A

Report on

Personal Care Products Industry

In India

Submitted To: - Submitted By:-

Prof. R.J.Masilamani Apurva Bhardwaj(207) Jain Avi Dinesh(222)

Nishant Gupta(235) Prateek Jaiswal(240)

Pratichi Dixit(241) Prerana Sharma(243)

Prerna Karwa(244) Rachita Masand(245)

Rashmi Sharma(248) Sanchit Gupta(253)

Satish Singh(256) Saurabh Bhattacharya(257)

Shivaji Saha(260) Swati Bhatter(271)

TABLE OF CONTENTS

SL. NO. CONTENT PAGE No.

1. INTRODUCTION 3

2. Market Size and Growth (Indian Perspective) 5

2.1 Key Trends and Growth Drivers in India 6

2.2 Personal Care Ingredients in India 6

3. Major Players in India 7

4. Industry from Indian Consumers Perspective 9

5. Industry from Market Player Perspective 10

6. Demand Dynamics in Consumer Goods 11

7. Personal Care Industry- The Global View 12

8. SWOT Analysis of FMCG Sector as a Whole 14

9. The Rural Market- A Big Target 15

10. Way Ahead for Personal Care Industry in India 16

REFERENCES 17

1) INTRODUCTION

Personal care products are one of the key constituents of the Fast Moving Consumer Goods (FMCG) sector. Personal care is the industry which manufactures consumer products used for beautification and in personal hygiene. Personal care includes products as diverse as chapstick, cleansing pads and wipes, colognes, cotton swabs, deodorant, eye liner, facial tissue, hair clippers, lip gloss, lipstick, lotion, makeup, mouthwash, nail files, pomade, perfumes, personal lubricant, razors, shampoo, talcum powder, shaving cream, skin cream, toilet paper, toothbrushes, and toothpaste, to give a few examples.

The major demand is for the products that are of basic need for the consumers like soap, shampoo, hair oil etc. The personal care products industry consists of four major sub-sectors manufacturing a range of products. These sub-sectors and their products are highlighted below: 

Face Care Products - Face is the reflection of an individual’s physical appearance. Generally, the beauty of a person is described by the look of one’s face. Thus, to enhance the beauty of the face people use face care products whose market is growing at double digits. The industry manufactures products like astringent, face cream, face scrub, face toner, moisturizer, cleanser, etc. Some of these products are used for clarification and purification of the facial skin from dust and harmful rays of the sun while others are used for toning. 

Hand and Foot Care Products - As the name suggest these products are used to enhance the beauty of hands and feet. These include herbal and organic products, as well as products for youthful skin. Men have also started to take better care of themselves, resulting in growth in the men’s foot care products market segment. Hand and foot care products can be broadly categorized into cuticle care products, foot scrub, hand and foot cream, nail care products etc.

The diagram below shows the various market segments: 

Figure 1: Global Market (segment) share in %

Hair Care Products - Hair care was the largest market segment, both in 2004 and in 2005 with sales reaching 350 million dollars globally. The price war has had its impact on the shampoo and styling categories. Sales in hair coloring products have stabilized while hair conditioners and hair repair products, showed significant growth. Consumers are willing to buy special, more costly, products because these products are used for many purposes like hair cleansing, hair conditioning and hair coloring. Some important hair care products are mentioned below:

o Hair Shampoo

o Hair Conditioner

o Hair Oil

o Hair Styling Gel

o Hair Glaze

o Hair Spray

o Hair Colors

Cosmetics - The global cosmetics market continues to benefit from a combination of strong macroeconomic trends creating opportunities for new product niches. Cosmetics are items to enhance or protect the appearance or odor of the human body. The products included in this category are: 

o Eye makeup product

o Face makeup product

o Lip makeup product

The above mentioned are the various product lines that the personal care category includes.

2) MARKET SIZE AND GROWTH (INDIAN PERSPECTIVE)

The personal care products (PCP) market in India is estimated to be worth around USD 4 Billion p.a. Personal hygiene products (including bath and shower products, deodorants etc.), hair care, skin care, color cosmetics and fragrances are the key segments of the personal care market.

