Global Outlook for Cosmetics Industry

Cosmetics industry is expected to reach a market value of USD 805.61 billion by 2023, registering a CAGR of

7.14% during 2018-2023. As the personal care industry has matured over time, it has gone on to contribute

a major share to global FMCG market. It is a highly competitive market with several companies. Social media

and internet has provided even the smaller companies the ability to speak to a much wider audience. This has

escalated the competition in personal care space.

INDUSTRY OUTLOOK

Global Outlook for Cosmetics Industry

22 June 2019

COSMETICS INDUSTRY OUTLOOK

Source: Compiled from STATISTA https://www.statista.com/statistics/243959/breakdown-of-the-cosmetic-market-worldwide-by-geographic-zone/

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Personal care and beauty product sales are on the rise and are projected to register a growth from 3.5 to 4.5%

between 2015 and 2020. It is anticipated to reach USD 500 billion by 2020. The Asia Pacific accounts for a

major share in the global personal care industry; increasing demand in the region is attributed to its bulging

population. In the U.S, growing Hispanic population is propelling demand for luxurious personal care brands

and will escalate during the forecast years. Personal care companies are making their products available online

at competitive prices. The internet has an impact on every business category be it deodorant or shaving prod-

ucts. Customers are willing to purchase the goods that can come directly to them through online retailing.

Global cosmetic products market is categorized as skin care products, hair care products, color cosmetics,

fragrances, personal care products, and oral care products. Skincare product is anticipated to dominate the

global cosmetic products market during the forecast period owing to its multiple variants such as makeup

remover, depilatories, hand care, and facial care. Based on form, global cosmetic products market is classified

into solutions, creams, lotions, ointments, suspensions, tablets, powders, gels, sticks, and aerosols. Gels are

projected to witness maximum gains over the forecast timeframe owing to rising adoption of the product in

youngsters for hair gel and face wash.

The Asia Pacific will account for a significant share in global cosmetic products market till 2024. Asian coun-

tries represent some of the most potential and largest markets for exports of the U.S. cosmetics and personal

care products. The region offers more than 3 billion potential customers to the global cosmetic market. China

is projected to become the biggest global cosmetics market going forward.

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Source: Compiled from STATISTA https://www.statista.com/statistics/243959/breakdown-of-the-cosmetic-market-worldwide-by-geographic-zone/

Chart 3: India’s Cosmeceutical , Cosmetics & Personal Care Market Size & Forecast*

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INDIAN MARKET OF COSMETICSThe cosmetics market in India presently has an overall market of USD 6.5-8.5 billion and is expected to exhibit

growth of 22% by 2025. The industry makes up 22 per cent of India’s market for consumer packaged goods.

With enhanced purchasing power, and increasing image consciousness of India’s clientele, many international

brands have established their footprints in India. The market will maintain healthy growth due to rising prefer-

ence for specialized cosmetic products such as organic, herbal and ayurvedic products. Principal areas that are

expected to grow include color cosmetics, fragrances, specialized skin care, hair care and make-up cosmetics.

MARKET SIZEThe Indian cosmetics and beauty products segment has been witnessing steady growth of late. It is primarily cate-

gorized into five major categories - body care, face care, hair care, hand care and color cosmetics. India’s per

capita spend on beauty and personal care (BPC) is it is growing in line with India’s GDP growth.

*Note: Figures for the period (2019-2022) are Projected/Forecasted.Source: TechSci Research; https://www.techsciresearch.com/admin/gall_content/2017/10/2017_10$thumbimg111_Oct_2017_092916623.pdf

GROWTH DRIVERS

Table 1: Indian Beauty and Personal Care (BPC)Market Size (%) by Category

India accounts for a share of just over one per cent of total global personal care, cosmetics and cosmeceutical

market. This share is anticipated to grow significantly over the next five years. This growth will be primarily led by

increasing disposable income, relatively young urban elite population and rising middle-class population.

Multi-Purpose Products: Products with multiple benefits like – anti-ageing properties, moisturizing care, suntan

protection etc. are very popular in the skin care cosmetics industry. Creams that offer multiple benefits such as –

sun protection, moisturizing, oil-free have witnessed increasing demand, especially from the working women

population. Demand for anti-dandruff, anti-hair loss and hair-care products are also high in demand.

Shifting Trend to Organic based cosmetics: Consumers are shifting towards organic based cosmetics due to

healthcare problem associated with traditional cosmetics, which are becoming very popular with younger gener-

ation.

Growing demand for innovative packaging: Environment sensitive packaging of cosmetics is also becoming

popular. For instance, since men do not like to stick their fingers into jar for face creams, companies are offering

cream in pump packages. Pack functionality is also becoming important as male consumer prefers more simple

form of packaging.

Source: https://www.export.gov.il/files/cosmetics/ReportonIndianCosmeticsIndustry.pdf

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Category Sub category Growth (%) Evolution

Face Care

Fairness 7% Consumers moving towards integration of health, wellness and skin care products.

