Emerging Opportunities in the Indian Personal Care Industry

Introduction

This report is based on the current trends observed in the Indian personal care industry. This report aims to facilitate the NPD and marketing teams of personal care companies in India to identify consumer segments and categories which present the maximum opportunity.

Scope

*Detailed analysis of Indian consumers' evolved mindset and how this influences perceptions about current & future prospects of personal care products

*Insights highlighting value consciousness and attitudes towards various personal care products

*Geographic scope is India

Highlights

The per capita expenditure on personal care products in India is currently the lowest, but the fastest growing among the other BRIC economies and countries such as the UK and the US.

The constant urge among Indians to maximize the leisure time at home and the high costs of professional personal care services have created a demand for personal care products which can recreate professional quality, while offering the advantage of at-home usage.

As of 2009, Indian consumers in the 1st income quintile allocate at least a third of what they spend on their grooming needs on styling products, and are expected to contribute the most towards the growth of styling products over the next five years.

Reasons to Purchase

*Provides pertinent insights on the Indian consumers' changing perspective on personal care product purchase and usage

*Access data from a recent primary research among Indian consumers, to be on track with the NPD and marketing activities

*Provides actionable recommendations to the existing, as well as potential market players in India, on the basis of product segments & income quintiles


Report Highlights

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Overview 1
Catalyst 1
Summary 1
Table of Contents 2
Table of figures 3
THE FUTURE DECODED 4
INTRODUCTION: Heightened awareness and inclination to focus on personal appearance is driving uptake of personal care products among Indian consumers 4
TREND: Personal care product adoption among Indians follows a tiered structure and is fast evolving with the needs and aspirations of the consumers 6
Key takeouts and implications: the purchase and consumption of personal care products in India follows a well-defined structure, driven by inherent perceptions of hygiene, grooming and beauty, and thereby impacting consumer spending priorities 10
TREND: The 'at-home' personal care market is still in a nascent stage in India, but is slowly emerging as a key focus area for companies 11
'At-home' personal care products have had mixed success with Indian consumers, but the most popular ones have enjoyed high growth 11
The lack of skill and underlying consumer skepticism is a hurdle which has to be addressed by manufacturers before tapping into the full potential of at-home personal care products 14
Key takeouts and implications: driven by an inherent value consciousness, salon-quality personal care products which are affordable and convenient to use are going to drive the demand for at-home consumption 14
TREND: Consumers' usage pattern of personal care products has changed as a result of manufacturers' micro-segmentation efforts 15
Indian consumers' demand for more convenient and multi-functional products has increased along with the rising penetration levels across some personal care categories 16
Micro-segmentation is an effective route to not only ensure consumer loyalty to a brand, but also helps to increase purchase volumes per household of a certain product category 18
Key takeouts and implications: with rising category adoption, personal care products manufacturers in India have to consider micro-segmenting their product portfolio to retain consumer engagement with their brand and to push purchase volumes 18
TREND: More Indian consumers are actively seeking out personal care products with natural ingredients based on health and wellness concerns 19
The growth of natural ingredient-based personal care products is being driven by the skincare and haircare markets 21
The heightened consumer interest in products with natural ingredients is one factor driving the concept of 'premiumization' across several personal care categories in India 22
Key takeouts and implications: the demand for natural ingredients would continue to be a key driver in shaping product development both in the case of basic and premium personal care products 24
TREND: Rising tendency among the Indian parents' to move from traditional/home-made formulations or solutions to packaged baby personal care products 25
Though uptake of bath and haircare products is still sluggish due to the consumers' apprehension, disposable diapers have gained significant consumer trust and are the fastest growing category 27
Given a highly consolidated market structure and that majority of the baby care products in India have a premium positioning, the market for products with a mass positioning is going to present tremendous opportunities in future 29
Key takeouts and implications: although the baby personal care market in India is still in a nascent stage, rising disposable incomes and the willingness of parents to shift from traditional/home-made solutions to packaged or branded products creates an optimistic outlook for the market 30
