Seizing Opportunity For Beauty Brands As Disposable Income Surges in India

Consumer spending on beauty is growing, with 33 per cent of consumers having bought a new beauty product that they haven’t tried before

India is currently shining on the global map and rightly so. With everything going for our economy, we are poised to become the third-largest economy in the world by 2030, amounting to a whopping $7.3 trillion. One of the major factors underscoring this success is the rising disposable income in the country, with people's aspirations growing parallelly.

India's Rising Disposable Income Driving High Consumption Rate

India boasts the world's most extensive population, surpassing 1.4 billion individuals, and maintains a median age of 32 years. The substantial size of the youthful domestic consumer demographic, characterised by elevated disposable incomes and ambitious aspirations, has substantially contributed to the augmentation of overall consumption levels.

India’s consumer market is set to become the world’s third-largest by 2027 as the number of middle to high-income households rises. India's household expenditure is anticipated to surpass $3 trillion, driven by a compounded annual growth rate of 14.6 per cent in disposable income until the year 2027. During this period, an estimated 25.8 per cent of Indian households are expected to attain an annual disposable income of $10,000. The significance of consumption in the Indian economy is underscored by its current representation in the Gross Domestic Product (GDP), standing at 60 per cent. Projections indicate that India's private consumption is anticipated to more than double, surging from US$2 trillion in 2022 to US$4.5 trillion by the conclusion of the current decade.

Opportunity For Beauty Brands 

The beauty industry in India has experienced remarkable growth, propelled by the broader availability of the Internet, rising income levels and aspirations, and the largest population of young people worldwide. From $12.3 billion in 2018, the market has surged to $15.6 billion in 2022, India’s beauty and personal care market is expected to touch $30 billion by 2027. Consumer spending on beauty is growing, with 33 per cent of consumers having bought a new beauty product that they haven’t tried before. Therefore, at this juncture, beauty brands have the perfect opportunity to harness the surge in disposable income and capitalise on this favourable circumstance. Fueling this surge is a heightened interest in Ayurveda and natural ingredients, that champions a holistic approach to maintaining health. This approach is increasingly making its mark on the beauty landscape, indicative of a changing consumer mindset that views wellness through a more expansive and sophisticated lens.

India's 'AAA' Opportunity Fueling the Opportunity for Beauty Brands

What makes this the perfect time for beauty brands in India is a 'Triple-A' opportunity- age, aspiration, and access.

With 34 per cent of the country's total population, India has one of the largest millennial populations. Together with GenZ, they are estimated to comprise 50 per cent of India's population by 2030. This huge chunk of the young population is increasingly becoming aware of the importance of caring for their skin. Apart from that, our young population has rising aspirations, driven by the increasing income, information-sharing prowess of social media, and growing knowledge about the importance of skincare. Coupled with access, amplified by e-commerce, wherein the sector is projected to achieve a market size of US$ 111 billion by 2024 and is anticipated to further grow to US$ 200 billion by 2026, this is the right time for beauty brands in India to flourish. When it comes to access fueled by e-commerce, India has witnessed a surge, adding 125 million online shoppers, and an additional 80 million are predicted to join the online shopping community by 2025.

Furthermore, a significant contributing factor to this opportunity is the growing internet penetration, which has led to a marked increase in ecommerce. The online commerce sector is poised to become a major distribution channel for the beauty and personal care industry. It is anticipated that by 2027, the market for online commerce in this industry will reach $10 billion, constituting 33 per cent of the total market share. These factors, in tandem with the ascending per-capita incomes, are poised to usher in a brighter future for beauty brands in India.

(The author is Anuja Mishra, EVP & Chief Marketing Officer, Honasa Consumer)

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