Demographic growth, ever-improving economic and social conditions, and the development of the manufacturing and digital sectors in India have made the country an international superpower. The improved quality of life in India instantly boosted personal care, to the point that estimated growth for the 2018-2023 period before the pandemic was 9.7%.
The outbreak of COVID-19 and the resulting global health emergency have certainly slowed the evolution of the cosmetics industry in the nation. As noted by Euromonitor International, an international market research agency, the country’s prospects for growth shrunk significantly from the rosy CAGR of +8.5% achieved between 2016 to 2019. Over the 2019-2020 period the growth rate was 2.3%, achieving a market value of a little over $15 billion in December 2020, while the growth forecast for 2020-2021 is 1.7%. Starting in 2022 revenue in the beauty sector is expected to increase by +2.8%.
THE KEY SECTOR
Mass beauty is a strategic sector for the industry in India, with a market value of more than $11 billion, followed by hair care and personal hygiene products, with a stable market value of over $3 billion. These products also showed the greatest resilience to the outbreak of the pandemic and the financial hardship caused by the restrictions and months of lockdown in the country. Meanwhile, the hardest hit categories were those most related to socializing and life outside the home: makeup, fragrances and products that protect against exposure to sunlight. Pradeep Srinivasan, a consultant for Euromonitor International, noted in an exclusive publication dedicated to Cosmoprof India – the event by the international Cosmoprof network dedicated to the cosmetics industry in India (Read the article HERE) – that some relief was provided as the country reopened last summer, but the lockdown during the first part of 2021 is impeding growth.
NEW TRENDS AND OPPORTUNITIES
Emphasis on well-being, digital acceleration and health and safety rose to prominence in India over the course of 2020 and are expected to have an effect in 2021 as well. Demand continues to grow for products specifically designed around skin health, physical and psychological well-being, hygiene, and sustainability. According to Srinivasan, companies in the sector will need to rethink their products following a more holistic approach. This is a key topic for the skincare sector: not only are traditional treatments and Ayurvedic culture increasingly prevalent, products that advertise the positive effects of vitamins and dietary supplements are also seeing increased sales. “There is a lot of room to explore the positive effects that active ingredients in cosmetic products offer for physical and psychological well-being,” Srinivasan notes.
Makeup is the sector that has had to adapt most to current social conditions in the country. After sales dipped over the first months of 2020, manufacturers focused on two traits that are particularly important for new consumer habits: ease of absorption and durability. According to a Beauty Survey by Euromonitor International, offering durable, no transfer products that dry rapidly can provide an opportunity for companies selling color makeup, especially for brands that provide lip and facial makeup. These categories also benefited greatly over the course of the year as transparent masks became increasingly available.
With social distancing set to become a lifestyle, at least until the number of active cases drops and most of the population is vaccinated, digitalization will have long term effects on distribution channels in the beauty sector, even older consumers are increasingly accustomed to online shopping. According to Srinivasan, companies will need to concentrate their efforts on new platforms as well as on immersive technology like AR and VR to win consumer loyalty. “The second wave may confine some groups of consumers to their houses in 2021 as well, which creates an opportunity for brands to explore options that mirror the in-person sales experience, using augmented reality for virtual tutorials or to try on makeup, for example. The main challenge will be overcoming wariness due to consumer concerns about privacy and safety risks. Building consumer trust will be fundamental.”
All data and insights are proprietary information from Euromonitor International.
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