Why India's beauty market is turning heads

 

In 2008, Estée Lauder Companies (ELC) acquired a 20% stake in the premium Indian skincare brand Forest Essentials. Last July, ELC took a strategic step forward by launching a new incubation ventures arm in collaboration with Indian beauty and lifestyle retailer Nykaa. This initiative aimed to support India-focused companies and entrepreneurs in the beauty sector. ELC allocated $500,000 among three selected beauty brands, offering them not only financial support but also access to mentors such as Deciem co-founder and CEO Nicola Kilner and fashion personality Derek Blasberg. The overarching goal was to foster the growth of prestige and premium beauty offerings in India, as explained by Shana Randhava, ELC's Vice President of New Incubation Ventures, in a conversation with Vogue Business before the launch.

L’Oréal, a major player in the beauty industry, made its initial foray into the Indian market in 2013 through the acquisition of Mumbai-based skincare brand Cheryl’s Cosmeceuticals. The company is actively investing in Indian beauty startups, evidenced by its recent strategic investment in DSG Consumer Partners, a venture capital firm specializing in consumer brands across India and Southeast Asia. Vismay Sharma, President of L’Oréal South Asia Pacific, emphasized the significance of building strong connections with the dynamic ecosystem of disruptors in these markets. He believes that the future of consumer brands will be significantly shaped in these regions.

India's thriving beauty sector presents a significant opportunity for L’Oréal, with Chief Executive Nicolas Hieronimus expressing optimism during the company's 2022 annual earnings conference. He sees India as a potential billion-dollar market, especially as the country's middle-class population is expected to double in the next five to ten years. Haircare stands out as a highlight, growing at twice the rate of the overall market. Hieronimus revealed that 40% of L’Oréal's growth is attributed to high-potential emerging countries like India, Mexico, and Brazil.

Although L’Oréal currently operates with two divisions in India, it already holds an 8% market share. The company anticipates that e-commerce, its primary growth driver, will propel this figure beyond 10%. Hieronimus, who visited India recently, expressed his admiration for the country's growth, development, and accelerated sophistication in the beauty market. While acknowledging that the distribution network is not as developed as desired, he sees promising trends, and L’Oréal plans to strengthen its presence in India by leveraging the evolving local digital infrastructure, including deeper e-commerce penetration and online payment systems. He envisions taking the current €500 million business in India to €1 billion in the foreseeable future.

One notable aspect driving the growth of beauty brands in India is the strong customer loyalty towards ayurvedic products. Executives argue that those who understand and adopt the philosophy of ayurveda are unlikely to abandon it, positioning it as more than a passing trend but rather a permanent lifestyle choice. This loyalty becomes particularly valuable at a time when the beauty industry grapples with challenges related to poor retention and high customer acquisition costs.