We are very well aware about the phrase “Beauty lies in the eyes of the beholder”; however, there is no harm in making it even better and more so, worth the while for the eyes of the beholder, with few enhancements here and there. Yes, we are talking about the ever growing and expanding market of beauty and personal care goods in India.
According to a joint study by ASSOCHAM and MRSS India, the market size of India’s beauty cosmetics and grooming is expected to touch US$ 35 billion by 2035 from the current level of US$ 6.5 billion. Meanwhile, another report by Research and Markets named “India Cosmetic Market Overview” (November 2016), the country’s cosmetic market was growing with a CAGR of 17.06 percent over a period of five years.
The personal care industry makes up 22 percent of India’s market for consumer package goods and experts agree that India is full of opportunities for many beauty and personal care companies. Sanjali Giri, General Manager - Brand & E-commerce, The Body Shop, affirms, “The conception of beauty and personal care has progressed tremendously due to strong rise in digital and social media influence. The desire to look good and feel good is raging more than ever in people from all walks of life and the yardstick has just gone higher. Beauty and personal care is no more restricted to basic hair care and skin care routines. It’s much more diversified and ever changing, hence providing a great opportunity for the industry.” With a population of over 1.3 billion, the opportunities for segment players to make inroads in this market are endless and extremely lucrative. Besides packaged cosmetic goods, professional beauty industry too is on its high with consumers visiting salons for most of their skin needs. Pushkaraj Shenai, CEO, Lakmé Lever, could not agree more. He says, “The professional beauty industry is fairly large and growing at a phenomenal rate. It is worth Rs.24,000 crores and is growing anywhere between 12- 16 percent. A large part of that business is growing from increase in supply of salons and professional artists and there this has lead to growth in number of consumers preferring professionals for their beauty needs. Whereas consumers earlier would shampoo and condition their hair at home, now they are more keen to walk in to a salon and get a more professional treatment for their hair and skin and that fairly is driving the growth of the industry. From a demographic perspective, there are three factors driving this growth— increasing disposable income, more women coming into the workforce and rising number of social occasions as compared to in the past.”
The advent of digital technology and penetration of smartphones brought in instant awareness and aspirations for the latest global trends, which has resulted in frequent shopping of beauty and personal care goods and also frequent salon visits. Vivek Bali, COO, Sephora, asserts, “Over the last 5 years, the per capita consumption is improving and that can be seen in the mass and premium segment. The trend has changed everywhere, whether it’s a TV soap opera or otherwise, women have come out of just nail and lip make up to the usage of face make up, eye makeup and more. Women are looking more glamorous than ever. Secondly, with more and more women joining the workforce, they now have enough money to spend on themselves. These factors have lead to increase in consumption of beauty products.” While Sanjali Giri feels that the rising consumption in rural and semi-urban sectors have lead to the growth the industry. “The understanding and consciousness about beauty has evolved dramatically over the last few years. Consumers are continuously looking out for products that feel good on their skin and are exclusive. The movement towards healthier, wellness-oriented lifestyles around the world – complemented by a growing consumer awareness of sustainability, organically constituted and ethical labeling has influenced personal attitudes towards beauty and beauty purchase,” she maintains. Talking about the growing consumption rate in professional beauty care market as well, Pushkaraj Shenai says, “I think over the last 5 years, we have seen per capita professional consumption grow by nearly 40 percent mainly because consumers visit salons more frequently. Earlier they would visit a salon for only hygiene needs like threading, waxing, basic clean-up, etc., but today they prefer specialized services for advanced treatments like facials, etc. and that is what is helping the growth of this segment.”
Also, the rising awareness and willingness to look trendier, sassy or rather more presentable among teenagers have given a push to the overall consumption rate in the sector. A study by ASSOCHAM- MRSSIndia.com has revealed that the consumption pattern of cosmetics among teenagers went up substantially between 2005 and 2017. Looking at this potential market, Lakmé has already introduced ‘students’ card’ for young fashionistas in its salons, leading to increase in footfalls. Sanjali Giri from The Body Shop, informs, “Today’s teen population are more and more engaged in digital platforms and have immense exposure. They are highly influenced by celebrities, bloggers and other influencers and are quite experimental in their behaviour. It is very evident from various consumer analyses that young consumers are highly aware of their beauty needs and contribute a fair share to beauty and personal care category. Further with increasing purchasing power of teens, beauty industry is looking at them as a very potential target consumer and is launching relevant products to drive this global trend.”
