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India Quarterly: Mary Kay to Invest $20 Million in India

Priyanka Bhattacharya

International direct seller Mary Kay Inc. has set up its Indian subsidiary, Mary Kay Cosmetics Pvt. Ltd., in Gurgaon, New Delhi. The company plans to invest approximately $20 million in the country over five years.

Targeting the high growth Indian beauty market, Mary Kay expects 50% of its business to be generated by its skin care range and the rest by its color cosmetics and body care offerings. “We anticipate generating the same success in India that we have seen in other Asia-Pacific markets,” said K.K. Chua, president, Mary Kay Asia-Pacific.

Products have been priced to attract both mass to mid-range consumers. “We want to make this brand available to all working women looking for good skin and makeup. We have kept the pricing affordable so that the maximum number of women can buy them,” said Hina Nagarajan, country manager, Mary Kay India.

While the market for direct selling beauty companies hasn’t been very strong in the country, despite Oriflame’s and Avon’s steady business, Mary Kay is confident to bring a paradigm shift with its new selling strategy and approach. The company plans to create a pull in the market rather than push, and its consultants are being trained to act as beauty advisors rather than just salespersons. In fact, the company created a very focused product portfolio that answered beauty needs specific to Indian women, launching its Botanical Customised Skin Care Collection in India.

Clinique Finds a Ready Market in India

Indian consumers have been a tempting target market for The Estée Lauder Companies-owned Clinique Laboratories for the last seven years, and the brand now has dollars earmarked for riding the wave of beauty awareness among Indian women and 400 products specially chosen for the market.

“We did a market study seven years ago in Delhi, Mumbai and Bangalore, but realized then that the market was not ripe,” said Paul Slavin, brand manager, Clinique India & Middle East. “Then we came in again last year to take a fresh look at the market, and found a match between our aspirations and consumer brand recognition and expectations. The market has matured, and Indian women are ready to spend on looking good and feeling good. So we decided to enter India. And here we are with the products and services to meet the growing beauty demands of Indian women.”

A survey at the Dubai and Heathrow airport retail outlets showed that Clinique was the most purchased skin care product among returning Indians. Speaking on the brand’s entry into the Indian market, Slavin commented, “This is the perfect time for us to enter the Indian market since, as a brand, we are celebrating 40 years of helping women of all different skin types, ethnicities and ages to achieve beautiful skin. With our dermatological heritage and unique approach to skin care consultant education, we feel that we can offer exactly the kind of service the skin-savvy Indian woman of today is looking for.” He expects India to become a key market after China, which the brand penetrated approximately eight years ago.

Clinique is targeting consumers age 25–50, and during its interactive event with the potential customers in Delhi, Slavin was pleasantly surprised to find more than 80% of women were aware of the brand and its various other products. “We met over 2,300 potential customers during the event. Some of them have already been using our products, which they bought outside India. This makes us confident that by opening up stores in India, we will be giving Indian consumers what they have been seeking for some time now.”

The company has introduced a 400-product portfolio, and has over 200 treatment products and 77 shades of foundation to match the various skin tones of Indian women.

M-A-C Expands Outlets

After testing waters in the Mumbai market over the last year, The Estée Lauder Companies-owned M-A-C Cosmetics is now available in Bangalore and Delhi. According to Rana Danesh, brand communication manager, M-A-C Cosmetics Middle East and India, the company spent the year assessing the response from the market, and the expansion coincides with the brand’s growing popularity and increased market opportunities in urban areas and upscale malls. The brand store is expected to curb diversion and unauthorized distribution of the products. M-A-C is also working with popular stand-alone beauty stores in Delhi and Bangalore to make sure that they do not sell M-A-C products imported from other countries.

Olay Enters Market With Antiaging Creams

With the skin care market showing double-digit annual growth, P&G-owned Olay marked its entry into the $5.3 billion Indian skin care market with Olay Total Effects Anti-Aging cream.

“Today, antiaging is only 3% of the total skin care market at [$15 million], which means there is huge potential. It has been doubling every year for the last three years,” said Sumeet Vohra, head of marketing, P&G India. “With our latest Olay antiaging product, we feel we can make a difference to Indian women with specific skin care needs. With the launch of four new Olay brand skin care products, we want to establish a strong presence in the country.”

