Indian Cosmetic Sector 2007-08

The cosmetics market has been growing at the rate of 15-20% for the last few years. eye. for example an expected growth in natural and organic cosmetics. and other emerging markets.1. The legislation is enforced by the Central Government in New Delhi. which is responsible for overall supervision. the trends of India's cosmetics industry are expected to follow those of the more advanced countries. Consequently. and the Drugs and Cosmetics Rules (DCR) made there under. natural ingredients present an economic advantage for local players as natural and Ayurvedic ingredients are often cheaper than their chemical alternatives. Furthermore. At the field level. Matters of product approval and standards. Regulatory Aspects The major source for pharmaceutical regulation is the Drugs and Cosmetics Act 1940 (DCA). rather than the consumer elite who are willing to pay the premium as is the case in Western markets. the main drivers of India's natural products trend are the country's lowincome majority. This includes getting approvals for setting up manufacturing facilities and obtaining licenses to sell and stock drugs in distribution centers and retail outlets. and import licenses for new drugs are handled by the DCI. . and perfumes. according to Euromonitor. introduction of new drugs. This legislation applies to all pharmaceutical products. Products The cosmetics market can be segregated into talcum powder. The sector has witnessed growth mainly from medium and low priced category that accounts for majority revenue share of the cosmetic market. The office of the Drug Controller of India (DCI) has primary responsibility. and nail care products). clinical trials. 3. due to the country's strong economic performance and youthful demographic structure. whether imported or made in India. according to the market research company. Like all emerging markets. 2. Local players are dominating the natural cosmetics sector providing cheaper natural alternatives to standard beauty products and foreign brands. However significant differences in the market drivers suggest that this sector may not follow the expected patterns. face. colour cosmetics (lip. enforcement is generally done by individual State governments through their Food and Drug Administrations. deodorants. Introduction India's cosmetics and toiletries industry is tipped to grow 27 percent over 2006-2011. In addition Ayurveda is experiencing something of a renaissance in India and many companies are cashing in on the trend by releasing Ayurvedic inspired beauty products.

L. This low level of market penetration can be perceived as an opportunity for major players in FMCG sector. eye make-up. Other major players in this segment are HLL. Shower and Bath products have the major share in the toiletries market. 3. The nail polish segment is valued at Rs.25 billions followed by the lipstick market at Rs 7 millions. Lipsticks and Nail Enamel account for 65% of the Color cosmetic segment. However. Gillette is the largest player in this segment. high entry barriers.The market consists of eye and facial makeup products. Lotions and gels also form a formidable component of the Cosmetic market but they shall be discussed separately. Morison and HLL. Greater access to television. lipsticks. Gone are the days when cosmetics were viewed as expensive and self-indulgent items. Godrej. nail enamels.e. The lipstick market in the country is valued at Rs 200 crore. compacts.65 in other Asian countries. valued at $60 million.2 Toiletries The toiletries market is quiet developed and it is dominated by large Indian companies and MNCs. The major products in colour cosmetics market are foundation. These products are not limited to women as their usage is now extended to men also. increased advertisement. . 1. All the categories in this segment are growing at around 25-30%. High advertising expenditures. and a high rate of new product launches characterize this segment. talcum powders. The facial makeup market in India is valued at Rs 97 crore and is expected to reach Rs 200 crore by 2012. The talcum powder market is valued at Rs 236 crore and is expected to reach Rs 495 crore by 2012. the penetration level of cosmetics and toiletries product is still very low in India. colognes and other toiletries products. and greater product choice and availability have resulted in growing demand for cosmetic products in India. The less price sensitive niche it caters to the middle and lower middle class.1 Colour Cosmetics These are the fastest growing segment. and J.68 cents compared to $36. The toiletries market can be segregated in the following two aspects: . Herbal cosmetic products in the form of creams. Men also use body sprays. The men's personal care market is valued at $165 millions. 3. etc. It caters to the urban higher class. International brands account for only 20% of the cosmetics market. High brand conscious. growing awareness of western world. blush-on. The penetration level of international cosmetics brand in India is also low. The per capita expenditure on cosmetic products in India is approximately $0. The premium niche i. . lipsticks and nail enamels.

