The global cosmetic industry has been captivated by India in a fascinating manner–the world’s second most populous country has seen an enormous growth of the cosmetics industry. Currently, the market size of the cosmetics industry in India is estimated to be worth US$1.5 billion, and is projected to reach almost US$3 billion by 2014. The industry has been growing at an annual rate of almost 20%, which is twice as fast as that of the United States or Europe. A market surge of 19% Compound Annual Growth Rate (CAGR) is anticipated till the year 2014.
The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has published a survey which stated that 65% of the teenagers claimed that their expenditure on branded cosmetics had increased 75% in the past 10 years. Unlike the western countries, where 55 plus age category is the target group, in India the target range is from 30 plus age group. Indian men are increasingly taking to cosmetics with men’s personal-care segment estimated at over $200 million. When compared to their female counterparts, the expense of the male segment has reported a rise of about 80% over this period. India’s import of cosmetics, beauty products and intermediate raw materials such as essential oils is approx $400 million per year.
Major driving factors for this industry have been the improved purchasing power and rising fashion consciousness among the population. Increased levels of brand advertising have also captured the imagination and awareness of the people. Another factor which has helped the growth is the higher spending power of Indian women owing to them being placed at better paying jobs since the last decade. The Indian movie industry and its changing fashion have also created an impression on the youth over the importance of grooming and being fashionable.
The cosmetic market caters to all sections of the masses, offering products ranging from a mere $2 to about $1000. The higher-end market range is considered to be within $20 to $200, while the middle market consumes products that are priced below $20. The increased brand awareness has also aided the growth of many brands such as L’Oréal, Maybellene, Lakme, etc. People have also embraced the importance of quality of products. This change in outlook towards quality of products and self image can be witnessed most in rural India where both men and women have become conscious about their looks and dressing. Foreign players have already recognised the importance of tapping into the untapped Indian rural market which comprises of nearly 70% of the Indian population, i.e. nearly 828 million people. To benefit from the overall market, many cosmetic giants, such as L’Oréal, have set up research facilities, investing millions in India to embrace the change and give themselves a makeover.
The disposable income of the urban Indian youth is making them opt for better choices, most certainly in terms of grooming. Also, the changing mindset of the people has encouraged a much lavish approach to expenditure. The makeover of the Indian cosmetic industry has certainly worked for both India and its investors, and it certainly looks set to impress.