Eye On Growth: The $90-million Indian eyewear market is attractive for MNCs

In fact, according to both Essilor and Carl Zeiss, India is the only major world economy where glass-based optical products are still used. The rest of the world, including neighbouring China and Pakistan, began buying plastic and polycarbonate lenses in the 1980s and 1990s.

On their slow road to success, both Carl Zeiss and Essilor have run similar, patient campaigns, beginning by drawing dealer confidence away from the unorganised sector, which dominated and still dominates the market. The nearly decade-long branding is now culminating in aggressive, and ongoing, consumer ad campaigns. “Ten years ago, spectacle lenses were a low-involvement product because everyone focused on frames,” says B. Jayanth, managing director of Essilor India. “Now there is awareness about the importance of lenses. After all, spectacles are about correcting your vision.”

Today, organised spectacle lens makers are reporting 30 per cent year-on-year increase in sales. According to one industry source, this growth has mostly come at the expense of the unorganised sector, which is showing a declining sales graph. The numbers bear this theory. When Essilor first started its India operations in 1998, the market share of organised lens makers was only 2 per cent. Now, despite the higher cost of branded lenses, it’s 25 per cent.

Through The Looking Glass
A study conducted by Hongkong Trade Development Council last year estimates the total Indian eyewear market at $90 million (Rs 360 crore), and its fashion and ophthalmic segment at $40 million (Rs 160 crore). Pilot studies by industry players showed the market for spectacle lenses in India to be roughly 70 million pieces annually. In this, unorganised lens makers, who still control 75 per cent of the market, largely sell inferior, and cheaper, glass lenses.

“We started with a disadvantage,” says Jayanth. “For the first few years, we branded only at the trade level to bring back dealer confidence.” Carl Zeiss conducted thousands of field visits to educate dealers about its newer products.

Conventionally, dealers hardsell spectacle frames, which have higher profit margins than lenses. Besides, plastic lenses were not only more expensive, they acquired the adverse reputation of scratching too easily when they were first introduced in India. Since then, improved technology delivered scratch-resistant and anti-glare lenses with improved coatings. Dealers also prefer bargaining for better prices from unorganised makers of glass lenses. So, “We worked on educating dealers and opticians as we identified them as a potential weak link,” says Carl Zeiss’ Soni.

Then, branded spectacle lens manufacturers also began promoting their products through aggressive TV and print ad campaigns. “We have a big edge with our marketing, which has helped convince customers,” says Jayanth. People are also willing to spend more on quality, especially when it comes to a faculty as important as eyesight.

Delhi-based senior executive Roystan La’Porte was among those convinced. “I have been using progressive lenses for the past six-seven years,” says La’Porte. “This is my third pair. Progressive lenses are really good. But lens prices have really gone up. I spent Rs 5,000 on the first pair. The last one I bought cost me Rs 8,000.” Even so, “After the initial phase, you can’t think of changing back,” feels La’Porte. It’s easier to adapt to progressive lenses than bifocals; they are also much lighter and more flexible.

Essilor, the Indian and global market leader, has two brands, Varilux and Crizal. Varilux, the first-ever progressive lens in the world, was patented in the late 1950s. These lenses gradually change power as the wearer’s vision moves from far-off objects to nearby ones. Traditional bifocals also do this but wearers remain unable to focus on mid-distance objects. Other companies adopted this popular technology with the expiry of Varilux lens patent in the mid-1970s. “While most new customers prefer plastic lenses, old glass lens customers are also quickly changing to plastic lenses,” says Essilor’s Jayanth.

Easy Luxury: High-end eyewear are far more affordable than other luxury products

This elite section of the population has always had access to high-quality products. But it’s the billion-odd people outside this segment that multinationals are keen to tap. High-end prescription eyewear and even sun-glasses are far more affordable than other luxury products such as fur coats or hand-crafted watches.

They make easier entry points into high-end products for less wealthy folk. “Luxury brands are no longer only for the wealthy,” explains Chadha. “The new buzzword is democratisation of luxury.”

Hamed Saberi, whose family has been in the eyewear business for two decades, would like to see luxury democratised. “People have really caught up on brand awareness,” he says. “In the past five years, they have even begun to name specific brands that they’d like to buy.” Saberi is managing director of Shades, a chain of retail stores that deals exclusively in high-end sunglasses and prescription eyewear. Shades currently runs four stores in Hyderabad and Bangalore. By end-2009, Saberi plans on ex- panding to 640 sales points, through new stores and smaller kiosks. Bollywood stars Sanjay Dutt and Suniel Shetty are his partners.

High-end eyewear retailers have seen exceptional growth rates in the past one or two years. At Aureole Inspecs, a joint venture with Inspecs, a leading British eyewear company, revenues have risen 500 per cent in the past year-and-a-half alone. “We see a lot of opportunity in the Indian eyewear market for the key reason that people have started spending a lot of money on accessories like eyewear,” says Vineet Sharma, managing director of Aureole Inspecs.

This market will soon have more. Japan’s Hoya Corporation, and US-based Kodak and Transitions, who have already announced plans to enter India, are expected to be here by the end of 2008, if not sooner. “Most of the market is at the low-end, but fashionable eyewear is catching up at 30-40 per cent per year,” adds Saberi. Men seldom make passes at women who wear glasses? That was ten years ago. Look again. Specs were never sexier.

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(Businessworld Issue 25 Feb-3 Mar 2008)