Each of these segments exhibits its unique trends and growth patterns. For example, the largest segment of personal hygiene products, largely dominated by bar soaps has grown at 5% p.a. over the last five years. In comparison, the second largest segment, hair care products has seen a much higher growth of 9-10% p.a. during the same period. The skin care market is relatively smaller and is growing at a relatively high rate while moving away from basic creams and moisturizers to specialized products such as anti-wrinkle and dark circle removing creams. For example, the anti-ageing segment, though only 2% of the skin care market has been growing at a rate of greater than 90% p.a. over the last few years.

Figure: Indian market for personal care products

2.1 Key trends and growth drivers in India

As in other parts of the world, the driving force behind personal care products has evolved considerably in India. Starting from purely health notions and moving on to fitness, the current trend is towards well-being coupled with beauty. In an effort to adapt to these changes, the industry has moved from basic products such as soaps, shampoos and hair oils to functional products such as cold creams and now to specialized products such as sun block lotions, body exfoliating creams and skin whitening & anti-ageing products.

The sizable Indian population base with rising disposable income offers the personal care industry a burgeoning middle class to market a large variety of consumer products. As compared to China, India has a fairly similar personal disposable income per household and a growing population of women in the 25-44 age groups, the key consumer segment. Several social, market and industry trends signal the possibility of Indian personal care industry realizing this huge potential in the near future. Increasing urbanization, rising participation of women in urban work force and growing importance of looks and personal grooming not only for personal but professional reasons are some of the key social drivers. Market trends like spread of organized retail to Tier II cities, development of non-traditional segments like men’s cosmetics (with products like hair gels and fairness creams) and development of a wide range of products at different price points are all factors which could contribute to the growth of the domestic personal care market. Industry trends like increasing competition with entry of large MNCs, increased brand building and customer awareness initiatives by companies are accelerating growth. Subject to sustained overall GDP growth rates of 8-9% p.a., the overall Indian personal care market has the potential to grow at 15%-16% p.a. (much higher rates for select segments like color cosmetics, skin care and deodorants) and thereby double to USD 8 Billion by 2012-13.

2.2 Personal care ingredients in India

The Indian personal care ingredients market is currently estimated at USD 300-350 Million. The relatively higher price sensitivity of the Indian personal care market has traditionally limited the role of high value personal care ingredients. This has also contributed to lower R&D spends and fewer innovations by the Indian personal care product formulation companies, few of which are backward integrated in the personal care ingredients space. However the recent market developments and changed competitive landscape with the advent of large corporations willing to take investment decisions for a longer time horizon have contributed to changing the scenario. Global trends like high demand for green products are already well established in the domestic context due to long standing preference of the Indian consumer for herbal products. Other trends

like consumers demanding better performance from products, whereby a minimum addition of the active ingredient to justify marketing claims is no longer sufficient, are relatively new.

Indian personal care industry typically uses specialty chemicals such as surfactants, fragrance compounds, polymer compounds and UV filters as active ingredients. Growing demand is leading to development of high end specialty active ingredients with a stronger emphasis on organic (natural) ingredients. Driven by increasing consumer preference for products with better functional benefits, the personal care ingredients market is expected to surpass the growth of the personal care products market.

3) MAJOR PLAYERS IN INDIA

1) HLL : Hindustan Lever Limited (HLL) is India's leading consumer goods supplier, with a focus on the Fast-Moving Consumer Goods (FMCG) category that includes detergents, soap, shampoo, deodorant, toothpaste, and other personal care items, and cosmetics.

HLL's personal care brands include soap brands such as Lux, Lifebuoy, Liril, Breeze, Dove, Pear's, and Rexona; shampoos and hair coloring brands including Sunsilk Naturals and Clinic; skin care brands Fair & Lovely and Pond's; and oral care brands Pepsodent and Close-Up. The company's cosmetic line is led by the Lakme brand; HLL also produces a line of Ayurvedic personal and healthcare items under the Ayush brand.

HLL maintains a strong manufacturing presence in India, with some 80 factories located throughout the country; the company also subcontracts to more than 150 third-party producers. HLL is itself a subsidiary of Unilever, which controls 51.55 percent of the group. With its strong presence and Brand Image in Indian market, it gives a huge competition to the other players.

2) Procter and Gamble: P&G Home Products Limited is one of India's fastest growing Fast Moving Consumer Goods Companies. P&G Home Products Limited is a 100% subsidiary of The Procter & Gamble Company, USA that in India, has carved a reputation for delivering superior quality, value-added products to meet the needs of consumers. P&G’s products include Head & Shoulders, Pantene, and Rejoice in the Hair Care segment; skin care brand Olay; and Oral care brand Oral-B. It manufactures a wide range of consumer goods.

