L’Oréal SA, the world’s largest cosmetics company, said India is rapidly growing into a beauty epicenter of the world where it can reach a €1 billion revenue mark in the next few years.
“From a €500 million business today, I think we can take it to €1 billion in the next foreseeable future. So very excited about India,” Nicolas Hieronimus, chief executive officer at L’Oréal told investors. “I don’t think India will never ever look like China, but it’s still a very promising market for us. We have high ambitions. Middle classes are rising in a major way. It’s still not as developed as we would like in terms of distribution, but it’s really accelerating and our shares are growing.”
The French cosmetics firm has about 8% share in India’s face care market and about 10% including e-commerce where Hindustan Unilever is by far the market leader with over 40% share. The company, which sells aspirational products globally, has been trying hard to compensate for its late-mover disadvantage by selling affordable packs and sachets but the distribution is largely restricted to urban markets.
The maker of the Maybelline and Garnier said 50% of the mass beauty spending is done by consumers that fall in the top two socio economic classifications in India, where it expanded twice the market rate.
“What’s interesting is to look at this upper part of the Indian middle class, which is today, let’s say 200 million to 300 million people, but which is set to double in the next five to 10 years,” Alexis Perakis-Valat – president, consumer product division at L’Oréal told analysts. “I have seen changes in the last two years like never before in terms of – in terms of sophistication of the market, in terms of change of the distribution, thanks to e-commerce. And all that powered by a super digital ecosystem. So we’re very, very bullish about India.”
L’Oreal India’s business contributes less than 2% to its parent company’s annual sales of nearly 38 billion euros. The local unit of the global rival in India, the country’s largest consumer products firm HUL is 12 times bigger, while Procter & Gamble is four times bigger in terms of sales. LÓreal India earned net profit of Rs418 crore on revenues of Rs3739 crore during the year ended March 2022, according to ROC filings sourced from
“Traditional personal care companies have mainly grown due to their distribution muscle over the years. However, post pandemic, the market is largely driven by ecommerce where D2C companies are at par with established ones with focus around product innovation, quality and affordability in a fast-paced environment,” said Ritambra Das, Cofounder at Better Beauty. “Reach is not the only criteria with which you can build brands that can be accepted by the GenZs and millennials as these buyers are interested in more than just purchasing a product.”
The beauty space is already seeing interest from retailers including Tata, Shoppers Stop and Reliance with plans to open physical stores to sell beauty products. Rival online beauty product retailers Nykaa and NewU have already built an offline presence.