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Decoding The Indian Beauty Landscape

BoF shares product and consumer insights on the growth potential of India’s beauty and personal care market, from a new report by The Estée Lauder Companies’ BEAUTY&YOU programme in partnership with 1Lattice.
BEAUTY&YOU: Decoding The Indian Beauty Landscape.
BEAUTY&YOU: Decoding The Indian Beauty Landscape. (Dolly Devi)
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Download the full report to discover The Estée Lauder Companies New Incubation Ventures’ guide to helping navigate the Indian beauty landscape.

According to Euromonitor International, the retail value sales at fixed 2022 exchange rates of India’s beauty and personal care market is expected to grow from $15.8 billion in 2022 to $23.7 billion by 2027, reflecting an increase of 51 percent.

Recognising the opportunity and seeking to support and provide a platform for entrepreneurial, creative and technical talent from the region, The Estée Lauder Companies’ New Incubation Ventures team (NIV) partnered with Nykaa to launch the BEAUTY&YOU Awards in addition to creating a report on the shape of the opportunity in the Indian beauty market.

“The most successful new founders will challenge today’s standards to build innovative, coveted new business models and products. India is at the forefront of this changing environment. [It has] a deeply rooted heritage of beauty and wellness, [...] pushed forward with modern thinking, anchoring exciting new brands and companies. We are excited to see the future of beauty through the lens of India,” says William P. Lauder, executive chairman of The Estée Lauder Companies.

Today, with total net sales of $15.9 billion and 60K+ employees worldwide, The Estée Lauder Companies is a global leader in prestige beauty. It holds a diverse portfolio of brands across makeup, skin care, fragrance and hair care that are sold in approximately 150 countries and territories. Joining the company created by its eponymous founder in the portfolio are the likes of Bobbi Brown Cosmetics, Dr.Jart+, La Mer and Tom Ford Beauty.

In addition to the awards and a two-day event including thought leadership panels moderated by The Business of Fashion, NIV has created a market intelligence report, “Decoding The Indian Beauty Landscape,” exploring the factors impacting India’s beauty and personal care market.

Decoding The Indian Beauty Landscape Report

“With a higher degree of consumer awareness than ever and an influx of options unlike anything that the market has seen, India represents an exciting opportunity for the global beauty ecosystem,” adds Shana Randhava, senior vice president of NIV. “We set out to spotlight the biggest trends and most interesting insights to help entrepreneurs innovate for the future.”

Below, BoF shares insights from The Estée Lauder Companies’ report, distilling four distinct themes from “Decoding The Indian Beauty Landscape”.

Purchase Journeys Evolve: Influencers Increase Impact

BoF: Given consumers’ increasing openness to trying new products, category opportunities are evolving and could provide entirely new growth avenues. The shift is also changing the profile of influencers in the space. While influencers and celebrities, as well as family and friends, continue to be a significant source of inspiration for beauty, shoppers also report being highly influenced by recommendations from doctors and dermatologists. In India, celebrities accounted for 27 percent of influencer marketing spend in 2022. The remaining 73 percent was composed of nano, micro and mid-tier influencers.

According to Euromonitor International, over the next five years, India’s beauty and personal care market is set to grow retail value sales at fixed 2022 exchange rates at a CAGR of 9 percent. The BEAUTY&YOU report predicts that the presence of beauty influencers on social media will be an important driver of this growth.

While recommendations from friends and family members alongside their own internet research are the top sources of beauty and personal care discovery for shoppers (sitting at 55 and 51 percent respectively), influencers have now emerged as one of the key sources of awareness among beauty and personal care shoppers in India, impacting 25 percent of sales.

KEY TAKEAWAYS

Influencers have led to a recent surge around specific product categories — particularly an increased usage of serums and sunscreens, which have seemingly risen as one of the fastest-growing subcategories within skin care — the most popular product category.

Purchase Decisions: Conscious Ingredients

BoF: When surveying beauty consumers in the State of Fashion: State of Beauty Report on what aspects of sustainability matters most to them, the most popular responses included: the absence of ingredients that harm the environment and 100 percent natural formulas.

