Slide 1: 1 An overview of
the personal care
market in India Information courtesy of: Slide 2: 2 The main market segments Slide 3: 3 The market in figures Source: Madras Consulting Services Slide 4: 4 Skincare The skincare market value is estimated to be 410 million Euros (2005-06).
Production in 2004-05 amounted to 83,500 tons. Slide 5: 5 Skincare: sub-segments Creams and toners account for the main sub-segment in the skincare category: over 48% in volume terms & 51% in value terms.
The market is valued at 210 million euros (2005-06).
This sub-segment also includes “fairness creams” in particular, a market worth 166 million euros (2005-06). Hindustan Unilever Limited’s “Fair and lovely” brand leads the market (70% share) followed by CavinKare’s Fairever (9% market share).
Creams and toners also include curcuma-based creams, a mass-market product (12 million euro value between 2005 and 2006) with Vicco Laboratories and its Vicco brand as market leaders. Slide 6: 6 Skincare: sub-segments Creams and toners also include “anti-ageing”, which is perceived as a luxury product in India where Avon and Garnier Synergie are market leaders.
In India the talcum powder segment is part of the “skincare” category on account of its significant penetration in the country.
The market is valued at 113 million euros (2005-06) and is dominated by mass market companies such as H.U.L (with the “PONDS” brand holding a 53% market share), CavinKare, Godrej, Colgate Palmolive and Johnson & Johnson.
This market is particularly important in the South of India where talcum powder is used as a cream. Slide 7: 7 Skincare: sub-segments The make-up sub-segment or “colour cosmetics” is still small by global standards. It is currently valued at 87 million euros (2005-06) but is growing at a rate of 30% annually.
This sub-segment is dominated by lipstick and nail varnish (95% in total).
The LAKME brand is the best seller in India.
Several international brands have also positioned themselves on the market including Revlon, L’Oréal Paris, Lancome, Nina Ricci, Shiseido, Chanel, MAC, etc… Slide 8: 8 Haircare: markets and segmentation The haircare market is valued at 725 million euros. Slide 9: 9 Haircare: sub-segmentation The production of haircare oils (in volume terms) is 80 million litres.
This market is valued at 367 million euros (2005-06) and growing by 8% a year.
72% of oils are coconut-based and MARICO is market leader. Slide 10: 10 Haircare: sub-segmentation Shampoo is gradually substituting soap in India (32% penetration in 2005) and is worth 63,000 tons (sales volume). The shampoo market is estimated to be worth 262 million euros (2005-06) and accounts for 36% of the haircare market.
Packaging is customised and comes in bottles or sachets (70% of total consumption).
This segment also includes conditioners, a market valued at 17 million euros. The main players’ market share Slide 11: 11 Haircare: sub-segmentation The hair dye market is an emerging one.
It is worth 78 million euros (2005-06) and is growing rapidly (25% a year).
Godrej is the dominant player with an 86% market share.
L’Oréal has been very instrumental in the adoption of hair dyes, which are not only used to colour white hair but also for cosmetic reasons, i.e changing one’s appearance. Slide 12: 12 Fragrances and deodorants Few Indian nationals can yet tell the difference between deodorants and fragrances.
Official statistics don’t make a clear distinction between the two either.
The fragrance market is estimated to be worth 262 million euros and growing by 25% annually.
The “select” segment is dominated by imported foreign brands but the mass market segment includes a few local players.
The deodorant market is valued at 227 million euros (2005-06) and is growing by 20% a year. Leading the market is Hindustan Lever with a 58% share. Slide 13: 13 Oral care The oral care market is valued at 638 million euros (2005-06).
The toothpaste market is valued at 437 million euros (2005-06) and is growing at a rate of 8% annually.
Colgate is the market leader (40% share).
The toothpaste market is valued at 104 million euros (2005-06) and is growing by 30% a year. Slide 14: 14 Male grooming The male grooming segment should not be overlooked as it is valued at 253 million euros and growing at a 24% annual rate.
Apart from shaving products, the outlook is bright for the “care” market whether haircare or skincare segments.
Indian consumers are also very keen on spa treatments. Slide 15: 15 Soap Soap penetration is estimated to be approximately 88% but consumption is weak: 800 grams per capita vs 6.5kgs in the USA and 4kgs in China.
