Today, everyone desires to look beautiful and healthy. This aspiration has driven the Indian beauty industry to experience remarkable growth and transformation in recent years, making it one of the fastest-growing sectors in the country’s economy. This article explores the reasons behind this rapid expansion and highlights why it presents a golden opportunity for investors.
Changing Trends and Opportunities
In the past, traditional remedies were the go-to for beauty solutions, but times have changed. Today, both domestic and international brands are launching innovative products in the Indian market, attracting the youth. But why is the Indian beauty industry growing so rapidly, and does this mean it is an attractive opportunity for investors?
The Shift in Beauty Standards
Previously, beauty was synonymous with fairness, but now there’s a visible shift, especially among Gen Z. In contemporary India, beauty is about being stylish, attractive, and confident. Social media has played a significant role in raising beauty awareness, and companies are responding to this demand by introducing a variety of new products.
In recent years, Reliance Retail has entered the beauty retail market with its brand ‘Tira’ and acquired Sephora India’s operations, indicating the vast potential within the beauty industry. Similarly, Nykaa launched its IPO in 2021.
Why is the Indian Beauty Industry Growing?
Several factors contribute to the rapid growth of the Indian beauty industry:
Increasing Disposable Income: With rising disposable incomes, the middle class in India is expanding. In 2020, the average annual spending on beauty and personal care was $10.6 per person, which has now increased to $11.6.
Urbanisation: Rapid urbanisation in India is also boosting the beauty industry. Urban residents are more inclined to follow fashion and beauty trends, driving demand.
Online Shopping: The surge in online shopping has made beauty products more accessible, playing a crucial role in propelling the Indian beauty industry forward.
International Brands Entering India
Noticing the growth of the Indian beauty market, international brands are also making their way into the country. According to a report by Redseer Strategy Consultants and PeakXV, the local beauty sector is expected to grow at a rate of 10% between 2022 and 2027, outpacing the estimated growth rates of China (7%) and the USA (5%).
In 2023, Japan’s Shiseido-owned NARS Cosmetic, partnered with Shoppers Stop Limited for distribution. Selena Gomez launched her brand Rare Beauty through Sephora India, and famous singer Rihanna introduced her cosmetics line Fenty Beauty in India via Nykaa.
What Does This Mean for Investors?
Traditionally, investors have favoured sectors like infrastructure, banking, pharma, technology, or FMCG. However, given the rapid growth of the beauty industry, it is emerging as a new and attractive investment option. Currently, with a population of 1.4 billion, the Indian beauty industry is the fourth-largest market globally. Nonetheless, it is essential to conduct thorough research or consult a financial advisor before investing in any sector.
What’s Next?
According to The Times of India, the value of the Indian beauty and personal care market was approximately $14.9 billion in 2021 and is projected to reach $28.9 billion by 2026, growing at a CAGR of 14.9% from 2021 to 2026.
This growth results from a rapidly expanding economy, increasing incomes, and urbanisation. Moreover, Indian consumers are now more aware than ever and are embracing branded products alongside traditional remedies to enhance their appearance.
That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!
*The article is for information purposes only. This is not an investment advice.
*Disclaimer: Teji Mandi Disclaimer