Overall, the focus on sustainability is most prominent among Millennials and Gen-Z, with more than half of the age groups reporting a willingness to pay more for beauty products from a sustainable brand.

Key purchase criteria suggests that quality and brand popularity continue to be at the top for beauty and personal care shoppers in India. However, following closely is use of organic and natural ingredients in products. Indeed, 61 percent of those surveyed within the report stated factors that would influence their willingness to switch to a new brand amounted to how safe a product was to use. Presence of natural ingredients came in second at 46 percent.

KEY TAKEAWAYS

Brands and products with low differentiation which lack proper guidance are some of the key pain points for consumers. In the absence of successful directions, consumers find it difficult to choose the right beauty and personal care products and skin care regimen as per their skin type. With a predicted influx of several beauty and personal care brands and products, proper guidance is necessary for consumers.

The Skin Care Opportunity

BoF: In India, skin care sits at around 15 percent of the sector’s 2022 total retail value sales at fixed 2022 exchange rates. The category’s retail value sales at fixed 2022 exchange rates is expected to grow from $2.4 billion in 2022 to $3.8 billion by 2027, an increase of 57 percent, according to Euromonitor International. The Indian market offers distinct potential for specific categories and price tiers. The likely upshot is that many brands will align their geographic strategies to this new framework, which will require a variety of localised playbooks.

In India, the increased adoption of skin care regimens has been fuelled by increasing awareness and emphasis on general grooming alongside an accelerated demand for natural and organic skin care products amongst beauty and personal care shoppers. Driven by a combination of complex lifestyle issues — acne, dark circles, fine lines and wrinkles have been identified as the top beauty concerns for the Indian beauty and personal care consumers.

The report found that 60 percent of users who take derma treatments surveyed in the report used oxy facials, 65 percent of these being millennials. Skin tightening treatments came in at 20 percent, most popular within Gen-X and Boomers. And chemical peels at 15 percent, most popular with Gen-Z at 30 percent.

Here, recommendations from friends and family continue to be the key sources of awareness — at 52 percent — for beauty treatments followed by skin specialists or dermatologists —at 43 percent. Gen-Z are advocating for more affordable and result-driven products for acne and breakouts. Whereas consumers over the age of 40 are shown to prefer simpler, less experimental products for age-related concerns such as wrinkles and fine lines.

KEY TAKEAWAYS

The BEAUTY&YOU report found that skin issues faced by all generations often go unmet due to the absence of effective products. Indeed, expensive treatments and the low efficacy of already existing products mixed with improper guidance leaves skin issues like acne, fine lines and dark circles untreated — a key pain point for consumers.

Sales Channel Strategy: Omnichannel Excellence

BoF: Consumers’ embrace of e-commerce has defined beauty distribution around the world in recent years, indeed for good reason. The State of Beauty Report found that between 2015 and 2022, global e-commerce sales grew at a CAGR of 20 percent, with significant uptick during the pandemic. By 2022, digital shopping overtook speciality retail as the largest individual sales channel worldwide — accounting for around one-fifth of the industry’s overall total. Looking ahead, e-commerce is set to represent a quarter of the beauty market by 2027.

The report predicts that online distribution channels are expected to grow at a CAGR of ~30 percent — fastest across all distribution channels, followed by health and beauty specialists and modern grocery retailers.

The report found that Indian beauty and personal care shoppers show higher acceptance for online channels on the back of higher discounts and convenience of ordering from home. 70 percent of those surveyed stated Amazon as their top online channel, with Nykaa following closely behind at 50 percent.

Discounting plays a major factor in terms of channels of preference. 50 percent of beauty and personal care shoppers were found in the report to be trying different brands’ platforms to get discounts. Notably, impulse purchasing emerged as a key behaviour for Indian beauty and personal care shoppers.

KEY TAKEAWAYS

The growth of online channels is attributed to the surge of digital adoption combined with the convenience offered by online channels. Wider product assortment, enticing discounts and customisation are other factors leading to the growth of this distribution channel.

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