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wellness business 2015-08-18

‘Natural’ tipped as new growth frontier for personal care products trade

Growing demand of natural ingredients based personal care products has given a broadening scope of growth to national and international traders who are betting high on the Indian Wellness industry. A report.

‘Natural’ tipped as new growth frontier for personal care products trade

The largely untapped segment of the Indian Wellness market has been the natural ingredient products category which has now grabbed focus with hair and skin care products manufacturers and promoters.

As Indian consumers are shifting their focus towards their personal grooming, they’ve become choosy about the selection of their products as well. This shift in preferences from the consumers has given a sudden boost to Natural personal care products market in the country, grabbing attention of various existing, upcoming and even international players in the segment.

The key trend witnessed in the industry at present includes nanotechnology and green chemistry besides others, which has influenced the strategies of existing and emerging players. The eventual winners would be those who ensure better value offerings to meet the needs of the Indian consumers.

“Natural skin care products have put the spotlight on the risks posed by harsh chemicals present in conventional cosmetics. Therefore, most of the companies are getting forced by the rising consumer awareness to review their ingredients and making a gradual shift towards - Green Chemistry. However, the biggest challenge remains in terms of transparency where, organic cosmetics being regulated by a third party, have to be very transparent about their ingredients whereas conventional cosmetics especially the herbal ones can get away with sharing only key ingredients. The other challenge remains in terms of the cost because organic cosmetics have a higher raw material cost and can only cater to a high income bracket for the moment,” informed Vishal Bhandari, Founder & Director, SoulTree Natural Ayurvedic Beauty Products.

The category largely unorganised
Interestingly, as per the recent reports of Markets and Markets, global demand for personal care ingredients is projected to reach US$ 17.6 billion by 2020 at a CAGR of 5.4 per cent from 2015 to 2020. Out of which, Asia-Pacific is forecast to be the fastest growing market in the next five years, with China, Japan, India, and South Korea dominating the region.

The personal care products category for natural products is divided into two parts; Skin care and Hair care. Both the categories have large number of players, yet, it contains enough room for improved, innovative, customised and more quality result products, due to lack of organised manner of trade in the space.

Alienated into niche segments further, both - skin care and hair care categories are offering range of personal care products.

Skin care products
“Overall, if you look at the Beauty market, the size might be too big, but, the key categories where we compete, which includes face wash category (falls under skin care), is now close to Rs.1,400 Crore in Urban India (overall sized of the category in urban+ rural is Rs1,700 Crore), out of which, we have close to 22 per cent market share and we are the market leaders as the brand. Then, we have also entered into packs and scrubs category which is small but growing with about Rs 400 Crore market size in Urban India (divided equally between scrubs and packs). Here also, we have strong numbers to play with around 17-18 per cent of market share and if you take Shampoo, which is a big category close to Rs.3,600 crore (falls under hair care category includes bottle+sachets), regionally, especially in South, we have close to 4-5 per cent of market share. And, overall, we have close to 2 per cent of market share, nationally, in the shampoos business," said Rajesh Krishnamurthy, Business Head, Consumers Product Division, The Himalaya Drug Co.

Emerged as one of the biggest players in the category, The Himalaya Drug Company is currently operating in over 90 countries with its high-quality products prescribed by about 400,000 doctors worldwide.

So far, this category had lured maximum attention on consumers who are extremely conscious of their skin texture and blindly rely on – natural ingredients based and Ayurvedic products. The category is vast but largely unorganised with number of small, medium and big players like Kama Ayurveda, The Himalaya Drug Company, Omved, The Body Shop, Forrest Essentials, Lotus Herbals, SeaSoul Cosmeceuticals and SoulTree, to name a few.

Significantly, the niche segments falls under the natural skin care products, including face wash, packs & scrubs, creams & lotions, hands & feet care products and to a certain extent night care products also. The existing and emerging players see a vast scope of expansion, but with a continuous and high density of competition.

Similarly, there are other existing players in the category who have secured a descent position in the market for themselves.

Hair care products
Similarly, as per the latest research report of RNCOS Business Consulting Service firm, the Indian hair care market which includes niche segments like hair oil, shampoo, hair gel, packs and hair colour, have witnessed an unprecedented growth in the sales. It is estimated that the hair oil market in India will cross Rs 100 billion-mark in future.

The Indian Hair Care Market Forecast to 2015 report of the consulting firm says that the increasing desire to look presentable and stylish is driving the market. It is expected that the market will maintain its growth pace by launching new and innovative products, and thus, it holds promising prospects for both existing and new players which largely includes international players like L'Oréal India, Wella Professional, P&G, of course apart from leading Indian companies like Hindustan Unilever, Marico, Dabur and Godrej, to name a few biggies.

The category also covers some niche brands which are manufacturing natural ingredients based premium range of products. The Himalaya Drug company, Kama Ayurveda, The Body Shop, Forrest Essentials and Lotus Herbals are few players who have successfully grabbed bigger pie into the category.

“We’ve managed to gain immense popularity since the inception of our brand in 2002. The brand enjoys a huge fan following and has become a preferred Ayurveda wellness products brand across India,” said Vivek Sahni, Co-Founder, Kama Ayurveda.

Nevertheless, the category offers adequate opportunities for small players like Oshea Herbals, Omved, Wikka and many more.

“India has a very bright future for skin care business as skin and hair care awareness is increasing day by day and with the same speed, markets are also growing. You can say India has a huge market for new innovative skincare products,” said Dilip Kundlia, Director, Oshea herbals, a darling brand of small salons across India.

International brands raising the bar high
Multinational players with international brands like L'Oréal, Wella and even L’Occitane have a strong presence in the Indian formulation segment. These big brands are gaining a strong foothold in the market by innovatively developing value offerings to meet the unique needs of the Indian consumers. Going further, it would be significant to develop R&D capabilities to further customise products for Indian consumers, create greater awareness among the burgeoning middle class and ensure effective distribution reach to service them.

“Wella Professionals in terms of their growth, here in India, continues to be the best growth across the globe. So, India is one of the fastest growing markets across the globe. Strategically, at present, we are chasing L’Oréal, with our commitment to innovative products which Wella produces, the first ever cream colour product, many-many years ago in the early 90s,” said Stan Newton, Creative Director, Wella Professional.

Meanwhile, Gilles Moutounet, Country Head, L'Occitane en Provence India, said: “L’Occitane is all about sensoriality and natural products. We were one of the first brands worldwide to focus on this aspect more than 30 years ago and we are still leading the space through all the experience gained since our inspection in India about 5 years ago. The brand enjoys a good recall thanks to its strong worldwide presence.  Moreover, the cosmetic category in India is also growing very fast. A large portion of our business comes from our existing customers who are loyalists who still came to our stores for their refills.”

The companies that are able to develop a judicious mix of the above will be the eventual winners. The time is ripe to review one’s strategy and come up with innovative approaches to help realise the full potential of the Indian personal care sector, where the ingredients market is likely to double in the next four years.

Indian beauty and wellness industry has been influenced strongly with the ancient practice of Ayurveda surpassed by generations in the form of home-remedial methods. Although, the changing lifestyle and Westernisation has influenced the Indian consumers, however, the growing demand of natural products in the market shows that Indian consumer is still intact with the roots and Mother Nature. This significant shift in demand shows a bright future for ‘Natural Products’ in the wellness space.

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