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India’s Cosmetic Market Ready for Big Leap

By: Priyanka Bhattacharya
Posted: October 10, 2008, from the January 2006 issue of GCI Magazine.

page 4 of 4

Renuka Choudhury, Union Minister of State for Tourism, states that though the beauty industry has grown, there are neither benchmarks nor norms for it to follow. She called on the CII to establish an institute for the beauty and wellness industry.

Growth Opportunity

According to industry watchers, the Indian market is ready and is just waiting for the right spur. In fact some even expect the market to show 25% growth as they anticipate a boost in the retail segment.

A shift from generic retail outlets to specialty shops and floor spaces in malls and big department stores will help the cosmetic and skin care brands showcase their products and increase customer education and awareness. Features such as makeovers and free beauty consultations will attract more customers. The trend is visible in certain malls in the major cities across the country already. Dharmendra Khanna, business manager at Kunchals, a Delhi-based cosmetic specialty shop, said, “As cosmetic buying is impulse buying, so we need to create the right ambience.” The consumers today need the right setting to buy their products. Trained staff to create the right look for the customer to sway their buying is a must.” In fact, the company is expanding its presence in anticipation of entry of more brands in the country. Similarly, Baccarose is expanding its Parcos branded cosmetics stores in a big way as are the MKP and Cosmos brands. However the B and C class towns are yet to see such focused approach from the vendors. In fact these are markets where more awareness is necessary as they still remain mass-market product users and have lower spending power. This is a segment that presents a big opportunity to brands both national and international.

The second big opportunity where India is being perceived to have a good scope is manufacturing. In fact during the Beauwell event, it came to light that some major European cosmetic vendors were looking for distributors and third-party manufacturers to set up joint ventures in the country. In fact after China, India is being seen as a strong manufacturing hub and a good source for natural ingredients. Shyam Arya, director of Indus Cosmeceuticals, a cosmetic contract manufacturer, said “In terms of manufacturing, we have a good bio resource as well as trained professionals that makes it right for multinational vendors to look at India as a manufacturing hub, especially for natural or herbal-based products.”

Many Indian companies such as Lotus Herbals, Forest Essentials and Shahnaz Husain are looking to increase their brand presence in the international markets and are scouting for international partners to sell their products.