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India's Cosmetic Sector Hits All-time High with More Growth Predicted

Global brands now offering tailored local cosmetic variants as expanded middle class sees sales soar.

Photo: Mirroring the growth of the middle class: Cosmetic sales soar. (Shutterstock.com/AJP)
Mirroring the growth of the middle class: Cosmetic sales soar.
Photo: Mirroring the growth of the middle class: Cosmetic sales soar. (Shutterstock.com/AJP)
Mirroring the growth of the middle class: Cosmetic sales soar.

In terms of the global beauty and wellness sector, India is now ranked among the five fastest growing markets in the world. According to a joint report by the Indian Beauty and Hygiene Association (IBHA), Google India and Bain and Co, the global management consulting firm, the value of India's health, beauty and wellness industry is now at an all-time high.

The sector is currently estimated to be worth around US$950 million. With a compound annual growth rate (CAGR) of 18.6%, though it is likely to be valued at US$2.68 billion by 2020. This would see it growing twice as fast as the US or European markets, a clear sign of India's increasing demand for a variety of personal care and beauty products.

Focussing specifically on demand for beauty products, India was ranked 14th globally in 2015. According to a separate report by Altios International, a global business development agency, India is on course to move up to sixth place by 2025. This, the report says, is largely being driven by a surge in the number of middle class consumers with high purchasing power, a demographic that is set to double over the next decade.

At present, India imports a substantial proportion of its beauty and wellness needs. While there are no restrictions on the entry of cosmetic products, the current average import tariff is around 39.2%.

In a sign of the growing significance of the Indian market, a number of global cosmetic brands have introduced products catering specifically to local beauty preferences. Among the brands that have adopted this more bespoke route are Maybelline, L'Oréal, Shiseido Za, MAC and Bobbi Brown.

An earlier report by Ernst & Young also noted the huge potential of India's cosmetic sector. Predicting the global beauty market will double in value over the next 10-15 years, it sees China, the US, Brazil, India and Japan emerging as the key markets. By 2020, it also expects more than 50% of the high-end consumers in the cosmetic sector will be residing in the more tropical regions, obliging manufacturers to adjust their product specifications to better match the needs of hot and humid climates.

Among the other findings of the IBHA report is that nail make-up will be the fastest growing category overall, with a predicted CAGR of 23.3% over the 2015-2020 period. In terms of eye and face make-up categories, the key demographic is expected to be the 16-24 age group.

With regard to distribution, despite the growing importance of e-commerce in the sector, convenience stores are expected to maintain their dominance. At present, such stores account for nearly 50% of India's total cosmetic sales.

Mitra Dave, Mumbai Consultant

Content provided by Picture: HKTDC Research
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