NEW DELHI — Beauty mantras in India are changing fast. The emphasis now is on new packaging, special deals and offers and a strong focus on winning over customers. This new approach is not only ringing the register but building a strong sense of brand loyalty as well.
The estimated $5 billion cosmetics and personal care market in India is expected to continue growing at an approximate 17 percent compounded annual growth rate from 2011 to 2015, according to market research company RNCOS.
Indian customers have long been focused only on certain products: fragrances, eyeliner and kajal, lipsticks and lip gloss and a generic face cream.
“But now, every category is seeing a growth,” said Govind Shrikhande, managing director, Shoppers Stop, an important beauty destination and department store chain. Shoppers Stop has more than 50 stores across the country and has transformed beauty areas by experimenting and growing the category. “There is also a greater awareness built towards daily regimes and skin type specific products as more and more women join the work force. The customer today is much more open to exploring new brands and options. There is an aspiration for global brands and customers don’t feel guilty about indulgence,” he said.
Color cosmetics has been the wild card here, overtaking both skin care and fragrance in terms of growth. “Overall, color cosmetics grew by more than 20 percent in 2011. It strengthens our belief that color is on a fast growth track,” said Vivek Bali, business head and vice president, Reliance Retail. “Women are fast becoming more glamorous, confident and with an ability to spend on themselves.”
Reliance, one of the fastest-growing retailers, has five different formats that carry beauty sections. They include Reliance Fresh and Reliance Super, where beauty is stocked in the lower mass or value formats; Reliance Mart, which is a hypermarket format that stocks value and mass; Reliance Trends, which has 70 percent mass and 30 percent premium products, and Reliance Time Out, which has the opposite — 70 percent premium and 30 percent mass.
Other retail outlets include the Future group owned Central, Pantaloon and Big Bazaar chains of stores as well as the department store, Lifestyle. The retailers across India have fostered and seen a major change in beauty sections over the last few years, especially with the introduction, acceptance and integration of many foreign brands and a fast-growing premium segment in all categories.
In the skin care category, fairness products are still the main seller. There are no oblique references to fairness in India — it is not “whitening” or “brightness” but simply and clearly “fairness” itself. The fairness cream market grew 16 percent to become a $500 million category, according to industry estimates, a major chunk of the estimated $800 skin care market. Hindustan Unilever’s Fair and Lovely is still the market leader, with an estimated 60 percent share of this market.
New Indian brands have been making successful forays as well, and its no longer just about well-known foreign brand names or long established brands. Ishween Anand had a dream, gave up a lucrative accounting job in the U.S., came up with a business plan and moved to Mumbai. Now her brand, Nyasa, is stocked in several modern trade outlets, with colorful bars of handmade soaps with fragrances that global brands would hesitate to experiment with — mogra, sandalwood and traditional Indian scents based on local flowers and plants. She has ambitious growth plans for the bath and body products category. “When it comes to Indians, their choices are very distinct and different. A great deal of importance is given to natural products in terms of fragrances or skin needs (fairness creams tops the chart) or price points (very value-oriented consumers). There is a need for more choices within skin care and beauty companies,” she remarked.
Well-known brands in the natural product space include Lotus Herbals, Biotique, Shahnaz Herbals and VLCC.
Industry analysts feel that the real future in beauty is going to be in the mass arena with the middle class population of more than 400 million people, a fast-growing disposable income and a great propensity for grooming, which is being fueled by the media. “We’re launching more products in the mass range,” said Sandeep Ahuja, managing director, VLCC Healthcare “and looking at growing the retail segment with stand-alone beauty stores as well.”
Other brands such as Johnson & Johnson’s Clean and Clear has taken an innovative growth path, with a dynamic young team and an aggressive plan to target the youth. In 2011, the team orchestrated competitions, creating awareness and a niche for themselves among the teenage population who have had little or no peer groups for guidance, other than grandma’s recipes. “We’re finding the market very responsive,” said Ajay Grover, senior product manager, Johnson & Johnson, as he described the college campaign which happened across eight cities — Delhi, Calcutta, Mumbai, Bangalore, Chennai, Pune, Ahmedabad and Hyderabad — and in 160 colleges.
However, the giant among the companies continues to be Hindustan Unilever, which had 32.9 percent market share in 2010, according to Euromonitor. The brands, which include Ponds, Lakme, Dove, Axe deodorant and Fair & Lovely, have the advantage of a strong distribution in both traditional retail and modern trade outlets. L’Oréal India has a 3.4 percent market share and has been growing aggressively. Johnson & Johnson has 2.1 market share and Chennai-based Cavinkare 1.8 percent, in 2010.
In the mass segment, L’Oréal Paris, Maybelline, Lakme, Revlon, Chambor, Streetwear, Elle 18 and Colorbar continue to be the main players as the brands woo customers with new ideas, smaller sizes and more mall presentations and events.
According to a report by McKinsey & Co., India is set to grow into the fifth-largest consumer market in the world by 2025. It is a young market with a sizeable population below the age of 25. As several industry analysts point out, it makes it a ready market for new brands and a promise of providing a fast track for beauty.
In other emerging segments, the male market has shown increased maturity each year as well, and is now being taken seriously by both local and foreign brands. A quick check with retailers across the country shows that men are not just looking at shaving creams now, but rather, fairness creams are big on their agenda; they’re looking at antiaging products seriously (and buying them); they’ve also discovered the other segments which women have only just about started investing in — under eye creams and face washes. Kolkata-based FMCG company Emami Ltd. has seen fast growth in its Fair and Handsome, targeted only at men. The brand has seen sales growth of 24 percent from 2010 to 2011, growing from $25.5 million to $31.5 million in sales, according to figures from Euromonitor.
Looking at the surge in male vanity, German company Wahl launched a subsidiary in India this year and plans to open in more than 580 outlets in the next three years according to Rohit Sood, managing director of Wahl India Grooming Products Private Ltd.
Don Seale, director of Far East Sales for Wahl agrees that the men’s grooming market is really ready. “Three years back was too early and in another year would be to late. The reason is that the personal grooming is having a great awareness in India at this time. The timing now is perfect,” he observed.