India's consumer elite avoids the natural trend

By Katie Bird

- Last updated on GMT

Related tags: Market research company, Cosmetics

The Indian market for natural cosmetics is thriving; however
products are seen as cheap alternatives popular with low-income
consumers, causing concern for the future growth of the sector.

India's cosmetics and toiletries industry is tipped to grow 27 percent over 2006-2011, according to Euromonitor, due to the country's strong economic performance and youthful demographic structure. Like all emerging markets, the trends of India's cosmetics industry are expected to follow those of the more advanced countries, for example an expected growth in natural and organic cosmetics. However significant differences in the market drivers suggest that this sector may not follow the expected patterns. Local players are dominating the natural cosmetics sector providing cheaper natural alternatives to standard beauty products and foreign brands, according to the market research company. Local firms active in the natural sector focus on basic hygiene products and offer attractive discounts and offers, which, along with their extensive distribution networks allow them to reach India's rural, low income population. 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. Furthermore, natural ingredients present an economic advantage for local players as natural and Ayurvedic ingredients are often cheaper than their chemical alternatives. Consequently, the main drivers of India's natural products trend are the country's low-income majority, rather than the consumer elite who are willing to pay the premium as is the case in Western markets, and other emerging markets. Euromonitor highlights that the traditional driver of the natural market has been consumer concern over the safety of chemicals used in standard cosmetics products. "Chemical preservatives such as parabens and triclosan, which have been demonised by the Western press, are unfamiliar to most Indian consumers and standard beauty products are seen as high quality, particularly those under international brand names"​ said Diana Dodson from the market research company. India's consumer elite continue to buy the more expensive international brands, offering top of the range high-tech beauty products, and it is this sector of society that is tipped to drive market growth. A recent Kline report suggests that the Indian market is becoming increasingly sophisticated, with increasing consumer interest in skin care products particularly anti-aging and skin whitening formulations. Dodson believes that the naturals sector will not experience significant growth until the products become the choice of the more upmarket consumer; something that she feels is contingent on increased awareness of product safety. "Not until there is a greater awareness of the potential threat of cosmetic chemicals will consumers come to value natural products as high-end alternatives to standard brands. Only then will the trend for natural ingredients in cosmetics and toiletries catch on among India's consumer elite",​ said Dodson. According the analyst the UK-based Lush, a natural bath and beauty product retailer, has had difficulties investing in the Indian market as its 'Fresh Homemade Cosmetics' claim comes across as old-fashioned and downmarket to local consumers. In contrast, The Body Shop entered the Indian market in June 2006 and aims to have 50 stores in India's largest cities by 2008, suggesting that international firms see India as a potential market for natural cosmetics.

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