L’Oreal CEO Nicolas Hieronimus sent shares of his company and others downward following comments that the global beauty market will grow at 4.5-5.0% in 2024, compared to a previous forecast of 5.0%. The key culprit was weakness in the Chinese market. This is creating significant interest among brands in the Indian beauty market, which is anticipated to grow nearly 15% annually through 2026, totaling $28.9 billion by the end of the forecast period. Not to mention that McKinsey recently noted that India is "expected to emerge as a new hot spot." Here, we break down the dynamics in China and India, as well as details of Indian consumer behavior impacting growth in the next few years.
China's Massive, but Challenged, Beauty Market
In May of this year, L'Oreal competitor Estee Lauder noted that mainland China's prestige beauty sector remains soft.
And, in April 2024, P&G explained that its skin and personal care organic sales dropped in the "low single digits," driven primarily by weakness in the China-exposed SK-II brand.
Even China's 6.18 shopping festival appeared to be challenged by lower engagement and pricing constraints.
Despite these headwinds, the market is undeniably immense. Per Statista, the Chinese beauty market is tapped to be valued at $85.1 billion by 2028.
While China's market will continue to be a massive and critical opportunity for beauty brands, industry players are increasingly looking elsewhere to power growth. India is a leading candidate in that respect.
Understand India's Beauty Market & Consumer
The relative weakness of the Chinese beauty market has driven interest toward India as a new international growth center, as evidenced by Sephora’s November 2023 retail expansion partnership with Reliance Beauty & Personal Care.
According to NielsenIQ data, India’s beauty sales were up 7.1% year over year as of Q3 2023.
In that time, fragrance sales jumped 17.6% year-over-year.
Skin care sales in India jumped 8.6% in the same period, per NielsenIQ data, followed by color cosmetics, which increased by 8%.
Hair care sales in India were up 5% in the same timeframe, while nail care sales increased about 4.9%.
Key trends in India, per NielsenIQ, include Ayurvedic ingredients native to the market, as well as minimalism and male beauty.
Google/Spate data has unearthed other trends, including natural formulations, interest in which is driven by a young population in India, as are searches focused on pollution and UV defense.
Western Brands Pouring into India's Beauty Market
Brands and retailers have been busy tapping into the Indian beauty market's potential.
Seeking international growth, Deciem has expanded its reach to India.
Similarly, Kylie Cosmetics has partnered with omnichannel specialist House of Beauty to expand into India. The brand is available exclusively in 25 Sephora India stores nationwide and online on www.sephora.in.
India's beauty sales growth is also attracting investments in key regional beauty retailers and brands.
For instance, beauty retailer Purplle recently raised $100 million from Abu Dhabi’s sovereign fund, propelling future expansion in the category.
Around the same time, skin care brand Foxtale raised $18 million from Panthera Growth Partners and other investors, pointing to confidence in local brands to compete and grow, even amid rising engagement from overseas brands.
