BW Confidential - Issue #4 - October/December 2010 - (Page 72)

Market watch: India India Industry roundtable p.74 Retailing analysis p.76 A market for the future Growth is still high in the Indian beauty sector, but the returns leave a lot to be desired. BW Confidential analyzes what’s next for the market by Mayu Saini he potential of the Indian beauty market has been a topic of discusison for some time, but there is still a large gap between the growth expectations and what materializes. And although the market continued to report double-digit growth rates through the downturn (although from a small base), it’s the other BRICs, especially China and Brazil that are getting more attention. This is leaving India to be hailed as a ‘market for the future’ rather than for the present. “Everyone has been talking about India for years; but the country is very challenging: taxes are high, the collection of receivables is difficult and there’s not much structure,” Singapore-based distributor Luxasia ceo Patrick Chong recently told BW Confidential. Indeed, while sales are up, the returns still leave a lot to be desired. The high real-estate costs, crippling custom duties and scramble for the right locations make business difficult. However, there are bright spots. Despite the recession, beauty sales were up by 12.3% in 2009 to Rs277303.7m ($5.98bn), according to Euromonitor. Although from a small base, 72 T these growth rates are still impressive and a far cry from the progression in many other markets. These figures also hide a higher demand: there is a thriving gray market in beauty and a large portion of cosmetics that are being used by Indians are purchased abroad. “What is being sold in India is less than a twentieth of what is consumed there,” observes Suresh Menon, general manager of Tarz Lifestyle, part of Dubai-based Chalhoub group, which distributes prestige brands in India. The market is also seeing improved purchasing power and there is a growing consciousness about fashion among Indians. Market research company RNCOS says that industry players have also been more ready spend on promotional activities to increase awareness about cosmetics products. Developments in mass dominate In terms of prestige many of the well-known international brands have come to the market over the past few years, with Estée Lauder (in 2008) and Guerlain (in 2009) being the latest entries. The premium category also continues to grow, but its development is still curtailed by the lack of quality retail, which has seen a string of prestige brands open their own standalone stores (see article page 76). “ What is being sold in India is less than a twentieth of what is consumed there Tarz Lifestyle general manager Suresh Menon It is the mid-mass brands that are really changing the beauty market, with a blast of television advertising and endorsement from film stars and Bollywood celebrities. Hindustan Unilever is still the leader in this segment with its Ponds brand and its Lakme Lever ” October-December 2010 - N°4 - BW Confidential

Table of Contents for the Digital Edition of BW Confidential - Issue #4 - October/December 2010

- Brand & retail news recap
- Digital digest
- Companies on the move
Take note
- Market facts, figures & trends
Best of BW
- Highlights from our e-publication
- The latest in fragrance, skincare & make-up
- BPI president Rémy Gomez
Insight: fragrance
- Category overview
- Retailing
- Industry viewpoint
- New opportunities
- Launch roundup
- Airport Spas
- Spa case studies
- New store concepts
Travel retail
- Market overview
- Retail strategies
- Interview: World Duty Free & Aldeasa
Show preview
- TFWA World Exhibition
- Six up-and-coming beauty brands
Market watch: India
- Country overview
- Industry roundtable
- Retailing analysis
- Sector outlook
- Sustainability
Last word
- Mintel head beauty consultant Nica Lewis

BW Confidential - Issue #4 - October/December 2010