India's beauty and personal care market to touch $30 billion by 2027

The Indian Beauty and Personal Care (BPC) market has the highest growth rate as compared to other countries, according to a report by Redseer Strategy in collaboration with Peak XV, formerly Sequoia Capital India.

The report, titled, “Beauty Unveiled -- Decoding the Success of Pure-Play Beauty Companies”, said that the Indian BPC market is projected to expand at a compounded annual growth rate (CAGR) of 10 per cent to reach $30 billion by 2027.

In comparison, Indonesia will grow at 8 per cent, and China at 7 per cent.

The growth prospects of the Indian BPC industry are further strengthened in light of low penetration levels.

India has per capita spends of $14 in the BPC market, as compared to $38 in China and $313 in the US.

“Beauty is the industry of the hour and provides a huge opportunity for growth. This is visible in the growing sophistication in consumption. People are moving away from buying just cleansers and categories like serums and sunscreens have picked pace. Customers are now buying varied products at an increased frequency,” said Anchit Nayar, executive director and CEO at Nykaa Beauty, who was present at the report's launch.

Meanwhile, online is a significant channel for BPC in India and is projected to become a $10 billion market by 2027, accounting for roughly 33 per cent of the market then.

The report pointed out that pure-play brands, which are focused solely on BPC, have disrupted the market by targeting specific use-cases, leading to higher growth rates, gross margins, and profitability compared to FMCG-led BPC players.

“From acne management to anti-ageing solutions, specialised use cases are where we’re seeing a lot of the action. Brands are spending a significant portion of their resources and organisation bandwidth on new product development, R&D, and customer insights to drive more efficacious products to a targeted audience,” said Sakshi Chopra, MD, Peak XV.

Pure-play BPC players are performing well in terms of growth and margins, and therefore, are valued better. In 2022, the average gross margin for major pure-play BPC companies globally was significantly higher at 72 per cent than that of FMCG-led BPC companies (44 per cent), the report says.

This trend is visible in India too as pure-play brands have gained significance in the BPC market over the years. From 30 per cent share in the market in 2017, they have grown at a CAGR of 9 per cent to have 33 per cent share in 2022. These pure-play brands are now expected to grow at a CAGR of 15 per cent to achieve 42 per cent market share by 2027.

“The BPC landscape's transformation has also birthed a slew of innovative brands like L'Oréal, Nykaa, Honasa (owner of brands like Mamaearth, The Derma Co and Dr Sheth’s), and Pure Play Skin Sciences with niche offerings. These players, wholly dedicated to BPC, are more agile in responding to evolving consumer needs, positioning themselves as leaders in this dynamic market,” the report added.

A slew of new retailers also points towards intensifying competition in the BPC market. Apart from Nykaa and Sephora, two new retailers entered the market earlier this year: Tata-backed Cliq Palette in early August and Reliance-backed Tira in April.   

Going forward, the Indian BPC market will constitute 5 per cent of the global opportunity of $660 billion by 2027, the report said.

“The BPC market has been on a resilient path in the face of global disruptions brought about by the pandemic-induced lockdowns. Industry was affected marginally while the broader economies were more severely affected. This underlines BPC’s role as a fundamental human need,” it added.