Analysis from Frost & Sullivan showed that India's beauty market is a "fertile breeding ground" for active ingredients companies that can offer novel products and easier formulations. Ingredients with increased functional benefits and multi-application profiles are the order of the day, the firm wrote in its "Strategic Analysis of the Indian Personal Care Active Ingredients Market," as brand owners look to make a splash in several segments through better formulations that provide multiple benefits from the same products.
As active ingredients are the backbone of a product's appeal, states the firm, brand owners must take efforts to market their benefits to consumers. The rising consumer awareness and increasing ease of application have spurred the growth of this fledgling market in a number of segments and end-user markets.
"UV ingredients, in particular, are fueling the demand for end-product skin creams and skin lightening lotions," says Frost & Sullivan research analyst Natasha Telles. "This trend is expected to continue as customers become more aware and manufacturers are compelled to use targeted ingredients for specific formulations."
The future success of market participants rests on their power to differentiate their ingredients and functionalities. This has resulted in a slew of innovations, ranging from the delivery of antiaging actives through silicon elastomers to nutritional products that claim to posses anti-wrinkling and skin-smoothing properties.
Product development and market penetration are vital strategies for companies to enhance the growth of conditioning agents. However, in younger markets such as UV and exfoliating ingredients, market expansion and diversification are expected to aid in revenue generation.
"Personal care active ingredient manufacturers need to focus on the scientific efficacy and brand awareness of their products by constantly remaining a step ahead of market trends," notes Telles. "They need to aggressively maintain their first-mover advantage, given the large potential in terms of the raw materials provided by the Indian topography."
Manufacturers can greatly expand their customer base and market share once they realize that consumers are likely to prefer recognized Indian actives such as turmeric to exotic actives. Once participants establish a toehold in the market, they will have to work hard to retain their market and revenue shares as the competition is price-based, states the analysis. Apart from inadequate product differentiation, it is the lack of intellectual property or trademarks for ingredients that has caused this situation.
This deficiency of proper legislation has hindered the growth of this sector, both internally and externally, as Indian exporters find it difficult to export ingredients to Western markets because they are unable to claim ownership of their products. While India is a major source of raw materials, it does not claim any royalties or copyrights on any of its locally sourced actives, making it harder for domestic manufacturers to compete effectively.
"With increasing commercial and consumer interest in this market, it is important to strategically position products to create brand loyalty and thereby retain customers, creating product niches that will reduce the intensity of competition," says Telles. "Showing superior ingredient backing through academic research and clinical trials would result in customers developing ingredient as well as supplier loyalty, enabling participants to distinguish their products."