herbal and cosmetic products. There is a huge demand in the Western countries of organic natural products such as Aloevera.2% in urban and rural areas respectively. To stress on the matter an US-based company Nutraceuticals International has formed a joint venture with India's Amruta Herbals to develop and market Indian plant extracts for use in the cosmetics and nutraceuticals market.3. With an increasing demand for anti-aging creams and lotions with an added emphasis on organic products the market for these products is expanding immensely. Amla. Its market is valued at Rs 3. Pond’s dominates talcum powder market with a market share of 70%. followed by Johnson & Johnson with a market share of 15%. Top Advertiser Ponds India L' Oreal India Pvt Ltd Hindustan Unilever Ltd Paras Pharmaceuticals Ltd Reckitt Benckiser (India) Ltd Ganapati Herbal Care Pvt Ltd J L Morrison India Ltd Emami Limited Lakme Lever Ltd Procter & Gamble % Share 19% 17% 15% 9% 7% 6% 4% 2% 2% 2% . 4.5 billions and is growing at the rate of 12% per annum. Shikakai and extracts of Neem. Expenditure Potential on Advertisements-An Indicator of Market Top 10 Advertisers contributed for 83% share of overall Skin Care ad pie on TV. Its penetration level is 45.3 Talcum Powder This is one of the most popular cosmetic products in India. sandalwood and other such herbs and trees. 5.4% and 25. herbal and cosmetic products are high soaring in the world today. The Herbal Personal care products market is valued at US$ 100 million presently. The natural resources in the country are in abundance and have been a major source for the booming industry of ayurvedic. India has always been a rich producer of ayurvedic and herbal products. The table below mentions the same. Herbal Cosmoceutical Products The demand of ayurvedic.

Growth was partly due to high levels of inflation but volume sales also saw dynamic growth. This boosted sales for many areas of cosmetics and toiletries. Rank 1 2 3 4 5 6 7 8 9 10 New Brands Ponds Flawless White NiveaLip Care EveryuthDermacareLight & Clear Face Wash Dr Lips Bloom Vaseline Intensive Rescue Pharmaclinix Lightenex Collegian Cream Pharmaclinix Scar Repairex C Care Body Lotion Mary Kay Cosmetics 6. Grooming is increasingly associated with professional and social success and taking care of one’s appearance regarded as a virtue rather than vanity. mid. Meanwhile. Colour cosmetics saw the strongest growth in cosmetics and toiletries as a result of women increasingly . 2 brands each of 'Ponds India' and 'PharmaclinixLtd' were among the following Top 10 list. The following brands were launched in the Q1'08. Growth in India Cosmetics and toiletries saw strengthening value growth in 2007 over the previous year.Amongst these.and high-income consumers in urban areas began to seek out value-added mass brands and premium products. Increasing urbanisation and a growth in the number of office workers in India resulted in a strong focus on grooming. Fairness creams have the maximum share of the Skin Care advertising. Rising income levels resulted in lower-income groups being able to afford more cosmetics and toiletries and also saw many trading up from unpackaged to packaged products.

a figure that is expected to grow markedly in coming years. a figure that is estimated to reach 57 per cent by 2010. Department stores were another dynamic channel. As an example of this.85bn is attributed to rural areas and $4. The total FMCG category in India is currently valued at $15bn (€10. The growth in market share in these areas is expected to impact the urban India market. with a number of up market department stores opening in the metro cities and offering a large cosmetics and toiletries department or branded shopin-shops. Likewise. Supermarkets/hypermarkets notably gained value share during the review period. But as spending patterns and demographics shift. as did second-ranked multinational Colgate-Palmolive. is likely to jump by 10 per cent in rural India by 2010 and by 6 per cent in semi-urban areas as an increasingly young population adopts western personal care habits. the market share for the semi-urban population is expected to increase from 19 per cent to 21 per cent in the same time-frame. Hindustan Unilever offers the widest product range and has the strongest distribution network within cosmetics and toiletries and thus continued to be the leading player in 2007. There were marked changes in the distribution of cosmetics and toiletries during the review period. Godrej Consumer Products and Dabur are meanwhile the leading domestic players. of which a significant percentage is made up of soaps. The government association claims that this fall will be accounted by the fact that consumers in urban areas are expected to reject excessive FMCG consumption and start to move towards the use of more sophisticated products. convenience stores also expanded in the major cities. The company also focused on building rural sales towards the end of the review period. including naturals and organics. representing a fall of 25 per cent up to 2010. depilatories. Currently the organisation estimates that the percentage of this total spend on personal care products is approximately 8 per cent. styling agents and many other product areas also benefited from this trend. . fragrances.2bn is accounted for semi-urban areas.9bn). with these outlets opening in smaller towns and cities and attracting consumers by offering a wide range of products and frequent promotions. Growth in Rural India A study undertaken by the government-run Associated Chambers of Commerce and Industry (Assocham) indicates that there is significant growth potential for marketers of personal care products in rural and semi-rural India. it is expected to be in rural areas where consumer patterns will be most affected. toothpaste and other every day toiletries and personal care goods. while deodorants. Direct selling meanwhile also gained share thanks to the expansion of Oriflame and Avon. The FMCG (Fast Moving Consumer Goods) category. with both also benefiting from a strong distribution network in both urban and rural areas. shampoos. On a smaller scale. of which $2. the total market share of FMCG in India within rural populations is currently estimated at 52 per cent.focusing on their appearance. where the size is expected to fall from 29 per cent to 22 per cent.