Male Shaving 9% Cleansing 15% Lip Care 20% Foundation 20% Other Creams 9%

Hair Care

Oil 5% Consumers are warming up to more western style hair care regimes.

Shampoo 5% Conditioner 10%

Body Care

Toilet Soaps 2% Non-traditional product categories such as Derma, body wash, sunscreen are growing.

Deodorants 3% Creams/Lotions 8% Derma 32% Sunscreen 9% Body Wash 9%

Table 2: Growth Opportunities for various Products

Source: TECHSCI Research https://www.techsciresearch.com/admin/gall_content/2017/10/2017_10$thumbimg111_Oct_2017_092916623.pdf

Sl No. Category Growth Opportunities

1 Bath and Shower Products Demand for value-added bath and shower products such as shower gels is

expected to grow in the coming years. The rising disposable income, expanding organized retail in the Tier II and Tier III cities, introduction of multiple product

variants by major players are expected to positively influence the bath and shower products market in the coming years.

2 Hair Care There is a growing inclination among

Indian people to look smart and presentable. The population in India have also started to prefer natural and organic oils, hair packs, shampoos, conditioners,

etc., especially in the urban centres.!Strong growth in herbal and organic

products has also bought many new players into the market. Rapid westernization and changing lifestyles

is expected to further augment the market growth.

3 Skin Care Women in India are becoming more

conscious about their skin, not only in terms of color but also in terms of radiance, reduced wrinkles, etc., to

look young and bright, and thereby increasing demand for various types of skin care products. The professional skin care products are witnessing

significant growth as many consumers are reaching out to therapy centers, spas and dermatologists for skin treatment procedures. Some of the most prominent

professional skincare products include anti-wrinkle,anti-blemishing and anti-tanning solutions.

4 Oral Care Products Oral care is the third largest

segment in cosmeceutical, cosmetics & personal care market. There is a growing trend towards using traditional oral care products. Thus, companies like

Colgate are launching products based on natural ingredient such as salt, charcoal, etc.

PROSPECTS OF AYURVEDIC/HERBAL PRODUCTS IN COSMECEUTICAL, COSMETICS AND PERSONAL CARE MARKET

Major Players:

Various non-government organizations along with Ministry of Health & Family Welfare are taking initiatives to

promote the use of ayurvedic products across the globe. The ayurvedic products market accounts for around

seven per cent penetration in India cosmeceutical, cosmetics & personal care market. National programs

which are targeted at increasing consumer awareness is making Ayurveda more popular. India has 45,000

plant species, out of which 15,000 are medicinal plants, including 7,000 plants, which have ayurvedic use.

There are many institutions have been set up like –Central Council of Indian Medicine, Ministry of Ayush etc.

Going forward, the market is expected to grow further.

Revlon was the first international cosmetics brand to enter India in the mid-nineties. Avon, Burberrys, Calvin

Klein, Christian Dior, Estee Lauder, L’Oreal, Max factor, Max Mara, Body Shop, Maybelline New York, MAC,

Bobbi Brown and many more have been present in India. The top three players in the Indian market are -

Hindustan Unilever Ltd (HUL), Colgate-Palmolive India and L'Oréal India. The other prominent international

players with a strong presence in the Indian market include Gillette India, Johnson & Johnson (India), Reckitt

Benckiser (India) and Procter & Gamble Home Products. Domestic players are also catching up with the emer-

gence of the trends towards natural, herbal and Ayurvedic products. Prominent domestic players include

Godrej Consumer Products, Dabur India, Marico, Wipro Consumer Care & Lighting, Emami and Patanjali

Ayurved. Bigger players like Dabur and Marico continue to dominate the market due to presence of ayurvedic

and herbal cosmetic products in their respective product portfolios.

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Following are some other companies with their major business:

Source: Compiled from Company websites.

Table 3: Major Brands/Companies with their Business in Cosmetics Industry

S No. Brand/Company Major Business

1 Lakme

Lakme offers a wide range of high performance and world class cosmetics, skincare products and beauty salons. It combines international cosmetic technology with an in depth understanding of the needs of Indian women and also providing products in a variety of skin tones.

2 Lotus

This brand deals with manufacturing and selling of various kinds of cosmetics. The list includes face cleansers, sunscreens, winter care, hair oils, and shampoos. Lotus Herbals Ltd Company specialises in producing cosmetics that claim to have Ayurveda as well as herbal goodness. . They believe in making use of herbal ingredients and making their product devoid of chemical-based, synthetic cosmetics.

3 Biotique

This brand manages to stand out in the world of chemical-based cosmetics as it doesn’t contain any artificial preservatives or synthetic fragrances. The ingredients used are extracted naturally from herbs.!

