India Market Brief - Cosmetics and Toiletries Industry

INDIA MARKET BRIEF

COSMETICS AND TOILETRIES INDUSTRY

Market Overview

Many of the world's popular cosmetics brands entered the Indian market in the 1990s as

the Indian market opened up to foreign companies. The cosmetics and personal care

industry has been growing at an average rate of 15-20 percent for the last few years.

Growth has come mainly from the low and medium-priced categories, which account for

90 percent of the cosmetics market in terms of volume. Even though mass-market

products still constitute the major portion of the India cosmetics and toiletries market,

increased disposable income has led to growth in demand for premium products. The

urban population in particular, with its rising purchasing power, is the main force that

drives the demand for various cosmetic products in India.

The reasons for the growing demand for cosmetic products in India also include: greater

access to television, which has created a growing awareness of the western world;

increased advertising in general; and greater product choice and availability. The success

of contestants from India at various well known international beauty pageants in the last

few years has also contributed to making Indian women more conscious of their

appearance and more aware of western cosmetic products and brands. Also, a boom in

the Indian fashion world has contributed to the rise in demand for professional beauty

care products.

Even with double-digit growth rates, the market penetration of cosmetics and toiletries

products in India is very low. Current per capita expenditure on cosmetics is

approximately $1.00, as compared to $36.65 in other Asian countries. This low market

penetration for cosmetics and personal care products in India can be viewed as an

opportunity for more significant growth down the road in this country of 1 billion people.

The current size of India's cosmetic and toiletries market is about $950 million. The

fastest growing segment is color cosmetics, accounting for around $60 million of the total

market. Nail enamels and lipstick account for about round 65 percent of the color

cosmetic segment. Revlon and L'Oreal dominate the small premium lipsticks and nail

enamels niches. Lipstick sales account for nearly a third of the market at $21 million,

while the market for nail enamels is about $23 million. Lakme, a brand originally

introduced by the Tata Group of India, but now owned by Hindustan Lever (HLL) of the

Unilever group, Tips & Toes, and Revlon dominate the color cosmetics market. The

color cosmetics segment is very competitive and has a high penetration level, compared

to other market segments.

The skin care market in India is about $180 million. The market for specialized skin care

products such as sunscreens, toners, cleansers, astringents, dark circle removing creams,

anti-wrinkle creams and day and night creams has grown steadily in recent years. Most

consumers, however, are still are using only facial cream and moisturizers, with

moisturizing lotions, fairness creams and facial cleansers being the most popular

products. These products account for approximately 60 percent of the skin-care segment.

The major players in this segment are Lakme, Ponds, Fair & Lovely, J.L. Morison and

Revlon.

The size of the hair care market in India is about $200 million. International companies,

including Unilever, through its subsidiary, HLL, and Procter & Gamble dominate the

shampoo market in India. The hair coloring and styling/gel market segment is at a

nascent stage and there are not many local brands available. Foreign brands such as

L'Oreal and Wella have started to make inroads into this segment by positioning hair

colors as a fashion accessory. The market penetration of these products is very low,

however, and limited to a small section of the urban market. The market for hair creams,

mainly used for hair grooming by men, is also very small. Hair oiling, an age-old Indian

tradition mainly used as a pre-wash nourishment treatment, is a major niche in this sector.

In the last few years, there has been a renewed craze for herbal cosmetic and personal

care products, especially in the skin care segment with the growing belief that chemical-

based cosmetics are harmful. Local majors, including Shahnaz, Lotus Herbals, and the

Biotique brands dominate the premium herbal cosmetics segment in India, estimated at

$100 million. Many companies have expanded their product range into herbal variants,

including companies with a primary focus on health care products.

Market penetration levels of international cosmetics brands in India are low.