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Indian beauty brands have struggled to convince local consumers that they are a worthy alternative to global giants or luxury houses. That’s changing as younger shoppers place preference on brands whose mission and values they feel aligned with, and show a greater willingness to experiment with niche products. India is becoming a new beauty hotspot, where emerging brands rooted in ayurvedic practices are thriving.
More widespread internet access, rising income levels and the world’s largest population of young people have also helped fuel an explosion in India’s beauty market, which has grown from $12.3 billion in 2018 to $15.6 billion in 2022, and is projected to reach $17.4 billion by 2025, according to Euromonitor International. L’Oréal, Estée Lauder Companies (ELC) and Puig have all signalled their interest by investing in local beauty brands.
“Indian consumers’ per capita gross income is forecasted to increase by 138 per cent in real terms over 2021-2040, fuelling their disposable income and ultimately providing more scope for beauty brands to further penetrate the Indian market,” says India-based Euromonitor analyst Abhay Prakash Singh.
Underpinning the boom is a heightened interest in ayurveda, the ancient Indian medical system that relies on a “natural” and holistic approach to physical and mental health, basing treatment on balancing a person’s three doshas. The practice is becoming a growing influence in beauty globally, as consumers increasingly view wellness through a broader and more sophisticated lens.
A new generation of brands is leading the charge: Kama Ayurveda, Ranavat, Forest Essentials and Fable & Mane all tap in the ayurvedic philosophy and prioritise wellbeing and lifestyle above selling products. At the heart of their offering is making Indian traditions more universally approachable, which also reflects the multicultural background of their founders, many of whom are of Indian origin but are based overseas.
The challenge for Indian brands is standing out in a nearly-$500 billion global beauty sector dominated by big conglomerates, in-house offerings from luxury brands such as Hermès and Chanel, and an ever-growing pool of celebrities, influencers and makeup artists turned entrepreneurs. Ayurveda requires a level of understanding on the part of consumers, so the onus is on Indian brands to educate as they expand globally.
Interest from big players
Indian beauty brands are drawing attention from global conglomerates in a number of ways. In May 2022, the Asia fund of LVMH's consumer-focused private equity firm L Catterton, led a series D funding round for Sugar Cosmetics, one of India’s largest omnichannel beauty companies targeting Gen Z and millennials, which is aiming to scale its physical presence to more than 40,000 retail doors across over 550 cities. Anjana Sasidharan, L Catterton’s managing director of Asia, believes India’s cosmetics market is “at an exciting inflection point of expansion”.
Executives at ELC, which first entered India in 2005, agree that the market is buoyant. For the third quarter, it reported double-digit organic sales growth in emerging markets, with “strong contributions” from India and Brazil. A “standout performance” from brands including The Ordinary and Mac Cosmetics was also attributed to geographical expansion into India and the Middle East, helping to offset the decline in overall organic net sales for skincare, according to ELC president and CEO Fabrizio Freda.
ELC acquired a 20 per cent stake in premium Indian skincare brand Forest Essentials in 2008, and last July, its new incubation ventures arm partnered with Indian beauty and lifestyle retailer Nykaa to support India-focused companies and entrepreneurs; a sum of $500,000 was shared among three selected beauty brands, along with access to mentors, including Deciem co-founder and CEO Nicola Kilner and fashion personality Derek Blasberg. The aim was to grow the prestige and premium beauty offering in India, ELC’s vice president of new incubation ventures Shana Randhava told Vogue Business ahead of the launch.
L’Oréal, which made its first acquisition in India in 2013 with the purchase of Mumbai-based skincare brand Cheryl’s Cosmeceuticals, is also investing in Indian beauty startups; last month it made a strategic investment in DSG Consumer Partners, a venture capital firm specialising in consumer brands across India and Southeast Asia. “The future of consumer brands will largely be shaped in these markets. So, it’s important to build a strong connection to its dynamic ecosystem of disruptors and invest in promising consumer brand startups,” says Vismay Sharma, president of L’Oréal South Asia Pacific, via a statement.
India’s booming beauty sector could potentially be L’Oréal’s next billion-dollar market as the country’s middle-class population doubles in the next five to 10 years, chief executive Nicolas Hieronimus said during the company’s 2022 annual earnings conference. Haircare was identified as a highlight, growing twice as fast as the market. Hieronimus said 40 per cent of L’Oréal’s growth is coming from “high-potential” emerging countries, such as India, Mexico and Brazil.
While L’Oréal only has two divisions in the country, it already commands an 8 per cent market share; e-commerce, the group’s main growth driver, tips that figure to over 10 per cent, according to Hieronimus. “I was in India two months ago and I was really impressed by the growth, development and accelerated sophistication of this market. It’s still not as developed as we would have liked in terms of distribution, but it’s really accelerating and our shares are growing.” L’Oréal plans to strengthen its footprint in India by continuing to harness the local digital infrastructure, which has evolved to include deeper e-commerce penetration and online payments, he said. “From a €500 million business today, I think we can take it to €1 billion in the foreseeable future.”
Taking ayurveda global
Customer loyalty towards ayurvedic brands is strong as those who understand and adopt the philosophy are unlikely to abandon it, making it less of a passing fad and more of a permanent lifestyle rethink, executives argue. It’s a powerful quality at a time when poor retention and high customer acquisition costs are among beauty’s biggest challenges.
