India’s beauty and personal care products market is in distress. Despite rising incomes and an increasing number of shoppers, growth slumped to a five-year low in 2015 as demand for mass-market products remained weak.
According to Euromonitor data, the Rs74,7oo crore ($11 billion) beauty and personal care products market grew 13.6% in 2015, much lower than in previous years.
This segment accounts for roughly 22% of India’s total fast moving consumer goods (FMCG) market, according to a report by consulting firm KPMG and the Federation of Indian Chambers of Commerce and Industry. Two straight years of low monsoon had led to a slowdown at India’s top consumer goods firms as shoppers went easy on discretionary spending.
Euromonitor’s May research report cited sales of deodorants, creams, soaps, toothpaste, and cosmetics to show that growth had suffered due to sluggish consumer spending on personal care products.
As a result, more firms took to higher promotions in 2015 to stoke demand. “Overall awareness and usage of beauty and personal care products increased, largely due to the large scale promotion of brands in this area throughout India,” the Euromonitor report said.
Companies reduced prices and launched smaller pack sizes to make products affordable.
“We had taken proactive calls on pricing. Given the fact that as there is a slowdown, affordability becomes an issue,” said Saugata Gupta, chief executive at Mumbai-based consumer goods maker Marico, in an interview with CNBC. Marico gets a bulk of its sales from Parachute coconut oil and brands like Set Wet.
While companies were struggling to revive demand, the year saw the emergence of more “natural” or “herbal” products. That sparked a war for market share.
As yoga guru Ramdev’s ayurvedic products—under the Patanjali brand—jostled with the country’s largest consumer goods makers in categories such as toothpaste and facial cream, more Indian companies added to their “natural” offerings basket.
“To counter the growing threat of Patanjali Ayurved, other major players in the market such as Hindustan Unilever, Colgate-Palmolive India, Dabur India, Emami, Marico and Godrej Consumer Products also focussed on strengthening their natural and herbal portfolios,” the report said.