India’s beauty market set for grooming with entry of new players

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NEW DELHI: Competitive maybe but India’s beauty market is far from being crowded. With consumers becoming more discerning, demanding, open to experimentation, there’s enough and more headroom to grow.
“The share of beauty in the $ 17 billion local beauty and personal care (BPC) market is under 20%”, said Rishav Jain, managing director at Alvarez & Marsal India.
Mumbai-based Tanni Mandal feels India needs more offline beauty stores, New Delhi’s Tanya Aggarwal still can’t find adequate choice of concealers in the market while Dharamshala’s Vaishali Dhiman wishes to see more brands that can cater to different skin tones. This probably explains why big conglomerates like Reliance Industries and the Tata Group have their eyes set on the beauty space.
“By 2030, the size of the BPC market is expected to double. From a size and growth perspective, it’s a good category to be in for companies which want scale,” said Anand Ramanathan, partner at Deloitte India.
In strict industry terms, beauty includes colour cosmetics, make-up products, fragrances and parts of men’s grooming items. Skincare and body care products are usually categorised as personal care although such rigid segmentation is hardly adhered to in regular practice. Angshuman Bhattacharya, partner and national leader, consumer product and retail sector at EY India said that several segments even in face care and body care have less than 35% of household penetration.
While announcing the launch of its tech backed omni-channel beauty platform Tira earlier this month, Reliance Retail Ventures’ executive director Isha Ambani made the company’s ambitions in the space clear: “We aim to break down barriers in the beauty space and democratise beauty for consumers across segments.” The Tata Group which runs a standalone online beauty platform Tata CLiQ Palette wants to go equally aggressive on the market.
“The beauty industry is expected to grow at a double digit CAGR for the next 5-10 years and our aim is to revolutionise the space by becoming India’s largest tech-enabled beauty destination,” said a spokesperson at Tata CLiQ Palette. Both the firms offer a mix of home-grown and global brands.
And their ambitions have legs. With the increasing participation of women in the workforce, the added touch of glamour to the corporate culture with the entry of startups, the basket of occasion for beauty consumption has broadened, triggering demand for a wider product range. Besides, Gen Z and millennials who make up a significant portion of the earning population have taken to consumption of products that promise clean beauty, use natural ingredients and eco-friendly packaging.
Green beauty is in vogue; as Mumbaikar Divya Jethi said: “people are becoming aware of the harmful chemicals like parabens and sulfates.” In other words, companies will have to step up innovation. “Consumers want variety. For that companies will have to build a wide portfolio and add depth to the range for the business models to become viable. The young people are seeking cruelty free beauty products with no animal testing. All of these require capital and can only be catered to by big players,” said Ramanathan. Micro-trends such as naturals, functional ingredients, sustainability and organic are driving premiumisation and specialisation, making BPC one of the most attractive FMCG segments, said Bhattacharya.
The entry of big players will also lead to organised retailing. The beauty market in the small towns is very unorganised with customers still dependent on unbranded stores for purchases. E-commerce has sure helped but beauty as a category often requires the element of touch and feel.
“There are only about 80,000-100,000 beauty stores across India. As new players enter the market, availability of products will get better not just in metros, but in the small towns, leading to higher adoption,” said Jain who estimates that the adoption of beauty is going to increase by 14%-15% CAGR over the next few years. With the supply of contract manufacturers getting augmented, developing private labels will not be difficult for companies either, said Neelesh Hundekari, head of fashion and luxury, APAC at Kearney.





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