The beauty and personal care (BPC) market in India is under-penetrated but has started seeing a pickup in recent years with the emergence of several pure-play companies. This comes even as many multinational brands have also entered the country and brands promoted by local fast-moving consumer goods companies continue to scale up in this space. In this backdrop, India is expected to emerge as the fastest growing BPC market in the world over the next few years, according to a new report.
The joint report by Redseer Strategy Consultants and private equity firm Peak XV estimates India's BPC market will grow at a compounded annual growth rate of 10 per cent over 2022-27 to touch $30 billion. In comparison, Indonesia (the next best) is seen growing at 8 per cent and China's BPC market is expected to grow 7 per cent in the same period.
Globally, the BPC market is expected to see a "meteoric rise", touching $660 billion by 2027, according to the report.
India's BPC market, as has been the case across many other FMCG categories, remains vastly under-penetrated compared with other countries. For instance, per capita BPC spends are at $313 in the USA, $38 in China and only $14 in India.
Like the evolving trend globally, the Indian market growth is also going to be driven by pure-play BPC brands that will lead the disruption.
"The Indian BPC market is growing at a rate twice as fast as FMCG-led brands, signaling the significance of specialized, BPC-focused players," according to the researchers.
In India, online has emerged as a major channel for BPC and is expected to touch $10 billion by 2027, account for around 33 per cent of the market, the Redseer and Peak XV report stated.
As the Indian BPC market matures, it is anticipated multiple hundred million dollar pure-play BPC brands will emerge in the country.
"From acne management to anti-ageing solutions, specialized use cases are where we're seeing a lot of the action," said Sakshi Chopra, MD of Peak XV.
The changing dynamics has seen existing brands like L'Oréal and newer ones like Nykaa, Honasa, and Pure Play Skin Sciences launching niche products.
"Brands are spending a significant portion of their resources and organisation bandwidth on new product development, research and development, and customer insights to drive more efficacious products to a targeted audience," said Chopra.
Globally, the gross margin for pure-play BPC companies has been significantly higher at 72 per cent, versus 44 per cent for FMCG-led BPC firms, according to the report. Also, despite the heavy investments in R&D and customer awareness by the pure-play BPC brands, their earnings before tax margin was ccompetitive at 12 per cent, compared with FMCG-led companies' 14 per cent.