May , 2017
The evolution of Indian cosmetics industry
15:06 pm

Varsha Singh

Indian consumers are more inclined towards natural and herbal cosmetic products. The herbal cosmetics industry is expected to grow at a rate of 12% in India.

The 1990s did not just witness economic liberalisation in India but also saw the most number of wins in beauty contests by Indians with two Miss Universe Crowns (1994 and 2000) and four Miss World Crowns (1994, 1997, 1999 and 2000).

It is widely believed that along with the growing popularity of yoga, the win by Indian beauties on the international platform contributed to the popularity and sale of cosmetics in India. The Indian cosmetics industry had a strong growth trajectory after the Miss World pageant that was held in India in 1996 and was sponsored by Godrej.

Since then, the Indian cosmetic industry has grown in leaps and bounds. There were many international brands, which entered the country after the policy of economic liberalisation. Side by side, the Indian cosmetics market expanded.  In 1999, the Indian cosmetics market grew 8% over 1998. It grew by 8.7% in current value terms in 2001, with value sales amounting to Rs.126 billion. Total value since 1995 was 54% in current terms, equating to 25% in constant terms. The increase in the middle class population with disposable incomes and increasing health and fashion consciousness can be considered to be the major factors behind the increasing demand of cosmetic products that are mostly herbal and came with an assurance of high quality.

Growth in the cosmetics industry in India

According to a recent report by Research and Markets named “India Cosmetic Market Overview” (November 2016), the country’s cosmetic market was growing with a CAGR of 17.06% over a period of five years. In 2008, the industry growth was counted to be 7% and it did a business of USD2.5 billion. In 2016, the market size of India’s beauty, cosmetic and grooming market was USD6.5 billion and is expected to reach USD20 billion by 2025, according to a report by Assocham (2016).  

A report by KPMG wellness sector (2014) states that India’s beauty market will reach Rs.80,370 crore by 2017-18. It was Rs.41,224 crore in 2012-13. The report also indicates that the workforce requirement will grow to 12.1 million in 2022 from that of 3.4 million in 2013. According to the CII, the total Indian cosmetics market is of  USD950 million, which indicates a growth of 15-20% per annum.

Factors for growth

The report by Assocham highlighted that the consumption pattern of cosmetics among teenagers went up substantially between 2005 and 2015 because of increasing awareness and due to the desire to look good. Over 68% of young adults feel that using grooming products boost their confidence. About 62% of young consumers in big cities prefer to buy online beauty and grooming products whereas 45% of consumers tend to buy cosmetics and apparels from any shop of their convenience rather than a single shop. Both quality and value for money is being sought by consumers.

Also, there has been a rising aspiration among Indian men to look better groomed, which has led to the Indian men’s grooming market witnessing a growth of more than 42% in the last five years. The study further showed that this growth is faster than the growth rate of the total personal care and beauty industry in India. “Interestingly, men who fall in the age group of 18 to 25, spend more money on grooming and personal care products than women in India,” highlighted the Assocham study.

Rise in demand for natural and herbal products

Indian consumers are more inclined towards natural and herbal cosmetic products. The herbal cosmetics industry is expected to grow at a rate of 12% in India. The Indian cosmetics industry has numerous herbal cosmetic brands like Forest Essentials, Biotique, Himalaya Herbals, Blossom Kochhar, VLCC, Dabur, Lotus, Jovees, Kama Ayurveda, Patanjali, Just Herbs, and many more.

According to a recent research by Euromonitor, words such as ‘natural’, ‘organic’, ‘botanical’, ‘free from’ some harsh chemical, and even ‘religious compliance’, are the major factors behind the purchase of personal care products. The report says that over half of Indian consumers reported ‘natural or organic’ features influencing hair and skin care purchase decisions. While 71% of consumers surveyed said that they would pick up a face cream or lotion if it claimed to be ‘natural’, 38% said they would buy a shampoo or hair oil if it was made with ‘botanical’ ingredients.  Even ‘religious compliance’ has swayed 17% consumers.

Even foreign brands have now dived into natural products. French cosmetics brand L’Oreal has come out with Ayurvedic shampoo, conditioner, oil, and cream under its Garnier Ultra Blends brand, Hindustan Unilever re-launched Ayush and acquired hair oil brand Indulekha while Emami bought out Kesh King Hair oil. Patanjali Ayurved, in a short span, has become a household name. Patanjali has a vast collection of shampoos, soaps, and beauty products.

Demand for herbal products in overseas market

Indian herbal and natural cosmetic products have a great demand in the overseas market and the products manufactured in India are supplied to international suppliers. According to CHEMEXCIL (Basic chemicals, Cosmetics and Dyes Export Promotion Council), set up by the Ministry of Commerce and Industry, Government of India, India is acknowledged to be the second largest exporter of herbal cosmetics to the world market after China.

In the entire range of products that fall under the Indian cosmetic and toiletries market, the most popular items are colour cosmetics, of which nail varnish, lipsticks and lip glosses account for the most sales. Indian natural products are in demand due to their experience in extracting the best from natural dyestuff, flowers, roots, oils, etc.  

Indian manufacturers export a wide range of quality cosmetics, which have gained worldwide acceptance. India exports natural and herbal cosmetic products to countries like the UAE, the USA, the Netherlands, Saudi Arabia, Germany, Japan, Malaysia, Nepal, Sri Lanka, UK, China, Indonesia, France, Russia, and Italy. According to CHEMEXCIL, the exports of cosmetics, toiletries and essential oils during 2015-16 was around USD1007.20 million. The import during the same period was USD703.58 million.

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