NEW DELHI, India — It’s fairly unusual to have a global investor like Estée Lauder Cos. take stake in a company in the Indian beauty market.
Since this happened — in 2008 — Indian company Forest Essentials, which prides itself on its formulations based in the Ayurveda philosophy, has been going about its business quietly. But, as it just launched its biggest store in Mumbai recently — a 1,300-square-foot unit in the upscale area of Bandra — it has a new mantra: strong growth in India, then the world.
The store fits the design format adopted last year — with chandeliers, Mughal arches and paintings inspired by legendary Indian artist Raja Ravi Verma, who depicted the traditional beauty of Indian women in exquisite style.
Forest Essentials now has an estimated 40 stand-alone doors in some of the most premium markets and malls in India, with more than 10 stores added in 2014-15 financial year (which ended March 31), and nine in the previous fiscal year.
But it’s not been just about retail growth.
“Passion has grown tremendously,” said Samrath Bedi, business head for the brand. His mother, Mira Kulkarni, started Forest Essentials in 2000, and Bedi has been driving it with a strong focus on systems and a vision for growth.
Unlike much of the homegrown beauty market, where growth has often been haphazard, Forest Essentials has had a steady and consistent rise.
“It’s not just about opening a shop. We have the history and we have the product, but then it’s about the right infrastructure and planning; it’s about getting the story correct,” he said. Meanwhile, other brands in the same space — such as Kama — have been growing their retail presence, too. Shahnaz Husain, Biotique, Lotus Herbals, and global names including The Body Shop, which has tapped the naturals market in India with more than 100 stores, add to the competition in the $4.5 billion Indian beauty market.
India’s skin-care market is expected to keep on growing at a 20 percent compound annual growth rate, according to industry analysts.
In this last decade, Forest Essentials strengthened its position in this market. Bedi said that Forest Essentials has an 89 percent conversion rate. “This means that 8 out of 10 people who walk in will buy, which in other stores is a 30 percent rate.”
Analysts expect this sense of connection with the consumer to intensify in the Indian beauty market. Ina Dawer, senior research analyst at Euromonitor International noted: “Over the next three to five years, consumers will become more willing to spend on high-quality skin- and hair-care products.” The premium/prestige beauty segment will be part of this change, she said, describing this segment as “quite promising and likely to record a year-on-year constant growth of 12 percent over the next five years.”
It is clear that Bedi has an eye firmly on the future.
“We built our factory in 2008 with an eye on expansion. We’re conscious about doing the right marketing, too. It was always about word-of-mouth for beauty brands, then we understood that you need to have proper brand awareness,” he said, describing the move into national television advertising in 2013, sponsoring a well-known interview-based show every Sunday.
Product ranges have expanded to include body products, oils, hair care and gift hampers, all in a simple, no-fuss packaging. A men’s line was launched for the first time in 2014. “Our strategy right from the beginning has been to specialize in facial care,” said Bedi. “Even today, I don’t know of any Indian brands that are very strong in this space — I mean masks, antiaging products; if you open your mind and think about it, how many brands would you put on your face that are Indian?”
Launching the brand globally is also in the cards, perhaps in the next 12 to 18 months.
An experiment in a personalized cream available online — in which an Ayurvedic physician is consulted by customers to design a special formulation for their skin — for a price of $100 to $140 has been part of the recent innovation. “It is part of our growth in e-commerce, which reaches 69 countries,” said Bedi.
He said that although the Indian market has been evolving, it has been slower than he would like, in terms of growth.
“Going into Tier One and Tier Two cities has been a lot slower than it should have been,” he said. “We are now starting to look at smaller non-metro towns. We have opened stores in markets like Surat, Chandigarh and Jaipur, where we see the markets maturing and accepting prestige Indian brands like ours.”
Speaking about the 40 shops that Forest Essentials opened after 14 years, he said that in the U.S., during that same time, the company could have launched 300 stores. “To put up every shop, to make it look right, hiring, training, it’s tough,” he said. The geographical differences across India are also part of the problem.
“India is not just one market, it’s not a billion people. Every State, every city is different. We’re so different culturally in each place that it’s a really tough market. What we do down South is very different from what we do up North. And to get this to be a common thread is a very complex thing.”
Launches over the last year have included the Soundarya Radiance Cream with 24K Gold Bhasm in 2014, which became a quick bestseller. Launches planned for this year include limited seasonal ranges for the summer and winter.
Looking ahead, Bedi said, there is an explosion of growth that’s going to happen in the Indian beauty market. By 2020 the median age in India will be 22 — a very young population with a growing need to experiment, and with a spending power that is expected to accelerate.
“And then we have our real strength,” Bedi said with a smile. “We have stuff that works.”