INTRODUCTION

As the world embraces the secrets of wellness and care in recent years, India has emerged as a thriving market for cosmetics, particularly skincare and haircare products. South Korean beauty products (K-Beauty, as it is often called), either manufactured for Indian businesses and sold under Indian brands or retailed directly under Korean brands, have shown a sharp uptrend, aligning well with the consumer preferences.

This article delves into the Indian cosmetics market exploring key trends and the intersection of global influences, particularly from the booming K-Beauty industry. Additionally, it provides an overview of the regulatory framework governing cosmetics in India, emphasizing licensing, labelling standards, and ingredient regulations prescribed under Indian law. It provides a glimpse into investment conditions that investors in this space should take into account. The article aims to equip stakeholders with valuable insights into the Indian cosmetics market, facilitating informed decision-making in this dynamic and promising sector.

KEY TRENDS IN THE INDIAN COSMETICS MARKET

As health came into focus amid the pandemic, early 2020s saw three key trends in the Indian cosmetics industry: (i) the merging of beauty and healthcare; (ii) the move towards 'natural' and sustainable practices; and (iii) the shift towards online beauty shopping with the simultaneous rise of 'skinfluencers'.

The merging of beauty and healthcare

As expected, the onset of the pandemic led to a significant shift in global priorities. Health, which was always important, suddenly became the central focus for individuals, communities, and governments alike. From personal hygiene practices to healthcare infrastructure, every aspect was scrutinized and enhanced to combat the unprecedented crisis – fitness, nutrition, mindfulness, hygiene and sleep were a few areas which were emphasised upon. One key sector that witnessed this change was the cosmetics industry. There has been a noticeable shift from 'cosmetic' products, which primarily enhance the skin's appearance, to 'care' products that emphasize the wellness of the body beneath the skin and celebrate its natural characteristics. A recent study revealed that the spread of the pandemic positively influenced the skincare product market, while it had a negative impact on the sales of makeup products.1 One reason for this could be that the pandemic induced lockdowns provided an opportunity for consumers to utilize more time they had to experiment with different skincare products, particularly those containing 'active ingredients'. Active ingredients are biologically active components in skincare products that have a direct effect on the skin. For instance, ingredients like salicylic acid, benzoyl peroxide, and retinol are often used in acne treatments. These ingredients can initially cause skin irritation or even exacerbate acne symptoms as the skin adjusts to the treatment (often referred to as a "purging" phase). However, with consistent use over time, these ingredients can significantly improve skin health and reduce acne. During the lockdown, people may have had the opportunity to go through this initial phase without the concern of social engagements. The active ingredients segment in the cosmetics space is one of the fastest growing segments in the industry.2

The move towards natural and sustainable Practices

In consonance with the shift in the cosmetics industry towards 'care' products, there has also been a gradual rise in the demand for natural and herbal alternatives to existing cosmetics products, often referred to as "clean beauty". These are characterised by several factors:

  1. Absence of hazardous chemicals: Clean beauty products are characterised with the absence of chemicals that are common but are now known to be hazardous for the skin. For example, parabens (which may have potential endocrine-disruptive effects), sulphates (which are aggressive surfactants that can strip away the natural skin oils) and formaldehyde (which may cause adverse skin reactions).
  2. Sustainable practices: Clean beauty products tend to align with eco-conscious values by emphasising at sustainability at each stage of the process. The products are made with organic, plant-based ingredients that are sourced from fair trade ethical cooperatives, tested with cruelty-free testing methods (avoiding animal testing), and packaged in recyclable and refillable containers.
  3. Transparency to the customer: In line with the overall objective of 'clean', clean beauty products champion transparency through clear ingredient lists including their quantity, potency and sourcing (for example, a conventional serum may advertise vitamin C as an ingredient, but a clean beauty serum may alternatively specify "10% vitamin C sourced from XYZ Inc., Germany").

The rise of 'skinfluencers' and online beauty Shopping

As is true across consumer categories, brands and retailers are tapping into influencers as an entire marketing channel. Fashion and beauty influencers worldwide are the most popular, making up almost 20% of all influencers on Instagram.3 In the skincare space, audiences subscribe to influencers they relate with, through commonalities of skin tones, textures, pigments, as well as skin conditions they seek to remedy.

This has allowed brands to push for higher e-commerce sales and start-ups to enter the industry without competing for retail shelf space, as consumers are now able to buy a skincare or cosmetic product based on the effect they see a product have on an influencer with similar skin, rather than going to the store and trying the product themselves.

With the demand for transparency, brands communicate through influencers using longer-form content on skincare routines, the science behind certain ingredients, interactions with the skin, as well as real-world progress which audiences can follow. These would not be possible through conventional marketing avenues. Apart from established influencer marketing tactics such as discount codes, product reviews, sponsored hauls and giveaways, some brands are also collaborating with influencers and celebrities for a personalised line of products (for example, YouTuber Shreya Jain's collaboration with YBP Cosmetics and designer Sabyasachi Mukherjee's collaboration with L'Oreal), while some other celebrities such as Deepika Padukone and Katrina Kaif have started their own skincare brands, showcasing the growing trend of personal branding in the beauty industry.

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Footnotes

1. Choi Y-H, Kim SE and Lee K-H, 'Changes in Consumers' Awareness and Interest in Cosmetic Products during the Pandemic' (2022) 9 Fashion and Textiles https://fashionandtextiles.springeropen.com/articles/10.1186/s40691-021-00271-8 accessed 11 March 2024.

2. Kumar R, 'New Concepts to Drive Demand for Active Ingredients in Asia' (Kline & Company, 5 May 2022) https://klinegroup.com/articles/newconcepts-to-drive-demand-for-active-ingredients-in-asia/ accessed 11 March 2024.

3. Dencheva V, 'Global Instagram Influencer Share by Category 2022' (Statista, 18 December 2023) https://www.statista.com/statistics/1123051/instagraminfluencers-share-world-category/ accessed 11 March 2024.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.