Premiumisation, internet drive growth of beauty industry in India: Report

New Delhi: India’s $14 billion beauty and personal care industry is on a roll thanks to online sales of beauty products, premiumisation, and an inclination towards organic and ethical brands. According to a report by research firm Euromonitor International, last year, with the presence of online retailers like Nykaa.com and Amazon.com, the beauty and personal care products category crossed $400 million in internet sales up from $100 million in 2014.

The high penetration of smartphones and easy access to the internet that exists on the fingertips of 560 million Indians (TRAI data for September 2018) today is driving the continued rise of the beauty and personal care industry in the country. With the number of internet users in the country expected to cross Europe’s population by 2025, it is no surprise that the beauty and personal care industry is enjoying rapid growth, accelerated by an increase in internet retailing.

According to the Euromonitor International report, since technology has been driving growth in most industries, including beauty and personal care, companies are rethinking the relevance of physical stores and revamping them. Businesses are developing ways to drive engagement as well as TO transform the in-store experience for consumers. "Physical stores continue to remain relevant in India with retailers focusing on enhancing the shopping experience by housing beauty studios with personalized beauty advisors who help consumers understand latest and trending make-up looks and regimes," the report said.

Internet connectivity has also caused a shift in consumers’ consumer’s traditional power structures, wherein recommendations from families and friends and independent consumer reviews have greater credence over mass marketing channels like celebrity endorsements, in-store advertising etc, according to the Euromonitor International Lifestyles Survey 2019.

Premiumisation, which essentially refers to the ability and willingness to spend on exclusive, superior quality goods, is of late becoming more popular with the Indian consumer. Indians are no longer afraid to put up extra bucks to purchase premium products. Such products come largely in partnership with a luxury or premium brand, like the lipstick launched by L’Oreal in collaboration with Indian couture designer Sabyasachi, or products personally formulated or customised in accordance to the specific needs of customers. Companies like Freshistry and Emcee Beauties produce customised products taking the needs of their customers into consideration, Euromonitor said.

Premiumisation has especially driven the demand for beauty and personal care products. The Euromonitor International study shows that in 2018, $774 million worth of premium beauty and personal care products were sold in India, with 63% share enjoyed by premium fragrances and hair care products. According to the study, with increasing disposable incomes, the per capita expenditure on premium personal care and beauty products is expected to show a CAGR of 15% from 2018 to 2023.

Meaningful consumerism has also been shaping the beauty and personal care industry as customer focus shifts towards conscious consumption and ethical living.

With India having 22 of the world’s 30 most polluted cities (2018 air quality data by Greenpeace), consumers are becoming increasingly aware of environmental degradation and switching to eco-friendly, organic AND , natural products. The Euromonitor International Lifestyles Survey (2019) shows that respondents have the greatest understanding of, and trust in(,) environmentally conscious and eco-friendly products (67%), followed by natural products (66%), and organic products (65%). Brands like SoulTree offer certified natural beauty and personal care products, while Ruby’s Organic offers organically made cosmetics. Many other companies are looking into creating recyclable products, or products that are free of any artificial ingredients.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.