Kohli has been in the Duroflex family for about five years now. We started five years ago because it needed a lot more excitement and glamour.

We sponsored RCB. We are proud to have had Virat on our mattresses for five years. Then we went down the route of also trying to attract a younger, slightly more feminine audience when we went with Alia, who's young and fearless and needs her beauty sleep.

But last year, we felt the need to come back to our roots of talking about sleep, health, and fitness. We couldn't find a better ambassador for the entire fitness and health regime than Virat. So, we went back to Virat, and it's been a magical six months.

We can all be proud of the way the Indian cricket team performed, especially the way Virat performed. When Virat scored his first century, we got a call at 5:55 a.m and we were told that Virat was not able to sleep on the hotel mattresses. We were asked to deliver our Magic Duroflex mattresses to every location (hotel) for every cricket match.

This was not something that we created. I think the association has been strong; it's been very meaningful. It was a genuine endorsement. A lot of people thought it was something we engineered. We didn't engineer it. It was very real. Of course, we marketed it well after that. Within a week, we had about 25 million views and three million likes. So, it gained traction, and it was a credible, meaningful campaign for us and something we'll do for the next three years.

I see an interesting play between big celebrity and sports celebrity-led campaigns and content-led digital initiatives like Sounds of Sleep that was about old lullabies.

Chandy: I think ‘Sounds of Sleep’ was one of the most fun campaigns that we did. It was born out of an insight. We've been studying sleep patterns through the life cycle of an individual, and we discovered that young parents are the most sleep-deprived people. Young mothers are extremely sleep-deprived. Sleep is very important for the infant because that's when they consolidate everything that they've learned through their day.

Infants actually sleep for 18 hours, and that's when they remember everything. We also found that there are some very magical lullabies from every corner of India. There are Marathi lullabies, Bengali lullabies, Punjabi lullabies, and Telugu lullabies that are almost forgotten.

But there was this very meaningful tradition of mothers, grandmothers, and even fathers singing lullabies to their kids while they drifted into this magical sleep. So, we went around bringing back these lullabies and getting young, very talented musicians to sing them.

We had a partnership with YouTube and Sony for two years in a row. We launched this on World Sleep Day. I think each of those lullabies has 25 million views.

We've lost track of the number of views they got because they've gone onto the streaming platforms and they just stream every day, every night. So, we moved away from celebrities. We moved into music, entertainment, and sleep. ‘Sounds of Sleep’ will survive way beyond any celebrity ever.

Q. Sridhar, what key learnings have you brought here from your time at ACC and Marico in terms of where you want to take the brand? What were some of the things about the category that stood out for you when you came on board as the group CEO of Duroflex?

Balakrishnan: We are experiencing and seeing a shift in terms of consumers moving from the unbranded to the branded space. That's happening at different rates, but it's certainly happening across categories.

The second is the overall relevance of sleep to the health of an individual. The awareness has gone up dramatically, and this is something that is really going to grow fast in the coming times.

So, I strongly feel that this category in particular is poised for explosive growth in the coming times.

Q. Where do the organised and unorganised categories stand now?

Balakrishnan: About 35-40 percent would be organised. So, the unorganised segment is large. While the overall category will grow, we see a shift happening from the unorganised to the organised.

In terms of opportunity, both brands (Duroflex and Sleepyhead) have a long way to go in terms of addressing completely different consumer types. There's a lot that can be done in terms of sharpening our channel strategy across the country. If we have to grow from where we are to 10 times the size in the next 10 years, we've got to do a lot of work in terms of building capability in the system, whether it's in terms of talent processes, systems, or the overall digital landscape.

After having spent time in Marico, I worked at Star, and I've also run ACC, which is a listed enterprise. I feel those learnings would certainly help us in listing and running Duroflex later as a listed enterprise.

Q. Is there anything that we must keep an eye on in the new year? Any plans to bring more celebrities on board? What do you have in the works from a marketing and brand point of view?

Chandy: We've got the celebrity we always dreamed of. Virat will stay, and that's a long-term partnership for us. The other very strong partnership that we have is with the Inspire Institute of Sports. It's an organisation that's based out of Bellary, Karnataka, where they are training young Olympic aspirants.

We are proud to partner with them through our foundation work, our CSR work. The Inspire Institute is a JSW initiative.

We're their sleep and technology partners for the Paris 2024 Olympics, and a number of our best boxers, wrestlers, and track and field athletes will be there. It is really exciting to know that we won one gold medal in the last Olympics. We hope we'll get closer to 10 in the coming Olympics.

India's time as a sporting power in the world arena has come. It's quite exciting that, beyond nutrition, exercise, and training, all sporting elites are taking sleep seriously.

We've had fun redoing the hostels and training grounds and bringing in some really good medical professionals to talk about improving the sleep routines to be able to wake up and train much harder. So yes, we're backing a large part of the Indian Olympic team for Paris 2024, which is very exciting. It's not a marketing initiative, but it's done through our social impact projects.

Q. Will you be taking any mattresses to Paris on special requests?

I really hope we can take our mattresses to Paris as well.