The retail boom, along with increasing consumer awareness and demand, has resulted in many global high-end beauty brands targeting the Indian market over the last year. French cosmetics brand Guerlain has joined the bandwagon, looking at the Indian market and surveying the possibilities of setting up shop here.
LVMH Group, Guerlain’s parent company, already has a presence in the country through its Christian Dior, Louis Vuitton, Givenchy and Kenzo brands. Since the company is still testing Guerlain’s potential in India, it is yet to decide whether to enter the market directly or through a large distributor—as most luxury brands entering the country have done.
Shampoos Grow; Bath Soaps Slow
As Indian consumers across segments become cognizant of new product categories and product usage, there has been a discernible shake-up in the market, and the $17 billion Indian bath soap category is evidence. In the third quarter of fiscal 2007–08, the bath soap segment has shown a negative growth of 4%, per ACNielsen’s quarterly retail panel, compared to the same period 2006–07. This is, however, in volume terms; value growth remains positive due to the relative increase in pricing of the products. The same report shows the volume growth of shampoo at 10% for the 2007–08 period, with value growth of 14%.
This marks a shift in consumer usage behavior. Until recently, soaps doubled as hair wash for most consumers in smaller cities and towns. With increasing awareness, consumers in these areas have shifted to usage of two separate products for skin and hair. Similarly, increasing sales of facial washes also mark lower usage of soaps, according to some industry watchers.
Bath soap is a highly penetrated category, with levels across India exceeding 90%. On the other hand, the shampoo category is not as penetrated, standing at 38%. This leaves more room for growth for the shampoo category, according to industry analysts.
India a Key Market for L’Oréal
Buoyed by 40% growth in its India operations, L’Oréal has identified the country as one of its top five growing businesses, globally. According to a company spokesperson, India has always offered high growth potential for the company, which made its entry possible 13 years ago.
In fact, the company is leading in the hair color market in the country, both for at-home and professional coloring products.
L’Oréal operates in India through its wholly owned subsidiary, L’Oréal India, and has four divisions—consumer products, professional products, active cosmetics and luxury products. Up to 2007, the company’s portfolio of brands included cosmetic ranges L’Oréal Paris and Maybelline NY; hair color and care products from Garnier, L’Oréal Professionnel, Matrix and Kérastase; and skin care from Garnier, L’Oréal Paris and Vichy. To demonstrate its dedication to the Indian market, the company launched newly purchased Body Shop and its luxury brand Lancôme in India in 2007, and the company recently set up its first Lancôme Boutique in New Delhi.
Although Body Shop launched in India through a distributor partnership, rather than from L’Oréal’s Indian subsidiary, the strategy was employed to maintain Body Shop’s original branding and consumer brand recognition, say some industry watchers.
According to the company, its strong channel network and push strategy has worked in its favor. It has also spent substantially on advertising. Unlike the average spend of 12% of sales on advertising in the fast-moving consumer goods sector in India, L’Oréal spends slightly more than 30% of its sales on global advertising. The company has adopted a six-pronged approach for growth—technological innovation, creation of blockbusters, product value enhancement, brand power, globalization and acquisition.
Although L’Oréal’s share of the Indian market is relatively small, with $15.8 billion in sales, it is growing. And, along with other emerging economies, India’s contribution to the growth of the global cosmetics market amounts to 60%, according to the company.
Expos: The Indian Success
The fact that the Indian beauty market is booming is evident by the number of beauty expos that are being held in the country. Major events such as in-cosmetics India, Professional Beauty India, and Asia Spa and Wellness Expo saw successful participation, both in terms of exhibitors and visitors.
Held in Mumbai, in-cosmetics hosted 1,659 unique visitors, an increase of 6% over 2006. Out of the 91 exhibitors present at the show, 61% were international companies—including Clariant, Cognis, Croda, Dow Corning, Gatefossé, Jos H Lowenstein & Sons and Solabia.
“With its abundance of raw materials and the local industry’s thirst for scientific knowledge and practical know-how, India is the ideal platform for in-cosmetics,” said Elisa Seminari, exhibition manager, in-cosmetics India. “And on the evidence of our research, we are in the driving seat to capitalise on this multifaceted and fast-developing market.”
Points of attraction were the business and technology seminars that discussed topics ranging from personal care trends, chemical formulations for new age products, skin whitening and antiaging products. Isabelle Van Reeth, global technical leader skin/AP Deo Segment Life Science, Dow Corning, added: “There was a very good choice of topics with a good balance between more general topics based on consumers benefits and new raw materials performance. [in-cosmetics India] offered a very good alignment with the current trends such as antiaging and whitening, covering both skin and hair applications.”
Professional Beauty India (PBI), a three-day show held in New Delhi, also registered an increase of visitors (31%). Though smaller than in-cosmetics, PBI nevertheless saw participation from 75 companies, hailing from 12 countries. According to post-show statistics, 3,000 visitors were present at the show. The highlight of the event was the first ever India Cup Open, the Hair and Beauty Competition, organized by the National Hairdressers & Beauticians Association.
Besides beauty brands looking for distributors, many equipment companies were also present. Because Indian consumers are evolving and seeking new beauty products, makeup and hair care brands from Europe were on hand to scout for Indian distributors to gain access to the growing market.
Pevonia, Jaypee Hotels Open Second Pevonia Spa in India
Spa care brand Pevonia Botanica has partnered with the Indian hotel chain Jaypee Vasant Continental to establish the first exclusive Pevonia Spa, under the name Tamaya, in Delhi. The spa—like other Pevonia Spas across the globe, including Spa Bellagio in Las Vegas and Sandals & Beaches Resorts in Jamaica—will use Pevonia products only.
According to Pevonia Spa Care India’s Jasmin Arethna, specialized treatments that answer specific Indian skin problems and issues will be offered. Unique among these offerings are the Caviar Treatments, Moroccan Rassoul Body Wrap, Aromatic Anti-Fatigue Moor Mud and Sabai Stone Therapy.
“It is the first time that we have created a special caviar facial just for men,” said Arethna. “Also, our Sabai Stone Therapy is a hot stone therapy, but the stone used in this therapy is different. We have designed special stones from granite and use a special micro-emulsified mineral oil with malachite and zincite to nourish and rejuvenate the skin.”
“We have created the space, but all our manpower is being trained and selected by Pevonia trainers here,” added Mukesh Singhal, senior vice president, Jaypee Vasant Continental.
To retain the exclusivity of Tamaya Spa, entry is being offered through invitation-only special memberships.
Alcome Opens Third Indian Plant
With an investment of approximately $25 million, Alcome Perfumes & Cosmetics, a U.S.-based fragrance company, will establish a manufacturing plant in New Delhi, expected to be operational by July 2008.
The plant, the company’s third in India, is expected to help boost the total production capacity to 400,000 bottles per day, according to Hansraj Manghani, managing director of Alcome Overseas, who also stated that 33% of the plant’s production capacity is to be reserved for domestic consumption. “Looking at India’s growth story, we will soon start selling in the Indian market as well,” said Manghani. “There are a number of retail players in the mass-market segment here with whom we will partner, along with wholesale distributors.” With plans to target European and Middle East retail markets, the company expects the Indian facility to address the demands from these markets.
Alcome’s global bottling operations, based in India, have a capacity of 1.1 million bottles per day, and the company manufactures fragrances for export to 68 countries.