The Indian beauty and personal care’s appetite for natural and premium products is creating new opportunities for luxury ayurvedic brands.
India’s Growing Market
The beauty and personal care market in India grew by 9.2% in 2016, and is expected to achieve growth between 5% and 6% annually over the next four years, despite demonetization. According to Indian Beauty & Hygiene Association’s report, the Indian beauty and personal care market is worth about $8 billion and is expected to grow to $10 billion by 2021.
The report also noted that the market for premium beauty products has grown 6.3%, despite the per capita beauty and personal care spend being just $7 per month. In addition, the all-natural beauty product market, which comprises one third of the personal care market, is growing 2.5 times faster than the market for non-natural beauty products.
The Roots of Ayurveda
The “go green” trend has caught on in India in a big way, especially in beauty and personal care, and it has been very easy for the consumer to adopt this change in their daily skin and hair care ritual. Indian beauty care has always depended heavily on natural concoctions made from herbs, fruit and vegetable extracts.
Ayurvedic therapies have long been used to treat skin and hair issues in India. Even today, you will find many people whipping up their own hair conditioners and skin masks at home using age-old beauty formulas that have their origin in nature-care and Ayurveda. These formulations have been ingrained into consumers’ lifestyles, transferring from one generation to another.
Indian consumers are willing to pay more if the product is labelled natural and is based on ayurvedic formulations.
Since the usage of herbal and ayurvedic beauty products are closely linked with traditional Indian lifestyles, consumers today prefer to use indigenous products made with natural ingredients over well-known globally branded products. In fact, they are willing to pay more if the product is labelled natural and is based on ayurvedic formulations.
This is supported by the recent findings by research agency Euromonitor’s report Spotlight on India: Consumers, which is part of the Euromonitor 2016 Global Consumer Trends Survey. The report shows that 60% of the people interviewed agreed that they prefer to pick products termed “natural.” For 71% of the respondents ‘Natural” also meant ‘Chemical Free”. The report states that many Indian beauty and personal care companies are making most of this trend by developing brands that boast of herbal and ayurvedic ingredients.
Ayurveda, the ancient Indian medicine system, originally offering a cure for ailments and promoted general health. Today ayurvedic formulations are being used to create skin and hair products.
According to a recent market report by Tech Sci Research, the ayurvedic market is forecast to grow at a CAGR of 16% through 2021. The report shows that, along with traditional medicine, nutraceuticals and dietary supplements, skin and hair care products form a major chunk of this market. In fact, this segment is expected to boost the growth of the beauty and personal care market in India for the next five years. The report further states that, due to increasing urbanization, improving consumer lifestyles and rising awareness about potential harmful effects of conventional cosmetic products, ayurvedic beauty is finding a large number of takers.
Due to increasing urbanization, improving consumer lifestyles and rising awareness about potential harmful effects of conventional cosmetic products, ayurvedic beauty is finding a large number of takers.
Karan Chechi, research director at Tech Sci Research, stated that the increased importance of ayurveda in the Indian skin, hair and wellness market is evident from the fact that the Indian Government has set up a separate organization—the Ministry of AYUSH (The Department of Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy)—to develop alternative medicine and healthcare practices that have been indigenous to India. Ayurveda and yoga are two focus areas for this newly formed group.
This government body is now setting up policies and systems to ensure better awareness and educational programs. The Ministry of AYUSH is also developing systems to ensure homogeneity in product development, ingredient, and raw material procurement and manufacturing.
The Emergence of Ayurvedic Beauty Brands
Even though the government of India is putting a special focus on ayurveda now, the beauty brands using natural ayurvedic formulations have been present in the market for some time. Traditionally, ayurveda-based formulations, especially when it came to beauty treatments, were restricted to kitchen ingredients and small-scale usage. Over the last 10 years, however, the market scenario has changed drastically.
Today, there is an increased awareness about the beauty benefits of ayurvedic products. There has been an emergence of the newer brands, with products moving from the kitchen to industrial large-scale production.