Although several domestic firms are present. with great emphasis on lightening of skin tone. Shiseido. On the back of a fertility rate of 2. The launch aims to tap in to current annual market growth within the skin care sector of 16 per cent. There is a clear trend of the market heading towards premium cosmetic products. who are also. have transformed traditional stores into their self-owned retail channels. Global Scenario The Japanese cosmetics market is in a stable condition but with continuous realignment of distribution channels.81 children for each woman the total population exceeded 1 billion in 2000 and is continuing to rise. statistically speaking. the leaders in the Korean cosmetics market. South Korean cosmetics market is growing at a faster rate than developed regions. Kao (and Kanebo). Another notable trend is the rising demand of the male consumer segment. Procter & Gamble.2007 is mainly due to market growth within the semi-rural and rural and rural areas. further emphasizing the belief that the market is already undergoing significant realignment. all cosmetics producers need to enhance and restructure the management of their sales channels. Skin care . and Pola dominate the cosmetics market in Japan. L’Oreal has the largest market share in China. Specialty stores are the leading channel due to consumer convenience and low prices while sales through department stores is slowing down. The data suggests significant opportunities for international personal care players. India is being targeted by global cosmetic giants due to its favorable demographics. the second largest in Asia Pacific after Japan. The younger populace is looking for general skin care and hair care products while the older generation has more specific needs for their cosmetics products. is witnessing increased demand due to improving lifestyles and rising disposable income of the Chinese population. The reason why the profitability of FMCG companies operating in India has risen by 20 per cent in the period 2006 .The study also highlights that growth in rural and semi-rural areas will focus on the fastgrowing younger population. Amorepacific and LG H&H. The modern. Most recently the world's largest FMCG players. and the biggest players have all made considerable efforts to increase their footprints on the market in recent years. This suggests a huge growth potential for foreign cosmetic producers. has increased its presence in the skin care market in India with the launch of four new Oil Of Olay products in the country. China’s cosmetics market. urban Indian women are becoming increasingly conscious about their style and looks. more likely to spend greater amounts on personal care products as their grooming and personal care habits are changing the fastest in India. However. 7. the level of development of the market is still very low. Kose. foreign companies dominate the market. The population of those aged below 20 is currently estimated at 180 million and continues to rise in line with the Indian birth rate.

skin care market in India is appox. The fastest growing segment is color cosmetics accountable for around US$60 million of the total market.68 dollars as against 40 dollars in Hong Kong. . The above fact re-emphasises the presence of immense opportunity in India. Hindustan Unilever is India´s largest cosmetics company. In Vietnam and Indonesia. Market penetration levels of international cosmetic brands in India are low. followed by color cosmetics and hair care products. Skin care products dominate the Taiwanese market.twice as fast as the US & Europe markets. Cosmetics and toiletries are expected to see even stronger growth during the forecast period in constant value terms.65 in other Asian countries. US$180 million. . Times ahead It is estimated that the Indian beauty market is worth more than US$1. India’s annual import of cosmetics & toiletries and intermediate raw materials is around US$120 million. domestic cosmetic producers cater to the middle and low-end market segment while imported cosmetics dominate the upper strata of the market. thereby offering extensive opportunities to domestic and international players. driving sales growth as a consequence. In Singapore. the market penetration of cosmetics and toiletries products in India is very low. 8. In Thailand. 12 dollars in Japan and 1.5 billion and is rising at 25% p. as compared to US$36. nail enamel US$23 million. with more than half of the skincare market comprising of skin lightening creams. India's per capita consumption of cosmetics and toiletries for well-known branded products stands at 0. Cosmetics and toiletries will therefore effectively cater for a wide range of Indian consumers. small pack sizes are very popular as they offer a lower cost and the chance to try new products.68 cents. This will be chiefly due to rising income levels and consumers trading up. sun care products and men’s grooming product has been the growth engine. In addition. Foreign brands currently constitute only 20% of the market. 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. hair care market in India is about US$200 million. In India. distribution is expected to improve for cosmetics and toiletries and consumers will have greater access to a wide range of cosmetics and toiletries.5 dollars of China as per ASSOCHAM. Nail enamel and lipstick account for about around 65% of the color segment. Even with double-digit growth rates. Men’s personal care segment is about US$165 million. Current per capita expenditure on cosmetics is approximately US$0. followed by L´Oreal.a. ranging from cheap basic products in small pack sizes through affordable value-added mass brands to super-premium global brands. 10 dollars in Malaysia and Taiwan.2 billion people. Lip products form a majority of the color cosmetics market.and color cosmetics have witnessed solid growth for the last few years. skin care products and perfumes lead the market. Lipstick sales accounts for nearly a third of the market at US$21 million.

and it is this sector of society that is tipped to drive market growth. offering top of the range high-tech beauty products. with increasing consumer interest in skin care products particularly anti-aging and skin whitening formulations. A recent report suggests that the Indian market is becoming increasingly sophisticated. particularly women's increased personal spending power.The Body Shop entered the Indian market in June 2006 and aims to have 50 stores in India's largest cities by 2008. India's consumer elite continues to buy the more expensive international brands. suggesting that international firms see India as a potential market for natural cosmetics. . This is facilitated by the increasing spending power of the higher socioeconomic sectors of society.

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