“Ayurveda is a system that treats the cause, not the symptoms,” says Vivek Sahni, co-founder and chairman of Kama Ayurveda, which launched in New Delhi in 2002 and has since acquired a following for its focus on holistic wellbeing and ayurvedic products. In September 2022, fashion and beauty conglomerate Puig took a majority stake in Kama Ayurveda — its first Indian beauty brand. “Ayurveda is not only about skincare but also health. It’s a 360-degree vision of wellness, tackling topics such as nutrition, yoga and meditation,” says Thomas James, Puig’s chief brands officer for niche brands.
Kama Ayurveda declined to share annual revenues but says that business has grown “tremendously” since launch, multiplying ninefold over the last 10 years. The brand has been distributed in India, with 62 owned stores and 145 shop-in-shops. From 20th June, it will be available in the UK via its own e-commerce site, followed by a wholesale partnership (James declined to comment on who the retailer would be) and a physical London store, where consumers can not only buy products but consult with ayurvedic doctors and engage in meditation or yoga classes, which will launch in autumn 2023. The brand is also launching new social media accounts to create more relevant content for Western consumers. The priority is “to make ayurveda easy to understand, easy to buy and easy to use”, says James.
American beauty giant Estée Lauder is teaming up with Nykaa, India's biggest beauty and wellness e-commerce platform, to launch an incubator for Indian beauty entrepreneurs.
Forest Essentials, founded more than two decades ago in New Delhi by Mira Kulkarni, is also prioritising global reach for its ayurvedic philosophy. The brand, which has revenues over $50 million and a CAGR of 40 per cent over the last three years, currently operates 142 own stores in India and sells through retailers including Sephora, Nykaa and Tira Beauty. The goal is to build “a global prestige Indian beauty brand” and hit the $100 million mark in the next three to four years, says Samrath Bedi, CEO and Kulkarni’s son. While many brands from India now specialise in oils, the key to standing out is quality, he says. “It’s not just about the products and its efficacy, but also how it was made, what ingredients go into it and what it does for you.”
In November 2022, Forest Essentials opened its first physical store in London and also expanded e-commerce to the UK. In April, it signed a partnership with retail conglomerate Apparel Group to support its goal of opening 25 stores in the United Arab Emirates within the coming five years, as well as launch e-commerce and on marketplaces in the region.
“We recognise the immense potential of the Indian beauty market and firmly believe its influence extends to the Middle East,” says Neeraj Teckchandani, CEO and director of Apparel Group. “Both regions have rich affinities for personal care and wellness [and] discerning consumers seeking products that align with their wellness aspirations and cultural heritage.” Teckchandani says he “remains vigilant” for any other potential opportunities to help amplify the group’s presence and impact in both India and the UAE.
Overcoming hurdles
One of the biggest challenges with introducing ayurveda to a new audience is education. Until recently, many Western consumers would not feel comfortable with applying oils to their hair and face due to a misconception that it’ll “make them break out,” explains Kama Ayurveda’s Sahni. “Most people would still prefer to put a cream on their face, rather than an oil.”
Forest Essentials views offline as a key channel to educate new consumers. “Our stores are our best brand ambassadors,” says Bedi. “In India, we have an 80 per cent conversion and 73 per cent loyalty factor, meaning that eight out of 10 visit a physical space and purchase a product, and about 70 out of 100 come back as repeat customers.” He attributes it to the store’s ambience and offerings. “We offer consultations with doctors who can talk to consumers not only about beauty but everything else in their lifestyle such as stress and sleep. It gives people a better understanding of what might suit them not only on the outside but the inside. There’s a trust that is built.”
Education doesn’t only mean teaching customers how to use a product, but encourages them to reset their approach to wellbeing, agrees Michelle Ranavat, who in 2017 launched her namesake brand Ranavat — the first Southeast Asian ayurvedic skin and hair brand to launch at Harrods in the UK, Sephora in the US and Holt Renfrew in Canada. “Innovation doesn’t always come in the form of new products,” she says. The goal is to “demonstrate how innovative ayurveda can be, not keep it stuck in its origins 5,000 years ago. We want people to understand its relevance today and how it can better your skin, hair and body.”
To appeal to a more mainstream audience, Ranavat is introducing more commonly known products, such as a cleansing balm this month, while still working with local Indian ingredients and supporting domestic manufacturers who still follow traditional ayurvedic practices. Wholesale (about 300 doors) currently accounts for 20 per cent of the business, compared to 80 per cent that comes from its e-commerce site (the brand doesn’t have its own physical stores). Annual revenue is seven figures and the company is operating profitably, according to Ranavat.
Representation in marketing could also help with greater adoption. This week, Estée Lauder named the country’s former Miss World winner Manushi Chhillar as its global brand ambassador. Last September, Mac Cosmetics, owned by ELC, named Bollywood star Bhumi Pednekar as its first Indian ambassador. In April, L’Oréal-owned Maybelline New York signed Suhana Khan, daughter of Indian film producer Gauri Khan; Ananya Birla, a singer and entrepreneur; and Eksha Subba, a model, police officer, biker and boxer. Earlier this month, Laneige, owned by Korean skincare giant Amorepacific, named actress Athiya Shetty as its first Indian ambassador.
Ayurveda is a concept that is here to stay for the long term, asserts Kama Ayurveda’s Sahni. “It has lasted for a few thousand years in India now, so I would say it’s a pretty good trend,” he laughs. “It’s a new way of life, and that [can also be adopted by] other people around the world.”
Correction: An earlier version of this story stated that Vivek Sahni is co-founder and CEO. He is the co-founder and chairman. (12/05/2023)
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