P&G rival HUL launched its Pond’s International range of skin care with targeted approach for every age group and skin type, and Olay’s delayed entry might cost the company some market share. Justifying the move, Vohra added, “There are other players already present in the market, but we delayed our entry because we wanted to be absolutely sure that the product is right for Indian skin. We also tweaked the product a bit to suit Indian skin types. Secondly, we wanted to make sure that it is right from an economic standpoint, and we believe the time is right now. Today, women are more willing to embrace antiaging products, since looking youthful is a key beauty trend. Finally, this move fit in our sequence of priorities, because whenever we launch something new, we want to focus on it and put in the right amount of resources and energy behind each one of them.”

Olay Total Effects has been launched in six metros for the first phase of the launch, and the company plans to extend its presence to 25 cities and then add another 44. In speaking about the market share the company looks to gain with the Indian launch of the new product, Vohra said that the antiaging products market is still nascent in the country, so there is ample room for the company to grow.

“There is a great need to increase awareness about this product. Initially Olay Total Effects will be available in around 2,000 outlets—including hyper retail stores, chemists, beauty advisors and through existing distributors in Delhi, Mumbai, Kolkata, Chennai, Hyderabad and Bangalore,” Vohra added.

The company has previously introduced three other skin care ranges—White Radiance, Beauty Fluid and Olay Cleansers—to the Indian market.

Indian Companies Buying International Brands

There is a new trend in the Indian beauty market as large Indian personal care brands go shopping for international beauty and personal care brands to bolster their regional offerings, sparking renewed confidence in the market. Leading personal care brand Marico Industries and Wipro Consumer Care have both acquired foreign companies.

Marico bought the consumer division of South Africa’s Enaleni Pharmaceuticals Ltd., marking its entry into the South African hair care market. The deal, valued at approximately Rs520 million, was clinched through a bidding process, the company said in a statement. The acquisition included manufacturing facilities in Mobeni and Durban, as well as a 100-member team. “This acquisition helps us to consolidate our position in Africa, as it complements our entry into Egypt last year,” said Vijay Subramaniam, CEO, international business, Marico.

In another buyout, Wipro Consumer Care purchased the Southeast Asian beauty and personal care manufacturer Unza. With the acquisition, the company controls prominent male grooming brands in Southeast Asia. Currently, the company is studying the brand names, product features and brand potential for introduction to the Indian market. “There are various factors that differentiate other markets from India,” said Vineet Agrawal, president, Wipro Consumer Care & Lightning. “For instance, Vietnam is a market that is inclined towards perfumed products. However, similar products may not work in India. But, we are studying the Indian market to understand how we can launch [these] brands [in India].”

Rural Markets Spell Opportunity for Personal Care

According to a recent report by Indian industry association Assocham, the personal care market is expected to see 10% growth by 2010; the market will increase by 6% in semi-urban areas. This is a direct result of changing consumer behavior by which younger consumers are adopting western personal care habits. These consumers are also, statistically speaking, more likely to spend greater amounts on personal care products.

The total fast moving consumer goods (FMCG) category in India is currently valued at $15 billion, of which $2.85 billion is attributed to rural areas and $4.2 billion to semi-urban areas. Furthermore, the report stated that personal care product spending accounts for 8%, a figure expected to go up in the near future. And as spending patterns and demographics shift, consumer patterns in rural areas are expected to be the most affected. Venugopal Dhoot, president, Assocham, explained that the 20% increase in profitability of FMCG companies operating in India 2006–2007 is attributable to market growth within semi-rural and rural areas—a significant realignment.

The growth in market share in these areas is also expected to impact the urban Indian market, where the market share is expected to fall 25% by 2010. Assocham’s report stated that the loss will also be attributable to urban consumers’ rejection of excessive FMCG consumption and move toward the use of more sophisticated, natural and organic products.

Godrej Taps Into Growing Hair Color Market

With a goal to strengthen its hair color business in the Indian market, Godrej Hair Care Institute (GHCI), a center dedicated to the art and science of hair care in India, has introduced a Natural Brown shade of Renew Hair Colour Cream in a smaller pack.

“Renew has been [much] appreciated by consumers,” said R K. Sinha, executive vice president operations and marketing, Godrej. “Its unique formula offers a great coloring experience, which the consumers will enjoy. Buoyed by the success of the 50 mL pack, we are now introducing a smaller 20 mL pack. With the launch of Natural Brown in a small pack, Renew provides its consumers an opportunity to use fashionable colors at an affordable price.”

GHCI expects the pricing of Rs40 for the 20 mL pack to be the key pull for Godrej Renew Natural Brown. This shade has been specially formulated to complement Indian skin tones. The new product has a cream formula that is easy to apply and does not drip, and is enriched with aloe vera extracts and protein conditioners.

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