Bangladesh lucrative ground for Indian cosmetic manufacturing bases

By Michelle Yeomans contact

- Last updated on GMT

Bangladesh lucrative ground for Indian cosmetic manufacturing bases

Related tags: Cosmetics

In an effort to by-pass higher import tariffs for products made in India, cosmetics companies are widening their manufacturing bases in Bangladesh. 

Indian brands like Marico have set up production plants in Bangladesh to cash in on personal care demand, in what analysts report is an emerging market.

Marico, the first of the cosmetics firms to establish a base back in 2002 was followed by personal care giant VLCC and Emami by 2012.

This recent flurry of movement also comes at a time where India’s fast moving consumer goods market’s growth is seeing a slowdown with personal care brands listed among those which are losing out as a result. 

A depreciating local currency, higher input costs for brands, and rising domestic competition have been pulled up as the key factors behind the reduced consumer demand.

Indian companies looking to other markets because of this..

Although 2013 as a whole saw reduced growth on the preceding year, being that it was measured against the fairly high growth of the year before, industry players had hoped for an upturn in market fortunes for 2014.

The overall FMCG growth has come down to 6% in the quarter ended March from 18% a year earlier, cooling brands’ expectations for a strong 2014 from the off.

Premium segment and discretionary categories were really under pressure. The markets are still growing, but the pace of growth is slow.

Opportunities ahead

It’s certainly not all bad news for the industry though; India’s growth is still ahead of that in more developed markets, with the beauty and cosmetics sector currently estimated at $950 million, and predicted to grow to $2.68 billion by the year 2020 according to 'International Beauty Mart' (IBM).

Although slowing, the FMCG market is set to continue on its upward trend according to a study titled "Prospects in the FMCG sector​," recently made public by the Associated Chambers of Commerce and Industry of India.

The report predicts that the FMCG sector will witness more than 50% growth in rural and semi-urban India by the end of 2014.

Related topics: Business & Financial

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