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Indian Consumers Go Premium

Posted: August 18, 2011

A recent report from research firm RNCOS shows that the Indian cosmetic sector is expected to post a compound annual growth rate of 18% 2011–2014. Cost-conscious consumers in India are changing their mindset about cost versus quality of products. More and more consumers do not mind spending extra on beauty care and health care products, due, largely, to an increase in income at every level of society leading to more disposable income. Indian consumers are willing to buy more expensive products if they offer greater results.

Additionally, due to media exposure and the growing number of online retailers, the gap between urban buyer’s aspirations and those in the rural areas and smaller towns is closing. This has led to an increased demand for brands such as Dove and Pond’s in smaller towns and some developed rural areas, according to to a market research undertaken by Hindustan Unilever (HUL). Previously, the reach of these brands were primarily confined to tier I and tier II cities.

Additionally, HUL's research showed that the deodorant category in the rural and small town areas posted growth rate of 40% (for comparison, the skin care category growth rate is 20%), which is greater than the overall growth rate of the Indian deodorant market. HUL and other consumer product goods companies operating in India—including ITC, Godrel Consumer Products and Marico—have noted in various reports and news releases that Indian consumers are looking for value and considering cost second. If their chosen products deliver the value they are seeking, then today's Indian consumers do not mind spending extra.