TREND: Male consumers in India are seeking personal care products and services apart from what was traditionally defined as 'male toiletries' 30
Male inhibitions to personal grooming and styling are reducing in the face of active industry promotion of those products 30
Key takeouts and implications: male grooming and styling products need careful brand promotion over the next few years to sustain the initial demand that has been created among the Indian male consumers 33
INSIGHT: Both Indian men and women believe that physically attractive people have greater opportunities in life, and attach almost equal importance to their personal care needs 34
Key takeouts and implications: personal care products which are suited to the needs and lifestyles of both Indian men and women present tremendous opportunity across all the categories 37
INSIGHT: Among all the personal care product categories, Indians are most quality and brand conscious when it comes to their choice of shampoos and conditioners and skin creams 37
Key takeouts and implications: even amid economic uncertainty and the availability of affordable alternatives, the top brands of shampoos, conditioners and skin creams in India have retained their brand share owing to increased spending on brand promotion rather than just sales promotions 41
INSIGHT: Indians across all the age groups attach more importance to the tangible benefits of personal care products related to effectiveness, than the sensorial benefits 42
Key takeouts and implications: in a crowded marketplace, product communication based on results-led efficacy and not just sensorial attributes, is vital in building a long-term brand equity for personal care brands 45
INSIGHT: Family and peer group influence is a decisive factor in Indians' personal care product choices and this is most noticeable among younger consumers 45
Key takeouts and implications: the portrayal of actual user opinions is emerging as a preferred and powerful marketing strategy for personal care brands who wish to leverage on the consumer trust in the recommendations of friends/family 51
INSIGHT: Indian consumers are influenced by endorsements by professional associations/celebrities while choosing personal care brands, however, with age, the overall influence of endorsements reduces across all the categories 52
Key takeouts and implications: although celebrity endorsements would continue to play a significant role in creating an appeal for personal care brands, more companies might begin to seek endorsements from professional associations to drive the consumers' trust 55
ACTION POINTS 56
ACTION: While focusing on driving volumes from the lower income quintiles, manufacturers of hygiene level products need to explore opportunities for the existing consumers to trade-up 57
ACTION: Grooming product manufacturers should look at masstige positioning of their brands, especially to cater to the emerging demand from the Indian middle class 60
ACTION: Convenience of use and affordability to determine the future course of growth for styling products in India 62
ACTION: Careful marketing communication and positioning hold the key to increase the present low-penetration of lifestyle-focused personal care products in India 64
ACTION: FMCG companies should target the population of seniors who are seeking functionality and youthfulness 67
Align products with seniors' attitudes to 'healthy aging' rather than 'anti-aging' by leveraging functionality before appearance 68
Anti-aging concerns should be targeted by tailored skincare products for specific age brackets within these cohorts 68
Tackle senior specific oral hygiene issues such as plaque and sensitive teeth 69
ACTION: Correct price positioning, product innovation and marketing communication is key to grow in the Indian baby personal care market 70
Manufacturers should identify the gaps in the price bands in the baby personal care market in India on the basis of the willingness of Indian consumers to upgrade 71
Manufacturers should focus on innovation in product developments and packaging to tap the Indian baby personal care market 73
ACTION: Manufacturers should focus on developing products which offer long-term aesthetic solutions 75
Personal care players should focus on authentic and innovative ingredients in their marketing communication to promote long term aesthetics 76
Shea butter 76
Goat's milk 77
Personal care players care associate themselves with the cause of using safe personal care products 77
Personal care players should formulate and market products with reduced chemical composition 78
ACTION: Launch more multi-functional personal care products which help to save time and effort pre-purchase and post-purchase 79
APPENDIX 81
Definitions 81
Hygiene needs 81
Grooming needs 81
Styling needs 81
Lifestyle needs 82
Aspirational needs 82
Methodology 82
Further reading and references 84
Ask the analyst 85
Datamonitor consulting 85
Disclaimer 85
List of Figures
Figure 1: The Indian personal care industry has grown at a CAGR of 10% over the period 2006-2010 4
