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Last night I was reading a Jan 2008 article in Hindustan times reporting statistics from Associated Chambers of Commerce and Industry of India (ASSOCHAM) about cosmetics and toileteries market in our country. The report said that India’s per capita consumption of cosmetics and toiletries for well-known branded products stood at 0.68 dollars as against 40 dollars in Hong Kong, 10 dollars in Malaysia and Taiwan, 12 dollars in Japan and 1.5 dollars of China. Not only that, The penetration level of international cosmetics brand in India was also reported as low. International brands accounted for only 20% of the cosmetics market. The Remaining 80% use low-cost cosmetics and toiletry products. The main reason for low penetration of foreign brands in India is the price differentiation. India is a price-sensitive market.
Of course it is. As if we didn’t know it already. 🙂
Unfortunately, the price factor is something which is often not in control of the foreign brands. The cost of importing products to India for the foreign brands is very high: the average import tariff on cosmetics is 40 per cent, but can rise to 65 per cent after other taxes. Well, you can set up a manufacturing unit as L’Oreal did in Pune, but you have to negotiate that with the Drug Controller of India (DCI).
Not only that, abundance of natural and Ayurvedic ingredients in India has given burgeoning growth to natural cosmetics sector providing cheaper natural alternatives to standard beauty products and foreign brands.
Also, low awareness about skin care, cosmetics ingredients, personal groomming etc. tend to dissuade most Indians from buying expensive foreign products as they cannot differentiate between these products and their cheaper alternatives.
However, most of the cosmetics companies are optimistic about India growing as a strong market for cosmetics and toileteries. The various reports that I read pin down the growth of this market to somewhere between 20% and 25% per annum. Most foreign cosmetics companies also predict growth of their market share because of the following:
- Jump in high-income levels of Indians in a rapidly growing economy.
- Growing percentage of working women and hence increase in paying capacity of women.
- Increase in awareness about personal grooming and appearance.
Well, how big a market the foreign brands capture, still remains to be seen. Right now, let’s have a look at the expensive cosmetics products that are popular with our readers. Ladies! Here are the results of our ‘Which Expensive Makeup Product is Worth The Money?‘ survey: