The Lure Of Browns
High-end foreign skincare and beauty brands have their eyes set on the one-billion-strong Indian market
Photo Credit : Ritesh Sharma
Elisha Gupta’s dressing table is loaded with beauty products from all over the world. She has more in a suitcase — numerous bottles of lotions, serums, lipsticks, body butter creams, makeup brushes. “I have to invest in makeup,” she says. On a recent trip to London, she spent over Rs 1 lakh on cosmetics alone. Passionate about skincare, Gupta applies anywhere between 12-14 products on her face including facial oils, cleansers, moisturisers and makeup products such as anti-ageing primer, colour corrector, photo-finish foundation, mineral contour loose powder, oil-free sculpting blush, face radiating highlighter, ultra-fine pigment eye shadows, kohl, volumising mascara, eyeliner and creamy lipstick among other products for a perfectly sculpted, squeaky clean face. “It’s an addiction; you always want more,” says Gupta.
Consumers like Gupta have caught the fancy of global skincare companies that see tremendous potential in India. Those in the business say the skincare market in India — particularly the premium and luxury segment — looks radiant. The beauty market in India is at around $8.1 billion, which includes skincare, hair care, fragrances and makeup. Though it is tough to segregate the pure luxury segment from the overall beauty business, the annual growth in premium makeup and fragrance is roughly 32 per cent each while skincare and hair care is growing at 21 per cent and 13 per cent, respectively. According to Assocham, India’s beauty market will touch $20 billion by 2025.
Men’s grooming emerging as a separate category is also impacting the skincare luxury market positively. As per market research firm Euromonitor’s recent report, fashion brands are increasingly looking at “colour cosmetics” as a potential expansion driver for their businesses — think Christian Dior, Armani, Marc Jacobs, Tom Ford, among others. Globally, the category has seen a 6.5 per cent value growth and total sales of $56.59 million.
Sephora, the one-stop shop for premium and luxury range of beauty care products, is going strong in India with footfalls having more than doubled in the last one year. With over 65 global brands, the French multi-retail store owned by French luxury conglomerate Moet Hennessy Louis Vuitton had a slow start when it entered India four years ago. Back then it had partnered with Genesis Luxury and DLF Brands. Now in partnership with Arvind since a year ago, the number of Sephora stores has dramatically increased — from four to 14. “We want to keep the number steady at 8-10 stores a year,” says Vivek Bali, business director, Sephora India. “The GDP growth (from 6.9 per cent in 2013 to a steady 7.7 per cent) has allowed the beauty industry to be the biggest beneficiary,” adds Bali. The cosmetics market in India is growing twice as fast as the US and the European markets, and by 2025, it will acquire the sixth spot in the global market, up from the current 25th position.
Top-end cosmetics companies such as Shiseido, La Prairie, L’Occitane, Kiehl’s and Lancome are developing newer products for the Indian market, launching three-five products every quarter, compared to just one or two products twice or thrice a year earlier. “Products within categories are growing. At Sephora, 25-30 per cent of our sales comes from new products,” confirms Bali. Sephora has been growing at 60 per cent annually.
Making Big Investments
The business of beauty is getting more competitive, challenging and exciting. It’s little wonder that investments in research and development are overtaking even marketing budgets in majority of luxury cosmetics companies. La Prairie, which is fast becoming the numero uno luxury retail skincare brand, is a case in point. The iconic brand from Switzerland has seen a double digit growth in India in the past two years. The brand is addressing skincare issues specific to Indian women — skin lightening and whitening, fine lines, wrinkles and pigmentation — through its exquisite cellular creams, serums and lotions. Its signature ‘skin caviar’ collection has been received well by the Indian client base, reckons Sonali Chaudhary, business head (Luxury), IDFS Group, which brought La Prairie to India. The collection, as the name suggests, uses caviar extract and is priced between Rs 16,700 and Rs 69,000. La Prairie’s latest limited Baccarat Collection, a 75 ml jar of exquisite Baccarat crystal caviar bowl immersed in which is a ‘skin caviar luxe cream’, is priced a little over $2,200.
Then there’s French major L’Oréal, which started its R&D facilities in Mumbai and Bangalore three years ago with an investment of Rs 970 crore to understand the haircare and skincare regime of Indian consumers. It expects a lion’s share of Rs 7,000 crore by 2020 from Indian market alone. The brand’s business divisions include professional, consumer, luxe and active cosmetics; the last category, as per analysts, is growing at 10-15 per cent annually. L’Oréal’s research facilities have revealed interesting insights into the Indian luxe consumer — increased frequency of purchase of anti-ageing and skin pigmentation products in the age bracket of 35-40 years. “As a luxury brand, our goal is to create new innovative categories and set trends in the luxury beauty segment,” says Sandeep Kirplani, director, Luxe and Active Cosmetics Division, L’Oréal India.
Companies are indeed developing luxe products based on specific market needs. Shiseido, for instance, is engaging with over 1,000 researchers to focus on markets like India, China, Japan, US, Europe and the rest of Southeast Asia. “We develop products with a local focus but gather information from a global standpoint on vital aspects of our business,” explains Tashnu Khariwala, brand manager, Shiseido India. “The Indian consumer requires a deep emotional connect and experience through skincare products. This is vital in creating a seamless journey with the brand and brand loyalty.”
Clearly, the ecosystem in top-end skincare is changing. “The consumer wants to purchase an experience,” says Darpan Sanghvi, managing director, Sanghvi Brands. Six years ago, Sanghvi brought brand L’Occitane to the Indian market; the brand tied up with select five-star spa resorts and hotels to allow patrons to experience its skincare products. It was only later that select retail stores of the brand opened up. Next month, Sanghvi’s company will launch Britain’s bestselling anti-ageing luxury skincare brand Elemis in India.
Challenges And Opportunities
The rise of the Indian economy, fuelled by increased access to high-end goods by burgeoning middle classes and, arguably, a more materialistic mindset, is allowing the luxury sector to grow. While high import duties and spiraling rental costs, among other issues, are sore points for several of these luxury brands, no company is ready to ignore the market. As Andre Hoffmann, L’Occitane’s vice chairman and managing director for Asia-Pacific, mentioned in a recent interview: “Any country with more than a billion people has to be a market where you would want to be present.”
There’s another interesting trend in the Indian beauty market: Given the rising interest of the West in Ayurveda, herbal Indian brands like Forest Essentials and Kama Ayurveda are seeing growth in the range of 40-50 per cent annually. In 2008, Estee Lauder picked up a 20 per cent stake in the high-end, herbal beauty brand Forest Essentials, increasing it further in 2014. The recent move by the government to relax the FDI norms by allowing single-brand retailing through e-commerce, retail and wholesale channels, has allowed South Korean brands like innisfree to make inroads in the market. Kiko Milano, a high-end Italian beauty brand, launched last month in India. Clearly, the Indian luxury beauty market is experiencing the healthiest glow ever.
The author is a Delhi-based freelance writer
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