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Paradigm Shift for India’s Hair Care

By: Priyanka Bhattacharya
Posted: September 2, 2008, from the September 2006 issue of GCI Magazine.

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Throughout the past year, there is an increased demand for aspirational products. Women are willing to pay a higher price—particularly urban customers in tier one markets across India’s five major metropolitan areas. “Our clientele prefers to spend some extra money to buy international brands,” said Dharmendra Khanna, business manager, Kunchals—a leading beauty retail outlet in Delhi. “And there is strong demand for high-end hairstyling products like Tigi. They even demand brands like Paul Mitchell and Vidal Sassoon. They can shell out as much as 1,200 rupees for a shampoo.”

Men are fast emerging as a separate consumer category in a market traditionally dominated by women. The change in the buying pattern includes men looking for care and styling products that cater to their specific needs. This has led to marketers launching SKUs specific to male buyers’ needs—Shwarzkopf’s BC men hair therapy range of products, for example, has been designed for men. Similarly, styling gel brands such as Brylcreem, Marico Industries’ Parachute After Shower Hair Cream and Set Wet Hair Gel by Paras Industries all target men with male-specific advertisements.

In addition, consumers in rural areas are buying products further up the value chain. Market research done to gauge the consumer buying pattern in rural areas showed that only one Indian state had 25% penetration in 2000.

Hair Cosmetics Market

The Indian hair cosmetics market, which includes both hair care and hairstyling products, has a unique characteristic. This is one segment where the traditional hair treatments sell as much as newer category hairstyling and hair care products. Traditional herbal powders and hair oils for hair conditioning share the same shelf space with high-end conditioners and hair care products. Providing a feel of the market, Anmol Sherpa, coordinator of AC Nielsen Global Services, said that, unlike any international markets, India has a large proportion of consumers whose hair care expenditure also includes hair oils. In fact, hair oils showed a growth of 6% in 2005 over the previous year. Rural India saw a faster growth rate of about 11%, while urban India grew by 4%. The AC Nielsen study on the Indian hair care market identified shampoo as the fastest-growing hair care product category, while conditioners have the maximum growth potential. The shampoo usage has increased across the board in both urban and rural markets. According to AC Nielsen, shampoo is one of the fastest-growing categories within the Fast Moving Consumer Goods sector, registering a value growth of 10.9% between April 2004 and March 2005.

Marketers have responded by launching newer variants of their shampoos—or by bringing in a whole new range of products. Some established brands also have entered the shampoo and hair care segment to ride this growth wave—Hindustan Lever’s leading cosmetic and skin care brand, Lakm, is one such example. The company has ventured into the shampoo and hair conditioner market with a new subbrand—Lakm HairNext. “We are extremely pleased to bring to the Indian woman a wide range of hairstyling products that will transform her hair into gorgeous tresses within minutes,” said Anil Chopra, vice president, Lakm Lever, when the product launched. The aim was to get a complete hair solution on the market.