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Launched in 1997, Health and Glow opened its first brick-and-mortar store in Chennai. The business now has a network of over 175 stores located across Indian cities including Bengaluru, Mangaluru, Pune, Mumbai, Cochin, Kolkata, Bhopal, Bhubaneshwar, and Hyderabad among other locations. In FY22, the company clocked ?200 crore topline and is expected to close FY23 with Rs 370 crore of sales with a 15% Ebitda margin.
India’s beauty boom
Rising income levels, urbanisation, Internet access, rise of social media influencers and a large share of the young population are factors leading to a beauty boom in India that is projected to reach $17.4 billion by 2025 from $15.6 billion in 2022, a report by researcher Euromonitor said. In a 2021 report, global market research platform Statista said that India ranked fourth in revenue generation from the beauty and personal care market, just behind the US, China, and Japan, projecting that online sales would grow 18.2 per cent in the next few years.
As per another report by Avendus forecast, the online personal-care and beauty market in India will reach $4.4 billion by 2025. The report says the number of online beauty and personal care shoppers could increase by over four times — from 25 million in FY20 to 110 million in FY25.
Damani is not the only one with deep pockets to bet on India’s growing beauty and personal care market. Last year, Marico Limited entered into a definitive agreement to acquire Vietnam-based personal care firm Beauty X Corporation for Rs172 crore.
In April, India’s largest retailer Reliance Retail Limited launched Tira, an omni-channel platform for beauty products. With Tira’s launch, Reliance will be taking on Nykaa, Tata Cliq Palette, Myntra and other players in the market for beauty products. Tira offers a curated assortment of the global and home-grown brands. Last year, Reliance Retail Ventures Ltd bought a controlling stake in makeup and personal care brand Insight Cosmetics..
Last month, Unilever said India is its top priority and “disproportionately important” for it in the beauty and well-being space where its local unit Hindustan Unilever controls more than half the market.
“Beauty is now considered an essential aspect of self-expression and personal well-being, leading to a surge in demand,” Ritambra Das, co-founder at Better Beauty, told ET recently. “Additionally, there is a widespread penetration of media and social media platforms. Beauty influencers, celebrities, and online platforms have influenced consumer preferences, creating awareness and driving the adoption of beauty products and trends.”
Global brands make a beeline
India is witnessing an influx of global beauty brands, probably the most in a year as per industry executives, as they target the country with the largest population of young people and increasing disposable income for their next phase of growth, ET reported last month.
Brands have also embarked on a retail expansion drive and global funds are looking for opportunities to invest in beauty startups as they bet on a growing market. Economic headwinds in China, Asia’s biggest beauty market, too are making them turn the focus to India, say executives.
Demand for beauty products from make-up and colour cosmetics to hair-care products and fragrances is growing rapidly, fuelled by social media influencers, aspirational consumption in small cities and towns and increasing ecommerce coverage.
“India is at a place today where China was some years back in terms of aspirational growth and consumption,” Anchit Nayar, ED at Nykaa Beauty, said in a recent interview with ET. Terming consumption patterns in India as “very promising,” Nayar said: “The next ten years will look really good for beauty and retail … this is a multi-decade story.”
Last month, Shoppers Stop launched an exclusive store to retail global giant Estee Lauder group’s brands such as MAC and Clinique in India. The Raheja Group-owned Shoppers Stop has also signed a distribution partnership with Japanese beauty giant Shiseido-owned NARS Cosmetics for a launch in the second half of the year. In the same month, French retailer Sephora launched Hollywood singer and actress Selena Gomez-backed premium cosmetics brand Rare Beauty in India. Amazon India too joined the beauty boom by launching its global beauty store to retail more than 60 international brands. New Incubation Ventures, a fund backed by Estee Lauder Cos, too said it is identifying brands to invest in India.
L’Oréal SA, the world’s largest cosmetics company, sees India rapidly growing into a beauty epicenter of the world where the company can reach a €1 billion revenue mark in the next few years. “From a €500 million business today, I think we can take it to €1 billion in the next foreseeable future. So very excited about India,” Nicolas Hieronimus, CEO at L’Oréal told investors early this year. “I don’t think India will never ever look like China, but it’s still a very promising market for us. We have high ambitions. Middle classes are rising in a major way. It’s still not as developed as we would like in terms of distribution, but it’s really accelerating and our shares are growing.”
“What’s interesting is to look at this upper part of the Indian middle class, which is today, let’s say 200 million to 300 million people, but which is set to double in the next five to 10 years,” Alexis Perakis-Valat – president, consumer product division at L’Oréal told analysts. I have seen changes in the last two years like never before in terms of – in terms of sophistication of the market, in terms of change of the distribution, thanks to e-commerce. And all that powered by a super digital ecosystem. So we’re very, very bullish about India.”
The new trends
The share of the premium segment of beauty and personal care products will grow to an estimated 55% of the total market in the country by 2026 from 45% at present, with a corresponding decrease in the share of the mass segment to 45% from 55% now, omnichannel beauty and fashion retailer Nykaa said in its annual investor day presentation to analysts last month. Nykaa said consumer preference in the BPC category is shifting from personal care to beauty products, as a result of growth in per capita GDP.
Experts feel another key trend to look out for in the segment is an increasing demand for clean beauty products, drawing a higher focus on ingredients, sourcing and environmental consciousness, and diversity.
An emerging men’s market
The men’s grooming market is worth Rs 20,000 crore, of which the men’s shaving space is about a fourth, indicating huge opportunity, according to a recent report by Elara Securities. About 117 new male grooming brands have entered the market recently but an average man spends just $20 annually on grooming.
“Beard management is posting a growth of 20% per annum and is expected to do well. The beauty and personal care market in India is pegged at $25 billion in 2022 compared to the US at $86 billion and China at $60 billion. It is a profitable category as unit economics with gross margin on the higher side in the range of 55-65%,” said the report.
The category is dominated by mass beauty firms, with a 45% market share, held by the top few companies, such as Hindustan Unilever, P&G, Dabur and Marico. Standalone beauty retail has bounced back since COVID-19. Omni-channel will continue to drive sales.
“We are also seeing a rise in the number of homegrown brands emerging from smaller towns and cities, as entrepreneurs tap into the growing demand for male grooming products and services in India’s tier 2 and 3 markets. This is a promising trend for the industry as a whole, as it suggests that there is ample room for innovation and growth in the years to come,” Prashant Narang, Cofounder, Agility Ventures, said recently.
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