There are more than 200 soap brands in India and they are marketed by more than 70 companies.
The market is valued at 909 million euros (2005 – 06) and is growing at a rate of 5% annually.
H.U.L is market leader with a 54% share. Slide 16: 16 The main players Slide 17: 17 Hindustan Unilever Limited (HUL) HUL has been present in India for about 100 years. Its 2006 turnover was 2.27 billion euros. Slide 18: 18 Colgate Palmolive Pvt Ltd Present in India since 1937, Colgate Palmolive’s turnover is 213 million euro (2005-06). Slide 19: 19 Godrej Consumer Products Limited (GCPL) Godrej is part of a large Indian group with diversified products/services and a 120 million euro turnover (2005-06). Slide 20: 20 Nirma Ltd The company was founded in 1969 and its 2005-06 turnover was 391 million euros. Slide 21: 21 Procter & Gamble Hygiene & Health Care Ltd P&G had been trading in India since 1964 and achieved a 104 million euro turnover (2005-2006) Slide 22: 22 Henkel Spic India Ltd Created in 1987 in collaboration with Tamilnadu Petroproducts Ltd Chennai & Henkel KgsA, Germany
The company achieved a 52 million euro turnover in 2005. Slide 23: 23 Modi Revlon Modi Revlon is a joint venture (74:26) between Modi-Mundi Pharma and Revlon.
Originally positioned as a prestige segment company, Modi Revlon had to review its strategy due to other key players’ price-competitiveness, in particular Lakmé’s.
5 years after it launched in India, Modi Revlon has now been repositioned as a mass market player.
Modi Revlon’s product range comprises make-up, haircare, deodorants, talcum powder and mass market fragrances (Charlie and Fire & Ice). Slide 24: 24 Marico Industries Marico Lts was founded in 1962 and has built its reputation in India on food oils (Saffola), haircare and body oils (Parachute).
Parachute is a coconut-based body and haircare oil and is one of the most popular and most widely distributed oils in India (with a 22% market share).
Marico is also present in approximately 20 other countries and achieved a 183 million euro turnover in 2005-06. Slide 25: 25 CavinKare Pvt Ltd CavinKare started operations in 1983.
Its turnover in 2006-07 was 99.6 million euros. Slide 26: 26 Emami Group Emami Products, whether beauty products (talcum, essential oils, day creams or shampoo) or OTC pertain to traditional Indian medicine (ayurvedic) and target a mass market audience.
Emami’s turnover is 52 million euros (2005-06). Slide 27: 27 Reckitt Benckiser Ltd Created in 1998 following a merger between Reckitt & Colman India, a branch of Reckitt & colman PLC (UK) and Benckiser, this company ranks as one of the main consumer goods suppliers in India.
Positioned as a cleaning homecare products as well as OTC (including Dettol, Cherry, Harpic, Mortein, Disprin, Robin, Colin, etc…), Reckitt Benckiser (India) Ltd launched VEET, the depilatory cream brand, in 2004.
Sales turnover: 174 million euros (2005-06) Slide 28: 28 Dabur India Ltd Family-run and managed by Dr S.K Burman, Dabur India specialises in the manufacture of health and beauty care products and in particular ayurvedic products targeting the mass market (eg shampoos, make-up remover and oral care).
Dabur also markets food spices and exports to approximately 50 countries.
The company’s turnover in 2005-06 was 239 million euros. Slide 29: 29 L’Oréal India Ltd L’Oréal has been trading in India since 1990. Operating initially with the support of a distributor, L’Oréal created its 100%-owned branch in 1994.
L’Oréal’s full range of divisions is now operating in India:
The “consumer” division (launched in India first) includes L’Oréal Paris (with actress Aishwarya Rai as its ambassadress), Garnier and Maybelline N.Y.
“Professional Products” including L’Oréal Professionnel, Matrix and Kérastase.
“Active cosmetics” with Vichy and products distributed via 120,000 P.O.S.
The “Luxury products” division launched at the same time as the leading Lancome brand in 2006 followed by Ralph Lauren, Cacharel and Armani.
L’Oréal India employs > 400 staff and its turnover multiplied by 5 in 5 years.
