Abstract
Why buy this report
- Get insight into trends in market performance
- Pinpoint growth sectors and identify factors driving change
- Identify market and brand leaders and understand the competitive
environment
Product coverage
Baby care; Bath and shower products; Colour cosmetics; Deodorants;
Depilatories; Fragrances; Hair care; Men' s grooming products; Oral hygiene;
Premium cosmetics; Skin care; Sun care
Executive summary
Dynamic value growth is driven by booming economy and changing consumer perception
In 2006, current value growth of cosmetics and toiletries in India was the
highest during the review period. A booming economy, which put more money in
the hands of Indian consumers, meant that consumer disposable incomes grew, as
did the spending on cosmetics and toiletries. Value growth was also driven by
changing consumer perception, whereby most cosmetics and toiletries were
increasingly considered as essential items for daily use, rather than as
luxury products for indulgence. Mass products, including essential bath and
shower products and oral hygiene, accounted for the bulk of value sales,
whereas premium products were restricted to the upper middle classes and niche
high-income consumers.
Niche products grow in line with expanding consumer base
Growing from a smaller base, niche products witnessed the most dynamic value
and volume growth in 2006. Products like colour cosmetics, deodorants and
fragrances all witnessed double-digit value growth in 2006, as new consumers
started to use the products, and existing consumers traded up to more premium
products. With increasingly availability of domestic and international brands,
and greater product availability at affordable prices, consumers also started
to move away from using products from the grey and the unorganised channel.
This further benefited value sales through the organised channel.
Price increase witnessed across the board
While the economy was booming and consumers were in the mood to spend,
manufacturers saw 2006 as the best time to increase prices of products. Raw
material prices of most essential products, like vegetable oils, increased and
manufacturers passed the price increase to the consumer. With competition on
the increase, manufacturers also introduced better packaging with more vibrant
colours, relaunched products, and increased spending on advertising and
promotion, all of which added to costs. A significant shift in purchasing
behaviour was also observed, with consumers trading-up to more premium brands,
and new consumers shifting from the unorganised to the organised channel, both
of which enabled an overall price increase.
Hindustan Lever Ltd stays well ahead of the competition with breadth of presence, impressive distribution and continued investment
Although new players entered cosmetics and toiletries, and existing players
added to their offerings, Hindustan Lever Ltd remained well ahead of the
competition. In a highly-fragmented market, Hindustan Lever Ltd was the only
player to hold a double-digit value share in 2006, with Colgate-Palmolive
India Ltd a distant second. Hindustan Lever Ltd' s success was on account of
its breadth of presence across various cosmetics and toiletries products,
coupled with the best distribution system nationally and continued investment
in product promotion. Domestic companies also looked at the buyout of brands
and companies as a means of improving value growth, with players like Dabur
India Ltd, Godrej Consumer Products Ltd and Marico Ltd all on the prowl for
companies and brands that not only add to the top line but also bring in
intangible benefits.
Robust forecast performance predicted, with competition expected to hot up
Cosmetics and toiletries is expected to continue on its upward growth curve
during the forecast period. While value growth of the more penetrated bath and
shower products and oral hygiene is expected to be lower than overall value
growth of the market, deodorants, colour cosmetics and fragrances are all
expected to see double-digit constant value CAGRs (compound annual growth
rates). With this growth will come increased competition, and a growing array
of domestic and international brands are expected to enter the fray.
Developments in modern retailing in India are predicted to help these new
brands establish their presence more rapidly than during the review period.
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