The 1990s did not just witness economic liberalisation in India but also saw the most number of wins in beauty contests by Indians with two Miss Universe Crowns (1994 and 2000) and four Miss World Crowns (1994, 1997, 1999 and 2000). It is believed that these laid the foundation stones for cosmetics market in India and it has been growing since then. Vivek Bali informs, “Opportunities in the industry is great in the sense that Indian market which used to be traditionally just lip and nail market, has grown in all dimensions. When I look at customers buying inside Sephora, we realize that face makeup and eye makeup are the two lead categories. The customers of today are willing to use an entire range of beauty products. So, that is a great opportunity. The second part is the skin care segment where the larger market is mass market. Similarly, the opportunity also lies in fragrances and hair care segment.” Talking about the potential of tier –II and –III areas, Bali says, “Around 60 percent of our revenue comes from the tier –I and metro cities. And the balance 40 percent actually comes from all the other cities. So, the opportunity in tier –II and –III towns are enormous. There is a lot of money in these areas. In our expansion plan, we already have plans to go into these areas.” Pushkaraj Shenai agrees, “Tier-II and -III towns definitely play a major part in Lakmé business. About 25 percent of Lakmé salons are located in tier-III towns and there is a very strong demand and need for it as well as great response from the salons.”
India has a rich history of ayurveda and traditional therapies and the initial beauty industry was limited to either kitchen remedies or dadima ke nuske (grandma’s prescriptions) for all beauty woes. But with time, the laboratories made cosmetics and beauty products came into existence and later gave it a natural and herbal feel. As per analysts, the Ayurvedic market is estimated to be at Rs. 4,500 crores at present. The herbal products forms 6-7 percent of the overall personal care products market currently while the estimates are that it could grow to about 10 percent of the segment by FY 2020 as the trend accelerates. Thus, various players are rebooting their business strategies and investing in new products or making new acquisitions to reap in the benefit of the herbal age. Sanjali Giri maintains, “The world has woken up to natural beauty in a big way. Herbal/ ayurvedic/ organic are all different forms of natural beauty solutions which is rapidly growing and we can see increasing number of players entering the market in this space. At The Body Shop, we believe in naturally inspired products. This happens to be the specialty of the brand’s sourcing team, who understand everything about an ingredient – how it is grown, handled and processed. We use ingredients that are carefully selected for their high levels of purity and consumer safety.” Vivek Bali from Sephora, affirms, “The market is good and strong, people are aware and getting more of these products. Even multi-national brands are getting into organic space and are trying to acquire some ayurvedic brands for their portfolio expansion. Within Sephora, we have representation of one of India’s great ayurvedic brand like Forest Essentials. We also have Boscia which offer natural products.” While beauty products are showing a huge inclination towards natural ingredients, beauty salons too are offering herbal treatments and services to its customers. “At Lakmé Salon, innovation has been something that we have been very proud of. We bring trends from the back of Lakmé Fashion Week into our salon. About a fourth or a quarter of our revenue comes from innovation and as the consumers are showing a higher inclination towards organic or natural ingredients, we find these across our portfolio. So we have organic facials, we have recently launched a facial called ‘beauty sutra’ which are ritual based on traditional Indian beauty ingredients and it’s been a blockbuster. There is also an organic range in hair care or hair spa portfolio. At Lakmé, we have introduced a lot of products which have natural base and these are performing great for us,” asserts Pushkaraj Shenai.
Also, Indian herbal and natural cosmetic products have a great demand in the overseas market and the products manufactured in India are supplied to international suppliers. According to CHEMEXCIL (Basic chemicals, Cosmetics and Dyes Export Promotion Council), set up by the Ministry of Commerce and Industry, Government of India, India is acknowledged to be the second largest exporter of herbal cosmetics to the world market after China.
Challenges Facing the Market
While beauty and personal care goods market is on a high, there are certain challenges that are creating hurdles on the way ahead. Sanjali Giri from The Body Shop, says, “The three main road blocks are limited real estate and mall development which are impacting the rapid expansion opportunities; complicated logistics and supply chain clubbed with a strenuous product registration process; and the pricing issue for international brands who find it really difficult to expand because the market is driven by mass brands.” While for Lakmé’s Pushkaraj Shenai, the biggest challenge in the industry is finding talented staffs or beauty experts and the brand is working in the context with its training programs
The Way Ahead
Beauty and personal care market is moving towards a very positive change. Sanjali Giri says, “There is enormous opportunity for growth but more importantly due to a more evolved and aware consumer, there is a demand for natural and ethical beauty products which will eventually make the industry work towards more innovative, efficacious and environmentally sustainable products and practices.” The rising awareness of personal care products, growing disposable incomes, changes in consumption patterns and lifestyles and improved purchasing power of women, promises exciting times for the personal care industry. Vivek Bali from Sephora also agrees, “One of the most important thing is we have had a very stable GDP growth, which is around 7-7.5 percent and it will continue to grow in that direction. Secondly, we have a young population which means we have a very young consumer group who is going to consume for a long period of time. Third is the growing income level within India. Fourthly, today modern trade which was only 7 percent of the total business few years ago, today it is already growing and has reached to about 11- 12 percent and this is supposed to grow to 21 percent almost by 2022.” Pushkaraj Shenai also felt that the future of this industry is bright in the medium and long run.