L’Oréal has identified India as one of its top 5 global markets. Slide 30: 30 Other players Amway India Avon Ayur Herbals Fem Care Johnson & Johnson Lotus Herbals Modicare Oriflamme Paramount Cosmetics Shanaz Herbals The Himalaya Drugs Company Vicco Laboratories VLCC Slide 31: 31 What are the contributing factors to growth? Slide 32: 32 Contributing factors to growth: economic indicators 6% average annual economic growth.
4% average annual per capita growth over the past 10 years.
70% of the population under the age of 35.
20 to 49 years-old age group predicted to grow by 7.1% over the next 10 years.
Every year, the 20 to 24 age group increases by 3 million. This particular age group is the one enjoying the highest buying power increase. Slide 33: 33 Contributing factors to growth: distribution, labour, price… Although highly fragmented (3% chains, 97% independent), the sector is likely to become more structured in the years to come.
The large Indian chains have invested considerably over the past 2 years in this sector, which is reporting a turnover in the region of 205 billion euros.
In view of India’s cheap labour, the export outlook is positive for the main players in this sector.
Price is a determining factor in India. Indian consumers are thrifty (28% personal saving rate*), know their prices and are very sensitive to price increases.
Indian consumers give priority to value-for-money and expect to obtain maximum usage from a product with lower buying frequency than in Europe.
Indian consumers are also strongly influenced by advertising. Source: Reserve Bank of India Slide 34: 34 The ingredients market Slide 35: 35 The ingredients market Market size: 200 million euros a year (source: S.H Kelkar).
Exports: 20 to 25% of the local production.
Main ingredients produced in India: Mint-based products (eg menthol, peppermint oils); pine oil, lemongrass, flower essences (jasmine and rose in particular) as well as spices.
Main Indian companies: S.H Kelkar Ltd, Oriental Aromatics, Sachee Aromatics, Khatri Perfumes, Ultra International, SHK Aromas
Main international companies: Givaudan, IFF – International Flavors and Fragrances, Quest International, Robertet, Mann, Drohme, Charabot Slide 36: 36 Launch strategy and barriers to entry Slide 37: 37 Launch strategy and barriers to entry The legislation governing small businesses hasn’t been affected by the wave of industrial reforms launched in 1991.
Foreign participation for joint ventures which manufacture “small business” products is limited to 24% unless the company undertakes to export half of its local production.
Fragrance production is earmarked for small Indian businesses (SSI) but fragrance production involving formulation is not restricted to them.
It is possible to subcontract the production of fragrances to a local firm within the framework of a know-how supply with the local firm being paid on a percentage/royalty basis. In which case, it is possible to create a branch (with 100% ownership).
This type of solution must be negotiated with the Foreign Investments Promotion Board / Secretary for Industrial Assistance. Slide 38: 38 Import rules and regulations Import products regulations: The “Drugs and Cosmetics Act, 1940” and the “Drugs and Cosmetics Rules, 1945” (13th edition – 2001) and its amendments: basic regulations governing cosmetic production, imports and distribution.
“Classification of Cosmetic Raw Material and Adjuncts – Part 2: List Of Raw Materials Generally Not Recognized As Safe For Use in Cosmetics” Bureau of Indian Standards, 2001 ref. IS 4707.
Under the Rules: Cosmetics shall contain only approved dyes, colours & pigments & shall not contain certain chemicals, compounds etc. Cosmetics can be imported only through certain specified seaports, airports, railway stations, etc. Imported cosmetics may be subjected to tests & analysis & pending such testing cannot be disposed of by the importer. License has to be obtained from the Licensing Authority appointed by the State Government for manufacture of cosmetics. License is granted subject to conditions such as qualifications of staff in the unit, maintenance of records, inspections, etc Cosmetics have to adhere to the standards prescribed by the Bureau of India Standards (BIS). Labelling requirements have been specified. Cosmetic containers have to adhere to these requirements. Slide 39: 39 Taxes Import tax (per kg) – dependent on customs codes
Basic customs duty: 10%
Additional customs duty: 16.48%
Supplementary Countervailing Duty: 4%
Total Customs Duty (inclusive): 34.13%
Excise Duty: 16% Slide 40: 40 Thanks to: www.ubifrance.fr/cosmetiques