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The Indian ‘beauties’ beckon - Views on News from Equitymaster
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  • Sep 13, 2000

    The Indian ‘beauties’ beckon

    The Indian consumer never had it so good. Gone are the days when the cosmetics segment was largely identified with Lakme, Ponds and a host of locally made creams. International bigwigs like Revlon, Avon, Estee Lauder, Christian Dior and J. K. Hellen Curtis are all vying with each other to capture the Indian cosmetics freak. The question is what are all these fashion powerhouses doing in a country with a per capita income of about US$ 400.

    All these MNC’s are facing intensive competition in the developed world, where the market size has stagnated and hence the look out for additional markets with burgeoning middle class like China and India.

    Let us try and understand the dynamics of this ‘dynamic’ segment.

    The Indian Skin-care market valued between Rs 6-6.5 bn is growing at an impressive 22%. The segment can be broadly classified into 2 sub-segments:

    • The Fairness segment (50% of the total market)
    • The Non-fairness segment (50%)

    Out of these, the fairness market is growing faster at 30% per annum, whereas, the non-fairness segment is growing at a steady 15%.

    The Fairness segment
    Fairness creams command over 95% of this market. Fairness lotions have not been so popular and are losing market shares heavily. Hindustan Lever’s (HLL) Fair & Lovely dominates 90% of this segment and a hefty 45% of the total skin care market (in value terms).

    Southern India is skewed towards fairness cream consumption. Over 60% of its cosmetic spends are on fairness creams and lotions.

    The Non-fairness segment
    The segment is highly fragmented and different brands dominate each fragment. The segments include cleansers, cold creams, gels, nail polishes, eyeliners etc. Cleansers are the largest contributors in this category and accounts for about 10% of the total skin-care market. Cleansers can be classified into 4 segments:

    • Face wash (50% of all cleansers)
    • Cleansing milk (20%)
    • Deep cleansers (15%)
    • Astringent (15%)

    HLL owned Lakme and Ponds dominate this segment. Lakme and Ponds each account for over 10% of the total skin care market (Rs 60-65 m each). In all, HLL effectively controls 65% of the total skin care market (around Rs 4 bn), if we add its Fair & Lovely contributions also.

    Since new entrants cannot fight the heavy weights in the volume driven fairness segment, they have entered the non-fairness segment, positioning their products based on superior attributes to the upper end consumer in the urban market. Their distribution is at select up town stores and through personalised selling. Realising that the skin–care segment is brand sensitive, their aim is to earn a fan following in niche segments and then introduce a spate of products as brand extensions. They are looking at small volumes but big numbers.

    The successes of Indian ladies at International beauty pageants (Miss World and Miss Universe) will only add fuel to this already growing segment.



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