Figure 2: In 2009, personal hygiene and haircare products contributed close to 70% of all Indian television advertising of personal care products 5
Figure 3: The low per capita expenditure and the rising consumer interest in personal care, make the Indian personal care industry the fastest growing market among the BRIC economies and countries such as the UK and the US 6
Figure 4: The personal care needs of Indian consumers vary significantly on the basis of their lifestyle, personal and professional aspirations 7
Figure 5: The labor force participation rate of Indian women has risen sharply over the last few years 8
Figure 6: Consumers belonging to the 3rd and 4th income quintiles contribute close to 43% of the total households in India, and form part of the fast growing Indian middle class 9
Figure 7: With rising income levels, Indian consumers spending on personal care products are moving away from solely cater to the hygiene needs 10
Figure 8: The hair colorant market has set a good precedence for several other haircare product manufacturers to launch grooming and styling products which deliver salon quality and are suitable for at-home usage 12
Figure 9: In an effort to save money, close to 40% of the Indians are using spas and salons less often 13
Figure 10: In the Indian at-home personal care market, facial and foot care products are among the key emerging product categories 14
Figure 11: Close to 60% of the Indians consider customization/personalization benefits associated with personal care products as important while making a product choice 16
Figure 12: Micro-segmentation efforts in the Indian haircare market have consistently created increased awareness and adoption of specialized products to suit the individual needs of the consumers 17
Figure 13: A micro-segmented product portfolio has helped Vaseline cater to a wider target audience by addressing specific skin moisturizing needs 18
Figure 14: More than 70% of the Indians consider that the presence of natural/organic ingredients is important, while choosing their personal care products 20
Figure 15: Natural personal care is primarily driven by the health trends but other trends are also influential 21
Figure 16: Given the maturity of the skincare and haircare categories in India, and the high frequency of product usage, the marketers' efforts to promote the usage of natural ingredients in product formulation have been highly successful 22
Figure 17: More than 60% of the Indian consumer agree that organic beauty products are worth paying a bit extra for 23
Figure 18: Industry players are aggressively pursuing brands with 'natural' positioning in their product portfolio to tap into the 'premiumization' opportunity in the Indian personal care market 24
Figure 19: The ratio of disposable income per household to that of absolute birth rates is increasing in India 25
Figure 20: The Indian baby personal care market has grown at a CAGR of 9% over 2006-2010, and is currently valued at over $162m 26
Figure 21: Very low per capita expenditure on baby personal care products, a high birth rate and a high growth rate of the market in India present a tremendous potential for companies 27
Figure 22: Among all the baby personal care product categories, the plastic diaper market in India is the fastest growing category as of 2009 28
Figure 23: As of 2009, the Indian baby personal care market is highly consolidated considering that the top two brands command over 60% of the total market size 29
Figure 24: Product segments such as hair gels and styling creams are showing high number of new launches over the last few years owing to increased adoption among Indian male consumers 31
Figure 25: There are an increasing number of personal care manufacturers in India who are launching fairness creams specifically targeted at men 32
Figure 26: In a pre-emptive move, personal care products targeted at men have expanded into categories such as creams, lotions, gels and other cosmetics 33
Figure 27: More than 50% of both Indian men and women believe that physically attractive people have grater opportunities in life 34
Figure 28: A majority of the skincare brands in India have played to the popular notion that dull skin and lack of physical attractiveness is an impediment to opening up the best opportunities in life 35
Figure 29: Both Indian men and women show similar attitudinal tendencies in their outlook towards health and beauty issues 36
Figure 30: Indians are most quality conscious and careful about their brand selection in shampoos and conditioners, and facial skin creams, among all the personal care product categories 38
Figure 31: Even with the recent economic downturn and the launch of affordable products, the top three shampoo brands in India have maintained their share of the market 39
Figure 32: Over the last five years, the brand shares of the top three conditioner brands in India have grown despite increased competition in the market 39
Figure 33: In 2009, the volume of print ads for shampoos and conditioners in India almost doubled over the previous year, with a significant proportion of the ads targeted at brand promotion 40
Figure 34: The volume of print ads for skin creams in India in 2009 grew by 24% over the previous year, with a majority of the ads focused on brand promotion rather than sales promotion 41