Herbal beauty icon Shahnaz Husain first brought ayurvedic formulations for skin and hair care, and basic makeup such as kohl and lipsticks, into the limelight. She ruled the Indian market as the leader in ayurvedic beauty care, until her brand got competition from another indigenous brand, Biotique, founded by Vinita Jain, who used her training in herbal and ayurvedic products to develop the product range. Biotique claims to be more than just a natural beauty brand—it posits that ayurvedic products have therapeutic results on skin and hair.
Unilever acquired ayurveda-centered brand Indulekha to better align with consumer buying behavior.
Herbal beauty product manufacturers, mostly involved in contract manufacturing, have started their own brands of ayurveda-based beauty products, and have invested in marketing and branding activities. Even large FMCG players have started developing their own ayurveda-based products or bought small-time natural beauty brands to enter into ayurvedic ecosystem. For example, in late 2015, Unilever acquired ayurveda-centered brand Indulekha to better align with consumer buying behavior.
Ayurvedic Beauty Goes Luxe
The steady growth of indigenous ayurveda-based brands spans the mass, masstige and luxury categories because the new generation of consumers is more aware of ingredients and looks for products that offer real benefits and which have more aspirational value. In addition, with increased urbanization and consumers leaning towards everything green and natural, suddenly there is an increase in demand for nature-based beauty products.
This has led to the emergence of newer brands and manufacturers in the market that are competing with the established beauty and cosmetic brands. The USP of these brands is that they are using formulations from ayurveda texts to develop their products. There are also innovations taking place in terms of raw materials being used from sustainable and organic sources. Their marketing pitch has ensured that these products are being seen as something to aspire to and indulge in. These brands are now being adopted in destination spas and upscale hotels across the country.
In India, the first luxury ayurveda-based beauty brand that comes to mind is Forest Essentials. It was started in 2000 as a home-grown beauty business that focused on handmade scrubs, soaps, body washes, oils and milks. Founder Mira Kulkarni claims that the brand broke even in six months, and within two years the brand had moved into the mainstream beauty market. Today, Forest Essentials has more than 15 standalone stores in the country. Today Estée Lauder owns more than a 20% stake in the brand.
This has led to the emergence of newer brands and manufacturers in the market that are competing with the established beauty and cosmetic brands.
Another luxury ayurveda-based beauty brand, Kama Ayurveda, was founded by architect and designer Vivek Sahni to bring style, health benefits and traditional Indian formulations to the market. Sahni’s aim was to use ayurvedic formulations and promote the science not just in India, but across the globe. Both Forest Essentials and Kama have set up stores that have a very luxurious feel and a highly trained staff that educates customers on the products and the ingredients.
While Kama and Forest Essentials have used ayurveda as the selling point, other luxury natural brands like SoulTree and Nature’s Co have highlighted their ingredients to sell their products. Both companies showcase the fact that their raw materials are organic and responsibly sourced. Vishal Bhandari, founder of SoulTree, claims the company is a truly organic ayurveda-based beauty brand in the country, with certifications from relevant bodies.
Ayurveda Goes Global
The market is currently evolving at a fast pace with newer, niche brands with a luxe feel being launched every other day. According to a statement from the Ministry of AYUSH, India is gaining prominence in the world market because of its ayurvedic skin and hair care products are gaining acceptance.
For many international beauty companies focusing on developing herbal and ayurveda-based brands in their home markets, India is being seen as a key manufacturing hub. A case in point is Estée Lauder. Market sources claim that the company has contracted Forest Essentials to manufacture natural beauty products in India.
Besides manufacturing for international companies, Indian beauty brands are now ready to travel to international markets, especially the United States, United Kingdom and Europe. SoulTree’s Bhandari, who is eyeing a big chunk of business from the U.S. market, says that the Indian ayurveda-based brands can really make a mark if they focus not just on the efficacy of their raw materials, but also on innovative packaging of the product to be noticeable in mature beauty markets.