Sustainable luggage maker Uppercase plans to break even by FY27
The company plans to focus on offline expansion and brand stores as it aims to log Rs 150 crore in revenue next year and break even two years later.
How much is a sustainability tag worth for the average customer? Turns out, not so much, at least in the luggage industry.
Customers care for good quality, smart-looking luggage. Mumbai-based knows this, which is why it is making stylish yet durable luggage. Sustainability is an advantage.
The luggage market is pegged at about Rs 50,000 crore in India with branded luggage contributing to 25% of the overall pie, according to a report by Merisis Advisors. The sector is dominated by two-three players and is utility-driven. Everyone is banking on the strength of their distribution network for sales and expansion.
The luggage industry, as with most other sectors, saw demand dip during the pandemic. The segment quickly bounced back after the restrictions were lifted and consumer demand spiked on the back of vacation and wedding spending. This was the stage set for Uppercase’s entry.
Uppercase's Sudip Ghose comes with more than a decade-long experience in the luggage industry. He along with Uday Sodhi and Arnob Mondal founded Acefour Accessories, the company behind Uppercase, in 2021. They officially launched the brand in 2022.
The company raised $1.5 million in seed round from Emam Holdings in March 2022. Later in July 2022, it raised $7 million in a pre-Series A round led by Sixth Sense Ventures’ current fund, Sixth Sense India Opportunities III. The round also saw participation from existing investors like Volarado Ventures and Emam Holdings.
The company manufactures and sells sustainable travel luggage along with a variety of styles including duffle bags, backpacks and suitcases which are certified with the Global Recycling Standard.
Its backpack, a little on the expensive side, retails for anywhere between Rs 1,000 to Rs 4,000, while its suitcases start upward of Rs 3,000. This is slightly higher than other economical options as provided by VIP and Safari.
Uppercase considers its luggage to be at par with, in terms of price point, with American Tourister.
The problem with sustainability
Uppercase differentiates itself from other manufacturers in its approach to making its products. It manufactures hard-backed polycarbonate luggage using a combination of virgin polycarbonate and recycled polycarbonate.
“They (competitors) all use virgin plastics, which means a 100% they're producing and creating new plastic while we are creating a certain percentage less than what a regular guy would produce,” Ghosh, Founder at Acefour Ventures tells YourStory.
The composition of recycled plastic in the final luggage varies from product to product. Softbacks including backpacks and duffle bags are able to accommodate a lower composition of virgin plastic as much as 50% even while hardbacks can manage a mixture of around 30% for it to remain durable.
The criteria for GRS (Global Recycled Standard) requires at least 20% of a product to be composed of recycled material amongst other metrics. The certification is awarded in both gold and silver standards for the products based on varying degrees of recycled plastic composition. The company is not carbon-neutral or net-zero. In a nutshell, it uses a lesser quantity of virgin plastic than other manufacturers.
The certificate is awarded by Intertek Testing Services, and keeps in account multiple standards including fair labour and employment practices, waste management, efficient water and energy consumption and controlled use of hazardous chemicals.
It is a transfer certificate process wherein every factory merchant and company in the waste recycling process is independently audited every year to ensure that plastic waste pulled out of the waste stream makes it to the end user for reuse.
The primary criterion is that all products certified should be manufactured using a certain specific percentage of recycled plastic.
The agency tracks trashed plastic at every stage to ensure it gets back into the hands of consumers. The branding of sustainability comes with its own set of challenges. The company only has the option to buy it from certain vendors and therefore, it is difficult to manage sudden demand spikes without proper prior planning.
Also, challenges continue to exist within the quality of recycled materials and segregation of waste. Moreover, without a closed loop, the question of sustainability is redundant considering the products still end up in landfills.
“Soft luggage, the beauty is 50% of the material that we use is recycled while 50% is virgin. In hard luggage, it is not 50% because in India the quality of recycled material that we get is not of very high quality.
However, customers don’t seem to actually care about one of the brand’s key USPs, notes Ghose. “Nobody's going to buy you on sustainability because people don't care. People want to buy good luggage, good looking luggage, great price and along with it if sustainability is what I call the emotional high then they get converted.”
Nimisha Nagarsekar, Partner & CFO at Sixth Sense Ventures believes “that it is the way the product looks and feels and the price point at which it is available is what is driving the growth here. Sustainability is an extra edge.”
She further added that the sustainability factor acts as a feel-good option for consumers who are buying a backpack of similar pricing in the market, it adds a lot more flavour to the product. She also believes that sustainability will turn out to be an important positioning point when the brand plans to go global.
Financial health and future plans
The company expects to log a revenue of Rs 150 crore in the current financial year, and operates on a gross margin upwards of 50%. It also has a clear path to take margins to 57% and break even by the end of FY27.
Currently, the company is focusing on its offline expansion since it logs the majority of its sales, nearly 70%, from general trade stores. It plans to further its offline distribution channels and open up brand stores across the country.
“The initial intent is to create your own stores and create a kind of marketing and visibility where the consumer comes to your stores and buys the product,” adds Nagarsekar, who is also on the Board as an observer.
Uppercase has manufacturing plants in Gujarat, Karnataka and Uttar Pradesh. It currently manufactures 30,000 units of hard luggage per month and plans to raise production up to 60,000 to 75,000 units per month. For backpacks, it manufactures about 50,000 units per month, the company outsources backpack manufacturing to other producers and takes the entire stock to maintain quality.
The company's bet on offline expansion, appealing product design and the oomph factor from its sustainability trick will drive its growth as tries to take on both established players and new entrants.
(The story has been updated to reflect an accurate company timeline and designation.)
Edited by Affirunisa Kankudti
