Cosmetics Industry – The Indian Makeover
The global cosmetic industry or Multi nationals have been captivated by India in a fascinating manner–the world’s second most populous country – over 1 billion poeple – even one percent of captured market at estimated rates is a huge sum for some companies. India has seen an growth in the cosmetics industry especially in the recent ten years.
Currently, the market size of the cosmetics industry in India is estimated to be worth US$1.5 billion, and is expected to double to US$3 billion by 2014. The industry has been growing at an annual rate of almost 20%, twice the rate in the United States or Europe. A market surge of 19% Compound Annual Growth Rate (CAGR) is anticipated till the year 2014.
The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has published a survey which stated that 65% of the teenagers claimed that their expenditure on branded cosmetics had increased 75% in the past 10 years.
In some of the western countries – where 55 plus age category is the target group, in India the target range is from 20 plus age group. Indian men are increasingly taking to cosmetics with men’s personal-care segment estimated at over $200 million.
When one compares the data of male users to their female counterparts, the expense of the male segment has reported a rise of about 80% over this period. India’s import of cosmetics, beauty products and intermediate raw materials such as essential oils is approx $400 million per year.
Main reasons for this growth are-increased purchasing power and rising fashion awareness due to media and other exposures amongst the people. Grooming is also becoming an increasingly important part of people’s mindset because they are now stepping out to work – as retails sector employees, airlines workers, or other such jobs in the organised sector or at malls or wherever call centres exist.
Increased advertising creates and captured the imagination and awareness of the people. The Bollywood factor or the Indian movie industry and its changing fashion also create an impression and cause purchases to be expedited to match the images people hold close to their ideals – youth and people of all ages today use deodorants – and think over the importance of grooming and being fashionable.
Indian cosmetic marketis a fascinating market – the Indian cosmetic market caters to all sections of society, products ranging from a mere $2 to about $1000. The higher-end market range is considered to be within $20 to $200, while the middle market consumes products that are priced below $20.
Increased brand choices caused growth of many brands such as L’Oréal, Maybellene, Lakme, and others. People today ask for quality of products. This change is across the segments – all classes of towns and cities and mega cities – people have moved towards quality of products and self consciousness can be seen as important in rural towns as well.
The MNCs recognise the importance of tapping into the Indian rural market which is 70% of the Indian population, i.e. nearly 900 million people. To benefit the market and show commitment, many cosmetic companies, such as L’Oréal, have set up research facilities, Amway and Oriflame have also set up manufacturing facilities and some of them even export from India to other markets – investing millions of dollars in India has been a good strategy for India and has allowed them to to embrace the market and give themselves a cutting edge over other players.
In recent Focus group discussions for clients we found that more and more people are today spending a huge sum on grooming beyond just a creme and a kajal for women and creme for men. Specialised products and targeted grooming materials are today forming a part of overall habit of living for Indians. Although India is very far from becoming a HongKong overnight, the journey has begun.