Boom in Indian cosmetics market driven by changing socio-economic climate – research

By Simon Pitman

- Last updated on GMT

Related tags: Cosmetics market, Indian cosmetics market, Cosmetics

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) says that rapidly changing socio-economic conditions there could see the market for cosmetics double by 2014.

This changing socio-economic landscape is giving way to far higher income levels, giving Indians social mobility and expendable incomes that have before been witnessed in the Sub-Continent before. In this, the second part of a two-part article, we explore which niches will be the key drivers for this trend.

With respect to personal care habits, ASSOCHAM believes that big changes in Indian society, both in urban and rural communities, are resulting in far more sophisticated grooming habits, which is translating into the fast growing spend.

New consumer niches drive growth

New niches, such as teenagers, younger women and, in particular, women with lower buying power are amongst the groups that are fuelling this growth.

ASSOCHAM’s latest report on the cosmetics market highlights the fact that big international mass market brands such as Lakme, Maybelline and Color Bar are all being pushed at younger women and women with lower buying power.

On top of specific female groups and teenagers, the report highlights emerging categories that include the naturals and spa market – two areas that are being driven specifically by increased spending power in urban areas and amongst higher income individuals.

Spa and naturals categories

The spa category has grown tremendously over the past five years, ASSOCHAM points out, which is being fuelled by the actual number of new spa facilities coming on to the market, but also the products and services they offer.

Likewise, the naturals category, referred to by ASSOCHAM as the herbal cosmetic category, is driving overall growth in the cosmetics market, with the category recording annual growth of 12 percent, due to the fact that consumers are switching from synthetic formulations.

This category is dominated by brands such as Forest Essentials, Biotique, Blossom Kochar, VLCC, Dabur and Lotus, together with vast of other smaller players.

Consumption of cosmetics still low, pointing to growth potential

However, the report also highlights the fact that consumption of cosmetic products is still low compared with other markets in Asia, a factor that underlines the theory that the market is set for significant growth.

Underlining this is the fact that the average Indian consumes 40 times fewer cosmetic and toiletry products than their counterparts in Hong Kong, 18 times less than Japanese consumers and 15 times less than Taiwanese consumers.

According to ASSOCHAM, the value of the market should increase from a current estimate of Rs10,000 crore (US$19.3bn) to Rs 20,000 crore by 2014.

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