Cosmetics industry in India is undergoing an image makeover with the entry of sundry international cosmetics brands. The relatively slow growth of the industry is about to gain momentum now
India has become a favourite retail destination for international business houses. Owing to its large population (over 1 billion), the country offers a huge customer base which has largely remained untapped so far. In addition to this, the country`s robust economy has given fillip to the entrepreneurial drive of foreign companies at every front including cosmetics sector.
According to ASSOCHAM, the size of India`s cosmetics market will rise by almost a half to $1.4 billion from the current $950 million in the next two-three years as people get fashion conscious and with a host of brands being launched. However, despite high penetration of cosmetics with many foreign brands foraying into the country, India`s consumption of cosmetics and toiletries remains far less than other Asian countries. The per capita consumption in Hong Kong is 50 times that of India, while Japan`s consumption is 18 times.
Leading players in India
The US brand Revlon entered India through 76:24 JV with Modi Mundipharma by forming Modi Revlon Pvt. Ltd in 1995. It offers a wide range of cosmetics and beauty care products. The brand has three exclusive outlets; the one in Delhi is company-owned and the ones in Lucknow and South India are franchised. The brand is also available through shop-in-shop retail format in leading departmental stores. Revlon sources its products from its wholly-owned manufacturing unit in Assam — Kamakhya Cosmetics and Pharmaceuticals. The prices of this popular brand are ranged between something like Rs150 to Rs1000. Their target customer is aged between 25-45.
L`Oréal India, another paramount player in the country, is responsible for launching brands like Garnier and Maybelline. It imports most of its products from its own facilities abroad and manufactures the rest in Pune. L`Oréal entered India 13 years ago through JV with MJ Group but later on, riding on its high popularity, formed its wholly-owned subsidiary in 1994. It also offers the dermo-cosmetic brand Vichy in India which is available in the pharmacies.
The Body Shop, the brand known for its `naturally inspired, ethically produced beauty and cosmetics products`, set its foot in India in 2006. The brand is now owned by L`Oréal It entered India through the domestic franchisee Quest Retail Pvt. Ltd, which is the wholly-owned subsidiary of Planet Retail. Presently, there are 21 exclusive outlets in the country including in tier II cities like Jaipur, Ludhiana and Pune. The price range of The Body Shop products is anywhere between Rs 100 – Rs 2700. The brand is meant for all age groups.
In 2007, amidst much glitter and glamour, Toni&Guy, the UK based hair dressing brand was launched in India through distribution agreement with Brushman India. 80 per cent of their products are within the range of Rs150 and Rs 475.
Luxury cosmetics – a big hit
Meant for the niche market, the luxury line of cosmetics is a big hit for the rich and famous. Baccarose, the leading distribution house in India, is marketing international brands like Bourjois, Chambor, Clarins and Elizabeth Arden. These products are available over the counters and shop-in-shop in departmental or large-format stores like Ebony, Lifestyle, Landmark, Westside, Pantaloon etc. Cosmetics brands like Christian Breton and Art Deco are now at the disposal of Indian consumers. Both the brands are made available by the distribution agent, MKP Distributors, and have counters in prominent large format departmental stores. The prices of these products start from approximately Rs1000.
In 2004, another cosmetics brand, L`Occitane, was introduced in India. Ravissant is the exclusive distributor of L`Occitane in India. L`Occitane is retailed through Ravissant stores across Delhi and Mumbai and the brand`s exclusive stores are also set up through Ravissant. The prices of L`Occitane products range from Rs 220 to Rs 4,600.
Chanel entered the Indian market in 2005 directly through a subsidiary instead of a distributor. Similarly, Estée Lauder set up its India office and brought in M.A.C. and Clinique Cosmetics for the professional and serious makeup users. The price of a 3-step skincare system pack of Clinique is positioned above Rs 2000. Prices of other products start at Rs1,000.
Chicago-based H2O entered through distribution agreement with Sports Station India Pvt. Ltd. The product price ranges between Rs 475-5500. Since the brand is positioned for the niche premium segment, the target customers belong to high income group. Presently the brand has an exclusive outlet at the select Citywalk Mall in New Delhi, which is company-owned.It has a franchised outlet at Kanpur. The brand has counters in the MBOs like Reliance Wellness, Dabur `New U`, Lifestyle International, Central`s, and Fortis Healthcare. This brand`s USP is using seawater as a base for most of its products.
