Why the battle for India's beauty business is intensifying

Sector is expected to exceed $31 billion by 2027 as consumers pay more attention to personal care

A woman visits L'Oreal's Professional Spa in Mumbai. Subhash Sharma for The National

Beauty brands are intensifying their efforts to grab a share of the fast-growing sector in India, driven by the country's young population, rising disposable incomes, e-commerce sales and a trend among consumers paying more attention to personal care.

“India is among the top five markets for [us] and also one of the fastest-growing markets across the globe,” says Harmeet Singh, vice president of marketing, product and digital for Asia South at The Body Shop, the British skincare and cosmetics company.

“The beauty market has evolved significantly throughout the years, particularly in the last two years.”

The Body Shop has set its sights on doubling its business in India by the end of 2025, Ms Singh says.

The brand has 200 stores in India and aims to expand to 300 by 2025 — branching out to at least 15 new cities during this time.

E-commerce sales have risen by close to 110 per cent compared with 2019 and The Body Shop expects to double growth this year, Ms Singh says.

“With an increasingly young population, rising middle classes and growth of internet and mobile users, we have an ambition to reach where our customers are,” she adds.

It is just one of many companies trying to tap a market that is looking increasingly attractive to established brands, start-ups and investors.

India's beauty and personal care market is expected to exceed $31 billion by 2027, up from $25.72 billion last year, according to data from Statista.

“The market is primarily being driven by the rising disposable income, increased expenditure of personal care products and growing expectation to look good,” analysts at Expert Market Research (EMR) wrote in a report on the industry.

India's economy is consumer-driven and, with the country overtaking China to become the most populous nation, the opportunity is significant in the world's fastest-growing major economy, experts say.

Watch: India to overtake China as world's most populous country by end of April

Consumer spending in India rose to 24.77 trillion Indian rupees ($303.1 billion) in the last quarter of 2022, from 23 trillion rupees in the previous quarter, according to official data.

More than half of the country's population is under the age of 30, which is a key demographic for beauty brands.

Women are the main consumers, but men are also spending more on personal care, according to industry insiders.

Products range from shower gels to face washes, skin creams and make-up.

“Aided by the increasing penetration of a wide range of brands and the growing popularity of herbal products, the market is expected to witness further growth,” says EMR.

This has led to a proliferation of home-grown start-ups in the sector trying to offer unique selling points to stand out in a crowded market.

WOW Skin Science, which is based in Bengaluru and focuses on producing nature-inspired products including skin and haircare goods, spotted an opportunity when it launched a decade ago.

“When we started, the idea was to be a wellness brand, but we saw a large opportunity in green chemistry and the emergence of the indigenous beauty brands in India,” says Manish Chowdhary, co-founder of WOW Skin Science.

“Also, we saw a great demand for nature-based beauty care products; that's when we automatically transitioned into being a nature-based beauty, personal care and wellness brand.”

The company develops products without harmful additives, including silicone, sulphates, mineral oil, parabens and artificial colours and fragrances, he adds.

When we started, the idea was to be a wellness brand, but we saw a large opportunity in green chemistry and the emergence of the indigenous beauty brands in India

Manish Chowdhary,
co-founder and co-chief executive of WOW Skin Science

“The Indian beauty and wellness market is currently going through a very dynamic phase,” says Mr Chowdhary.

“There is a high level of awareness towards self-care and wellness among the consumers, which is driving their purchase decisions in a big, big way.”

However, the sector risks becoming saturated with brands.

“With the launch of new beauty brands almost on a daily basis, there is a danger of overcrowding in the market,” says Mr Chowdhary.

This is the case in India's largest cities. But it is a different story in smaller towns and cities, which create an opportunity for new beauty brands to tap underserved areas, Mr Chowdhary says.

Global brands are eager not to miss out.

L'Oreal, the French cosmetic brand, is among those betting on the Indian market.

Last month, it invested in Singapore-based venture capital company DSG Consumer Partners, which focuses on consumer goods start-ups in India and South-East Asia.

The deal will help L'Oreal to back entrepreneurs in India's beauty sector. DSG has invested in companies such as 82°E, a skincare company founded by Bollywood actress Deepika Padukone.

“The South-East Asia and India region has many of the fastest-growing, most populous and young demographic markets of the world,” says Vismay Sharma, president of L'Oreal South Asia Pacific, Middle East and North Africa.

“The future of consumer brands will largely be shaped in these markets, so it's important to build a strong connection to its dynamic ecosystem of disrupters and invest in promising consumer brand start-ups.”

The latest move follows L'Oreal's investment in Fireside Ventures, which is also focused on consumer start-ups in India.

Consumer goods company Unilever is also looking for new brands in India, having invested in skincare start-up BeMinimalist through its private equity arm, Unilever Ventures.

Indian skincare company Plum Goodness, a vegan beauty brand, has attracted investment from Unilever Ventures, after raising $35 million in a funding round in March last year.

“From an industry lens, there is significant investor interest in the personal care and beauty sector in India,” says Shankar Prasad, founder and chief executive of Plum.

The sector in India is “witnessing tremendous growth”, he adds.

“There is a growing awareness among consumers about the importance of self-care and personal grooming, which has led to an increase in demand for beauty and personal care products,” he says.

Plum primarily sells its products online, has a presence in 15 countries and reaches more than 350 towns and cities in India.

The trend towards personal care was boosted by the Covid-19 pandemic, Mr Prasad says.

Social media is also playing a role, as the sector's popularity grows on platforms including Instagram, where users often post selfies and follow trends and products.

“The rise of e-commerce and social media has also aided this phenomenon, as it has made it easier for consumers to discover and purchase personal care products, further driving the growth of the industry,” says Mr Prasad.

Beauty and fashion e-commerce site Nykaa's listing on India's stock exchanges in 2021 also reflects the growth trends and investor interest in the sector.

Some brands say that such platforms are proving to be instrumental to their expansion.

We “witnessed enormous growth through [Swiss Beauty's] online sphere after 2020, with a strong digital focus with products being available across all major e-commerce platforms like Nykaa, Amazon, Flipkart, Myntra”, says Saahil Nayar, chief executive of Swiss Beauty, a beauty and cosmetics brand founded in 2013.

With this online reach, he says its core customers typically are female, between the ages of 16 and 35 and live in smaller cities.

Swiss Beauty's products are competitively priced, with lipsticks selling for as little as $2.

However, it is a challenging landscape for beauty brands to compete and operate in India, with companies dependent on repeat purchases to thrive as more competitors emerge.

“New customer acquisition is also a challenge faced by the industry,” Mr Nayar says.

“As the market is saturated with many players, attracting new customers can be challenging.

“Operational challenges can be faced while scaling up, with the potential for higher returns and expanding the business requires an efficient and reliable supply chain, logistics, and distribution channels and managing these operations can be a significant challenge.”

But brands like his are willing to invest as they focus on a market that shows great promise in the skincare and wellness sector.