Figure 35: While making personal care product choices, Indians attach more importance to 'effectiveness' than basing their decision on just the sensorial attributes such as texture, fragrance, etc. 42
Figure 36: Personal care brand communication in India is increasingly delivering visible and tangible points of differentiation to build consumer trust 43
Figure 37: Several long-standing Indian brands are making efforts to realign product formulation and communication to deliver a mix of sensorial and tangible product benefits 44
Figure 38: While choosing personal care products, close to 50% of both Indian men and women attach a lot of importance to recommendations from their friends or family members 46
Figure 39: Indian personal care companies and third-party rating organizations are leveraging on the consumers' trust in friends/family, by allowing actual users to act as opinion leaders in assessing a brand's efficacy 47
Figure 40: Portrayal of actual user advice in influencing the product choices of their peer group is apparent in the advertising of products in categories such as skincare and haircare in India 48
Figure 41: Some personal care brand marketers in India are leveraging on the power of involving actual brand users in the consumer surveys and in the campaigns to build long-term brand trust 49
Figure 42: Social networking and online media, although less explored, present an opportunity for Indian personal care brands to easily connect to their core target audience 50
Figure 43: 50% of both Indian men and women attach a lot of importance to recommendations from friends/family while choosing personal care products and this is most noticeable among younger consumers 51
Figure 44: Celebrity endorsements would continue to be a competitive and relevant tool for the marketing of personal care brands in India in the near future 53
Figure 45: Indian consumers attach most importance to endorsements made by professional associations or celebrities in the case of make-up/cosmetic products, and overall, the importance attached to endorsements is found to decrease with age 54
Figure 46: Indian personal care manufacturers would increasingly seek accreditation from medical associations as a more sustainable way to gain the consumers' trust compared to celebrity endorsements 55
Figure 47: Hygiene level personal care products have a high level of penetration across the top two income quintiles, but would continue to present an opportunity for growth at the lower end of the income quintiles 57
Figure 48: Indian consumers would be willing to trade-up to more sophisticated hygiene products in the near future 59
Figure 49: There is an emerging class of Indian consumers who are driving the concept of personal care not only as a means of addressing some concern, but as a sophistication and an indulgence 60
Figure 50: Personal care products targeted at grooming would present a strong opportunity across all the income quintiles over the next five years 61
Figure 51: Masstige position of grooming products in India would significantly aid product uptake over the next few years 62
Figure 52: A rising desire among Indians to portray an individualistic appeal is making styling products the fastest growing among all personal care products 63
Figure 53: Lifestyle related aspirations of the Indian consumers are fueling the demand for personal care products such as face make-up, hand care, sun care, fragrances and depilatories 65
Figure 54: Companies should offer a balanced positioning of functional and indulgence-related attributes of lifestyle products to be successful in the Indian market 66
Figure 55: The 50 years plus cohort accounts for a growing percentage of the total population 67
Figure 56: The Body Shop's 'Wise Woman' targets women more than 45 years of age with a host of products in India 69
Figure 57: Brands available in Indian market offer oral hygiene products tackling prominent concerns, however, none of them are clearly targeted at the senior population 70
Figure 58: The baby personal care category in India is largely dominated by Johnson and Johnson 71
Figure 59: The baby personal care market in India offers opportunities across segments 72
Figure 60: The use of natural ingredients in baby products is gaining importance internationally 73
Figure 61: Mamy Poko diapers launched in India offers a powerful differentiator in terms of being a 'pull up' type of diaper 74
Figure 62: Baby products such as body wash, shampoo, etc., should be made available in pump packaging to enhance ease of use 75
Figure 63: Companies should create product formulation which contains Ingredients such as Shea butter and Goat milk, for instance, which offer long term solutions 77
Figure 64: Association with websites and events can create a powerful platform for personal care manufacturers to interact with their target audience 78
Figure 65: Companies should work on products with a less-chemical formulation and communicate the same through product packaging and marketing efforts 79
Figure 66: Multi-functional personal care products would appeal to the increasingly time-pressed Indian consumers 80

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