From evolving consumer desires to dueling distributors, a wave of change is rocking India’s fragrance industry and the results could have long-term implications.
Though still small—Euromonitor International estimates the country’s fragrance sales to be about Rs 5.4 billion, or $112 million at current exchange—the category’s potential is anything but. Sales grew 17 percent in 2010, and more and more, international brands are entering the market to take advantage of India’s intrinsic affinity for the category. In the past two years alone, Prada, Guerlain, Giorigo Armani, Diesel and Hermès have entered the premium segment and Playboy has entered at mass.
“Overall, fragrance usage has gone up in India and is amongst the top growing categories in the beauty market in India,” says Vivek Bali, business head & assistant vice president of cosmetics and fragrances of Reliance Retail Ltd., which has a strong beauty footprint across many of its retail formats. “All three segments—premium, mass and value—are growing at a good pace, with customers transitioning from value to mass to premium in both the men’s and women’s segments.”
It’s not just women who are fueling the growth. The men’s category accounts for more than 60 percent of sales. Not only are men in India very aware of their own grooming needs, they are also part of the large gifting market which drives sales. “Men tend to buy more for gifting and are more concerned with their own grooming as well,” says Rakhi Gupta, category head for beauty at Future Group. The top-10 sellers in India, across categories and genders and by market share, are Old Spice, Revlon, Bulgari, Nina Ricci, Hugo Boss, Oriflame, Axe, Azzaro, Davidoff and Christian Dior, according to Euromonitor. P&G’s Old Spice has been the market leader for the last five years, although its share has fallen from 6.1 percent in 2005 to 5 percent in 2010, according to Euromonitor. Revlon was number two in 2010 with 4.7 percent market share. Charlie and Fire & Ice are its best sellers.
“Like the Middle East, India has a deep history in fragrances. It is ingrained in the culture,” says Hemansu Kotecha, managing director of Baccarose. He should know. Baccarose is a leading beauty distributor representing over 60 brands including Prada, Guerlain, Burberry, YSL, Clarins and Nina Ricci. Kotecha adds that global fragrance brands are “looking at India more seriously than before. Many brands are considering how to realize the potential in India and how to invest to get a bigger market share. The question is still about the right timing and strategy.”
Those two elements have been a key concern for many global marketers. While India holds the promise of a middle class some 400 million people strong and a history of using fragrance, sales figures have not always been enough to counter the high import duties, unrealistic real estate rental costs in malls and the challenge of distribution across a country that is geographically as diverse as many parts of Europe.
“That is one of the biggest challenges,” says Gabriel de Gea Díaz, sales manager at Takasago, “along with the fact that the concept of fragrances in India is unique. Agarbathis (incense sticks) form a very large part of the fragrance market, and are much stronger in Southern India. Chewing tobacco is a very important segment and is spread all over India. Personal care and fragrances are more concentrated in the North.”
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