L`Oréal has luxury brands like Lancôme and Cacharel under its umbrella. Lancôme has one company-owned exclusive outlet in Delhi. The price range of Lancôme products is between Rs 850-11000. In 2007, L`Oréal introduced another high-end cosmetics brand Biotherm. The product contains Pure Thermal Plankton, a kind of Dermobiotic, found in spring water. This brand is available at counters in Shoppers Stop and Debenhams. Christian Dior of LVMH Group too has cosmetics line and presently the brand has set up its wholly-owned subsidiary office in India.
New brands` debut
This year Brushman India has also launched the nail expert brand Sally Hansen in India.
Among the recently launched brands are Thal`ion and Alfaparf Milano. Thal`ion consists of marine-based products and falls under the category of derma-cosmetics. Uttam Biotech Pvt. Ltd has received the exclusive distribution right for the brand. Being a derma-cosmetic, it targets dermatologists, cosmetologists, spa and high-end-salons besides ordinary customers. Tha`lion products are directly sourced from France. Informing about the price range of these products, Ravindra Shah, Managing Director, Uttam Biotech Ltd, says, “The prices for the retail products range between Rs 1700 – Rs 4500 approximately; while for the professional treatments, the cost per treatment ranges between Rs 200 – Rs1500.”
Alfaparf Milano is the well-known professional hair care brand from Italy. The brand has been launched through franchise and distribution agreement with Delhi-based Yerazig Impex Pvt. Ltd, wherein the company is the exclusive importer, distributor and marketing authority of the brand in India. Yerazig also launched men`s cosmetics brand Amenity. A shaving cream of this brand would cost around Rs 700 to the end-consumer, and a face moisturizer around Rs 850. The products of these two brands are being imported. Alfaparf Milano will be made available at high-end salons, and Amenity, at large format MBOs. Yerazig has plan to open exclusive outlets for Alfaparf Milano through franchised route in the near future.
Industry sources have disclosed that international brands like Europe-based Gosh, Korean brands – The Face Shop and Hancook Cosmetics- the French brand Uber products, Canadian brand Faces cosmetics and Brazilian brand Amazon Secrets are in serious talks with their Indian counterparts and would soon be making their foray into the Indian market. Kenzo of LVMH group is also planning to enter the Indian market through franchise agreement.
The company sources revealed that following their time-tested practice, Uber intends to have in India `Master Distributor` before the year end, thereby letting one person to gain `Master License`, simultaneously targeting other countries of interest such as Pakistan, Bangladesh, Sri Lanka etc.
Brand promotion strategy
Brand promotion is an important device to make a lasting impression on comsumers` mind. It is the means to survive in the market. As Arpit Jain Director- Marketing, Yerazig Impex puts it, “Initially, to make the brand visible, and make Indian public aware about the brands, we are participating in lots of trade shows throughout the country, advertising in magazines, doing press releases and launches as and when we are launching in different states.
We have a dynamic sales, marketing and a technical team of ours, which works in different regions assigned to them, networking with clients of that particular region, communicating & placing our products in the markets, and attracting new clients constantly.” He continues, “For a launching show of a new international brand, the company can shell out nearly Rs10-15 lakh, and for overall promotion, the cost can go up to Rs one crore.”
Tailor-made for Indian skin
Some of the brands are time tested and have already proved their credibility in the market. Before introducing Christian Breton in the market, dermatologists were sent to India to understand the Indian skin, to analyse and recommend the products that were suitable for India. Lancôme uses technologically advanced machine to diagnose skin. The products which are not treatment-based, like Elizabeth Arden, are sold on prescription over the counter; Clarins has customised counters with separate spaces allocated for an intensive consultation session for the consumer. It carried out an extensive research before entering the Indian market. The brand has taken pains making the customers understand the products. It offers consumer cards to get the feedback.Talking about the newly launched brand, Thal`ion, Shah, informs, “Apart from the basic marketing strategies including customer satisfaction, customer relationship etc, we are mainly concerned with the safety, the efficacy and consistent quality of the product. The products go through enormous tests (which includes in-vivo and in-vitro tests and efficacy tests on the Indian skin) before they are introduced by us. We consult the top Indian dermatologists to test the efficacy of the products.”
The industry`s future
After showcasing themselves in these large departmental stores and ensuring considerable market share, the obvious next step for these brands is to open their exclusive stores. Since these brands fall under top-line category and the Indian cosmetics have not reached the grown up stage in the truest sense, these brands target a selective segment of customers. Presently they are cautious, but with passing time they will have bolder plans for expansion for which franchising can be the preferable business role model.