The centre, which will open in the city of Sanand in the Ahemedabad region, will cost the German company about Rs 1000 crore ($200 million) in investment, and provide a 70,000 square metre operations base within the country.
Owned by personal care giant Beiersdorf, Nivea is now expected to make strong investments in the areas of skin care research and of analysis of local trends in India, looking to position itself to best address the country’s consumer demands.
On the ground
India’s Rs 400 crore skin care category is growing strongly at an estimated 15% CAGR, and, according to Euromonitor International, this is set to continue.
“With newer product categories such as anti-agers and acne treatments gaining a foothold, skin care is likely to evolve further, with technological innovations and new claims,” the firm’s analysts note.
Nivea’s move mirrors that of Swedish cosmetics maker Oriflame last year, when it too acquired an Indian manufacturing facility in order to increase its focus in the country, with plans to launch 200 new products.
Rival skin care brand Shiseido from Japan another company targeting expansion in India in light of its favourable skin care growth, having recently launched its highly popular Za range there.
Its products are manufactured primarily at the company’s nearby Vietnam factory, which serves the ASEAN and Japanese markets; Nivea’s move goes a step further in opening up production within India itself, a move set to maximize production and transportation cost efficiency.
An FCMG hub
The growth of the skin care category participates in a wider ongoing boom in fast moving consumer goods in the country.
"Driven by growing consumption in rural and semi-urban areas, the FMCG market is set to double from $14.7 billion in 2008-09 to $30 billion in 2014," Manoj Mehta, chairman, ‘International Beauty Mart' 2014, told Cosmetics Design.
Nivea is the sixth major FMCG brand to set up base at Sanand, with The Indian Express recently reporting that is fast becoming an FMCG hub, having already attracted other big players like Nestle and Colgate Palmolive.
Gujarat is reportedly a strong strategic location for the FMCG brands, offering good quality infrastructure like water supply, roads and power.