Over the past many decades, international cosmetics brands have flooded the Indian cosmetics and skincare market. Despite higher price points, they have remained the first choice of millions of Indian women and men due to the ‘premiumness’ and the foreign tag.

The story is changing now. Many homegrown beauty and personal care brands, especially those offering products made from natural ingredients, have managed to woo Indian consumers in recent years.

“The young generation is more conscious about sustainability and clean beauty products and most of them are willing to pay a premium for these products,” say experts.

Brands focused solely on pure-play beauty and personal care have disrupted the market posing stiff competition to established brands by targeting specific use cases, leading to higher growth rates, gross margins, and profitability compared to FMCG-led BPC players, a Redseer report has recently said.

Apart from unicorns like SUGAR and Mamaearth, several small and mid-sized startups have entered the fray with many now thriving at home and even aboard.

As per TAM data, personal care products contributed 17 per cent of ad volume in the first half of 2023, second only to food and beverages that constituted 23 per cent of ad volume. They are growing fast as the category penetration in the country is mere 10 per cent, experts pointed.

Health and wellness start-up The Ayurveda Experience (TAE), for instance, clocked revenues of ?270 crore in FY23, up 90 per cent compared to ?141 crore in FY22. The company, which sells products in over 20 countries, expects to become profitable in FY24.

Similarly, Joy, owned by RSH Global, is looking to grow by about 20-25 per cent annually to touch a turnover of ?1,000 crore in the next three years. The growth would come primarily from strengthening its foray into West Bengal and Maharashtra markets and traction in online sales. The company closed FY23 with a turnover of ?500 crore.

Another startup, The Ayurveda Company (T.A.C), posted a revenue surge of 500 per cent between March to October 2022. The Gurugram-based D2C company founded by Shreedha Singh and Param Bhargava, closed FY23 at Rs 45 crore with 4X growth year on year. It aims to extend its retail presence to tier-II and -III cities, targeting 50 exclusive stores by fiscal year-end. The firm has recently raised INR 100 Cr in its Series A funding round.

According to experts, “A significant segment of this demand is for products that suit Indian skin types and hair - a need that largely remained unfulfilled by international brands, providing the perfect opportunity for local companies. From acne management to anti-ageing solutions to sun protection, specialized use cases are where the growth lies.”

Rising market

India’s beauty and personal care market is projected to touch $30 billion by 2027, accounting for about 5% of the global market, according to a report launched by Redseer Strategy Consultants along with Peak XV.

The booming Indian cosmetics market is stormed by home-grown brands that promise to pamper Indian skin with the goodness of local, natural and organic products.

The major reason behind their sustained growth is rising consumption of personal care products. In the early 2000s, make-up was reserved for special occasions. Skincare segment was not as evolved as it is now. Now, skincare and beauty products are used daily by most users.

This phenomenon is not just restricted to metros and tier 1 cities anymore. With smartphone penetration reaching 700 million people, consumers in tier 2 and 3 cities are also exposed to skincare and cosmetics.

Not surprising that the homegrown beauty and personal care category segment emerged as one of the fastest-growing categories on the e-commerce giant Flipkart. The BPC category has grown 3X in 2022 itself, the eCommerce major had said early this year.

Explaining the rise behind the growth of Indian brands, Shreedha Singh, Co-Founder & CEO of TAC, says, “Firstly Indian consumers now prioritize products tailored to their specific needs and preferences, leading to the emergence of local brands that possess a deeper understanding of the market. Secondly, these brands offer more budget-friendly options without compromising quality, attracting price-conscious consumers. Thirdly, there is a growing trend to support domestically produced goods, driven by a sense of national pride and the desire to promote local entrepreneurship. Lastly, the widespread accessibility of Indian brands through e-commerce platforms and extensive marketing campaigns has significantly expanded their reach, further contributing to their success.”

Brands like Pilgrim, Skinella and Swiss Beauty offer a product range that is 100 per cent vegan and not tested on animals. Pilgrim aims to become a Rs 1000-crore brand in the next five years. Currently, 35 per cent of Pilgrim's sales come from the top 10 metros and semi-metros, while the remaining 65 per cent is generated from tier 2 and 3 cities. Most of their consumers are youngsters who have access to reviews on social media and e-commerce platforms to understand brands better.

Saahil Nayar, CEO-Swiss Beauty, says, “We are constantly innovating and bringing trendsetting products to Indian beauty markets while ensuring they are led by consumer-driven insights like being Peta-certified animal test-free, skincare ingredients and offering diversity and variety both in terms of choice of products and shade availability.”

Marketing strategy

The homegrown brands’ marketing strategy is centred around young GenZ and individuals who are highly active on social media. Influencer marketing is the most popular method to reach out to their target audience.

Their key approach involves continuous innovation and product diversification due to the ever-evolving preferences of young consumers, and also to expand offline and online distribution networks. They are also bolstering their e-commerce presence by partnering with leading online marketplaces.

Dolly Kumar, Cosmetics Engineer and Founder at Skinella, says, “To effectively connect with and engage our target audience, we have strategically incorporated influencer marketing as a pivotal element of our approach. Collaborating with reputable beauty influencers allows us to establish an authentic connection with our customers and maintain an ongoing and meaningful dialogue with them.”

Innovations

The category is witnessing a lot of product and tech innovations and global collaborations as well.

For instance, Kult, a tech-first beauty and lifestyle e-commerce app focuses on customization and shows a skin compatibility score derived by analysing hundreds of skin combinations with over 100 parameters. The app currently has over 200 brands on board and is also forging international partnerships, bringing various high-end brands like Kohl Kreatives to India. TAE and TAC have also forayed into the international markets.

Angela Toppo, Vice President-Marketing at Kult App, the home-grown beauty and lifestyle app said, “There’s no doubt that the Indian consumer loves to shop online – its convenience and sheer variety of choices is unmatched. However, the game changer for beauty eCommerce has been the integration of technology, focus on hyper-personalization and innovative use of content to enhance customer experience. Our hyper-delivery model further ensures that you have your favourite products at your doorstep within 2 hours in Mumbai and 48 hours pan India.  In a nutshell, it is the innovation in customer experience and promise of delivery that has given beauty eCommerce apps an impetus for growth and gained the trust of their consumers.”