4 L’Oreal

L'Oreal is the number one international cosmetic brand in the world. Its lipstick and hair products are popular among ladies and hence are one of the leading brands in India.

5 Shahnaz Husain

This brand also tries to harness the natural goodness of Ayurveda. Currently it has many products spread out over different categories like skin, hair, makeup etc

6 Revlon India

The price of its product is quite high compared to other Indian brands. It offers everything like Mascara, lipsticks, eyeliner, nail paints, lip gloss etc.

7 Maybelline

Maybelline has successfully positioned itself as one of the top cosmetic brands which the young generation cannot do without. The price is also modest, and it can vary from product to product depending on your location.

8 Himalaya

It offers various products like face washes, body lotions, sunscreens, shampoo etc.Himalaya has been able to patent its sunscreen, Under-Eye Cream, Anti-Acne range and Hair Loss cream among others from the United States Patent and Trademark Office.

9 Colorbar

The brand is known for its bright peppy colours and has a number of products to add colour to nails, eyes, lips and face.

10 Elle 18

Elle 18 is highly popular among teens because of nail paints. It also offers other products like lipsticks, lip glosses, powder etc. but nail paints are the best one.

INDUSTRY RISK

FUTURE OUTLOOK

Digital channels and online purchase options have increased competition immensely. Fast and cheap delivery

and ease of access to brands seen as luxury have become increasingly important to the beauty market. Interna-

tionally, increasing Merger & Acquisition (M & A) also pose reputational challenges for the cosmetics industry.

Moreover, marketing and distribution as well as pricing challenges pose further competition. Regulatory aspects

also pose further challenges. The Indian licensing authority for mandatory registration of all cosmetics imported

in India is the office of the Central Drugs Standard Control Organization (CDSCO) in the office of the Drug Con-

troller General of India (DCGI). The DCGI’s office administers the Indian Drugs and Cosmetics Act of 1940,

which governs the manufacture, sale, import, export and clinical research of drugs and cosmetics in India. This

mandatory requirement to register all imported cosmetics represents important costs in terms of time and money

and administrative requirements for foreign companies to market their cosmetics products in India.

The cosmetics industry is expected to grow by USD 20 billion by 2025. The rising awareness of beauty products,

increasing premium on personal grooming, changes in consumption pattern and lifestyles, increasing purchasing

power of working women as well as rural penetration are expected to provide further boost to the industry.

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FOOTNOTES

1. Mordor Intelligence https://www.mordorintelligence.com/industry-reports/global-cosmetics-products-market-industry2. https://www.globenewswire.com/news-re-lease/2018/06/22/1528369/0/en/Global-Cosmetic-Products-Market-Will-Reach-USD-863-Billion-by-2024-Zion-Market-Research.html3. https://www.globenewswire.com/news-re-lease/2018/06/22/1528369/0/en/Global-Cosmetic-Products-Market-Will-Reach-USD-863-Billion-by-2024-Zion-Market-Research.html4. ‘Key Driving Factors of Cosmetics Industry in 2018’(24 December 2018) https://www.franchiseindia.com/wellness/key-driving-fac-tors-of-cosmetics-industry-in-2018.123275. A cosmetic that has or is claimed to have medicinal properties.6. https://www.export.gov.il/files/cosmetics/ReportonIndianCosmeticsIndustry.pdf7. https://www.techsciresearch.com/admin/gall_content/2017/10/2017_10$thumbimg111_Oct_2017_092916623.pdf8. ibid.9. https://www.export.gov.il/files/cosmetics/ReportonIndianCosmeticsIndustry.pdf10. Recent examples include Julep which was fined $3 million in 2016 for miss-selling (by using the so-called ‘negative option’ marketing technique); Tarte Cosmetics which was sold to Kose of Japan but then suffered an influencer backlash because of the Japanese company’s animal testing practices; and Honest Beauty which has faced lawsuits over allegedly ‘faulty’ products and accusations of exaggerated marketing claims. See https://www2.deloitte.com/content/dam/Deloitte/cn/Docu-ments/international-business-support/deloitte-cn-ibs-france-beauty-market-en-2017.pdf for details.11. For instance, there was certain issues regarding Patanjali products see for details https://www.hindustantimes.com/india-news/baba-ramdev-s-patan-jali-products-fail-uttarakhand-quality-test/story-bXo4XySEajw7ZDby4GISML.html12. https://cdsco.gov.in/opencms/opencms/en/Cosmetics/cosmetics/ for recent regulations, see http://professionalbeauty.in/gois-implements-new-cosmetic-rules-2018/13. https://www.techsciresearch.com/admin/gall_content/2017/10/2017_10$thumbimg111_Oct_2017_092916623.pdf14. https://economictimes.indiatimes.com/industry/cons-products/fmcg/cosmetics-market-to-grow-by-25-to-20-billion-by-2025/articleshow/62838360.cms?from=mdr

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Global Outlook for Cosmetics Industry