What is Fueling the Growth of Beauty Sector in India

Despite the rapid growth in the last years, the beauty industry is still in its nascent stage with the per capita consumption for beauty products being historically low. Currently a $20-billion market, the industry is expected to grow to $30 billion in the next five years as the market sees the entry of a plethora of brands and a flurry of investors. 
 
In the third quarter, the industry saw one of the biggest fundraises in the sector as the Good Glamm Group, the parent company of popular beauty brand MyGlamm, became a unicorn with a valuation of $1.2 billion and raised $150 million. Mumbai-based beauty brand Purplle raised $60 million from Premji Invest, one of the top investment companies in India. Many other brands raised funds this year.  
 
Brands are allocating these funds to improve their processes in every department that will enable growth, along with research and infrastructural development. These investments are being acquired and utilized on the back of significant growth the companies have performed. 

Bella Vita, which raised $10 million this year, is allocating funds to strengthen the infrastructure, R&D, and manufacturing sector of the brand along with hiring talent for the same. "Since we are a profitable venture, we don’t see ourselves raising funds unless we decide to go down the route of a major growth spurt,” says Aakash Anand, Founder & CEO, Bella Vita Organic.
 
The company has in fact grown from a Rs 25 crore to a Rs 120 crore yearly revenue run rate and acquired 5-plus brands. At present, it is 2-digit EBITDA positive. 
 
“The company will be utilizing its latest funding to invest in product development, support data science and technology research, increase offline expansion, fund working capital requirements and expand content creation capabilities and digital reach of its content platforms,” says Darpan Sanghvi, Group Founder and CEO, Good Glamm Group resonating the same thoughts. 
 
The company has increased from 10,000 POS in 70 cities in March 2021 to 30,000 POS in 100 cities at present. The brand has grown from acquiring 30,000 new customers per month in August 2020 to acquiring 3,50,000 new customers per month today. 

Emerging Trends

The pace at which such developments are happening, major new trends, and developments are expected in the beauty market in the times ahead. 

Experts believe the rise of clean and green beauty products is a major trend that is expected in the beauty industry. In fact, there is a high degree of awareness of ingredients, and consumers are educating themselves on ingredients that are good for their skin and hair, which reflects in their consumption patterns as well. Sustainable packaging and cosmetics are other important trends. 

'Content to Commerce' has been one of the most discussed topics in the beauty sector. It involves making use of captivating content, generally educational, that can complement the products. Brands like MyGlamm have been extensively using this strategy to decrease their marketing costs. 

“Content to Commerce is a journey that we began in 2020 with POPxo and today we have seen the successful conversion of content users turning into buying users. This strategy has resulted in us being the only company in India with the lowest cost of customer acquisition,” says Sanghvi.  

Future Of The Industry 

Globally speaking, though some other geographies won’t rebound until 2023, China’s beauty market has already recovered and a well-developed e-commerce channel is expected to help the U.S. return to growth by mid-2021. However, Europe and Japan will be slower to recover, not rebounding to 2019 sales levels again until 2022, driven by deeper initial volume loss, according to a report by analytics firm Revieve. 

For the Indian beauty market, though there is no full clarity on how the business is working currently compared to pre-pandemic levels, the wide emergence of beauty content, beauty influencers, social and digital channels, experience centers, etc. is a good indication for the sector in the coming years, if not anything else. 

Manish Taneja, CEO, and Co-Founder, Purplle shares about his company's consolidation plans: "We will leverage exclusive Indian and international brand partnerships and fast-track acquisitions. Investments in content and community will be a key focus." 

In fact, working with a strong focus on new customer acquisition, the company grew its marketing investments by 2X to build brand Purplle. The company has in fact grown its GMV by 6x in the last 3 years. 

Good Glamm Group, which recently acquired The Moms’ Co and ScoopWhoop, has earmarked Rs. 750 crore for acquisitions and strategic investments. 

Within the next four weeks, the Mumbai-based firm is looking at closing more acquisitions in the beauty and personal care space. 

IPOs On The Way

One of the biggest developments this year has been the Rs 5,300 crore initial public offering (IPO) of cosmetics-to-fashion retailer Nykaa which saw a strong investor interest and was subscribed 82.4 times. Following IPO, the company plans to more than triple its brick-and-mortar stores to 300. 

IPO allows a company to raise capital to build its business by creating newly issued shares or selling existing shares, which enables it to make further strategic acquisitions, unlock opportunities to expand its business at a wider scale than otherwise. 

Homegrown beauty and wellness giant VLCC Health Care is also planning to open an IPO by the end of the December quarter, which has received SEBI's go-ahead. Good Glamm Group is aiming to target the IPO by the end of 2023.