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Tier II Cities—Emerging Opportunities for Luxury Beauty Brands in India

By: Priyanka Bhattacharya
Posted: November 19, 2010, from the December 2010 issue of GCI Magazine.

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Direct response marketing company Guthy-Renker, with distribution in 61 countries, has generated quite a buzz in India with its Proactiv skin care range to treat acne. The company set up shop here in 2009, and has since won more than 50,000 repeat users for the skin care system. Today, it sells three skin care products in India in addition to Proactiv—Sheer Cover, a mineral makeup system; Meaningful Beauty, an antiaging skin care system; and Youthful Essence, a home microdermabrasion and skin brightening system.

In India, too, Guthy-Renker is using the not so evolved (for this market) teleshopping channel to sell its products. However, a company spokesperson claimed that, through the sophisticated level of content, the company looks to drive up the quality of teleshopping in India. The five products available from the company through this channel (the four skin care lines plus an exercise DVD) generate more than 100,000 calls a month. Guthy-Renker has also outsourced its call center and customer service to meet the volume of calls being handled every day.

Indian Beauty Brands Expand Global Reach Through Buyouts; Retail Expansion

Even as the big Indian brands worry about competition at home from major international brands, they are executing their own strategies to sell in the global market and make their presence felt. Beauty brands such as Kaya Skin Clinic, VLCC, Dabur, Wipro Consumer products and Godrej Consumer Products are setting up shops or acquiring brands in Europe, the Middle East, South America and Southeast Asia to grow their businesses. The increasing number of non-resident Indians in these markets looking for Indian products to buy is one of the key reasons for this expansion.

While brands such as Kaya, VLCC and Lotus Herbals are looking at growing by setting up beauty shops, others like Dabur, Wipro Consumer Products and Godrej Consumer products are looking to grow through acquisitions. Wipro, for instance, has acquired the soap and fragrance of Yardley to push the brand, which is losing market share, in India and South East Asia, while Dabur recently bought Turkey’s leading personal care products maker, Hobi Kozmetik Group. The company has acquired 100% stake in three Hobi Group firms—Hobi Kozmetik, Zeki Plastik and Ra Pazarlama. This is an important step towards further consolidating and expanding Dabur's already substantial presence in the Middle East and North Africa region. Hobi manufactures and markets hair gel and hair care and skin care products under the Hobby and New Era brands.

Marico, which also owns Kaya Skin Clinic, has acquired the skin care business of Derma Rx Asia Pacific, an $11 million aesthetics business in Singapore. This gives Kaya ready access to markets such as Singapore and Malaysia. At present, Kaya has 19 outlets across the Middle East and Bangladesh.

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