3) Marico Industries: Marico is a leading Indian group operating in Consumer Products and Aesthetic Services. Over the past 17 years, Marico has been continually improvising and building new brands. Marico's Personal Care Products Business houses well-known brands such as Parachute, Hair & Care, Nihar, Shanti, Mediker, among others, which occupy leadership positions with significant market shares in most categories- Coconut Oil, Hair Oils, Post wash hair care, Anti-lice Treatment, niche Fabric Care etc.

Parachute is the premium edible grade coconut oil, a market leader in its category. It is the most known product of this company and is synonymous with pure coconut oil in the market; Parachute is positioned on the platform of purity. The brand has a huge loyalty, not only in the urban sections of India but also in the rural sector. The quality of the product has contributed to its lasting success. The consistency, with which Parachute has delivered, ensures consumer loyalty and trust in the brand.

4) Dabur: Dabur also is one of the main players in the Personal Care Industries. Dabur India Limited has marked its presence with significant achievements and today commands a market leadership status. Consumer Care Division (CCD) of Dabur addresses consumer needs across the entire FMCG spectrum through four distinct business portfolios of Personal Care, Health Care, and Home Care & Foods. The Master Brands for personal care division are:

Vatika - Premium hair care

Fem - Fairness bleaches & skin care products

Its main products and brands in this industry include categories like Hair Care, Skin Care, Baby Care and Oral Care. Baby Care Products include Dabur Lal Tail, Dabur Baby Olive Oil, etc; Oral Care Products include Dabur Red Tooth Powder, Dabur Herbal Tooth Paste, Dabur Red Tooth Paste, etc; Hair Care Products include Dabur Amla Hair Oil, Dabur Vatika Hair Oil, Dabur Special Hair oil, Dabur Coconut oil, Vatika Henna Cream Conditioning Shampoo, etc; Skin Care Products include Dabur Gulabari Jal (Gulab Jal), Dabur Vatika Saffron Glow Soap with Sandal, etc.

This company is also a great competition and one of the main players in the personal care industry. 

5) Emami : A dream of reaching out to the Indian middle class; a target audience whom they thought will have increasing potential for consumption, the company started manufacturing its products. Emami Talcum, Emami Vanishing Cream and Emami Cold Cream were great favorite brands with the quality conscious consumers in the mid-seventies. The company soon became adept in selling beautiful dreams to Indian women interested in finding their own identity.

Emami Limited is one of the major health and personal care FMCG companies in India with its brand presence globally. The famous and well known personal care brands under Emami are Baby Massage oil, Boroplus Prickly Heat Powder, Fair and Handsome, Hairlife, Malai Kesar Cold Cream, Navratna Cool Talc, Navratna Oil, etc.

This company’s main achievement and popularity happened because it was able to understand the domestic market well, catered the rural mass, and focused on Ayurvedic products.

6) Colgate-Palmolive : This Company is most famous for its range of dental care products. Its product ranges in the oral care category are Colgate toothpaste, toothbrushes, tooth powder, mouthwash, etc. In other personal care products the brands are Palmolive

Naturals Moisturizing Body Wash, Palmolive Aroma Shower Gel, Palmolive Thermal Spa, Palmolive Liquid hand wash, Palmolive Shaving Cream, Halo Shampoo, etc.

This company is also a main player in the personal care industry with huge varieties of products and its strong presence in the country.

The above mentioned are the main players in this industry.

4) INDUSTRY FROM INDIAN CONSUMER PERSPECTIVE

Personal care products have always been used by the consumer, albeit in the herbal form. With rising education levels and increased brand promotion by the personal care manufacturers, the aspirations of the younger generation have been turning to the branded personal care products.

The Indian consumer has always been value conscious. Premium category products have never been able to build on markets beyond the niche segments. The majorities of companies has identified this factor and are launching their products targeting the mass market.

Besides this, the proliferation of plastic cards has been exposing the Indian consumer to the perils of credit. People are buying consumer durables on credit and trying to balance their budgets by cutting down on their expenditure on personal care products. This is because subconsciously the average Indian consumer stills looks on the personal care expenditure as a luxury.

Brand awareness is extremely high in the urban markets but brand loyalty is very low. In rural markets, the opposite is true. This explains to a large extent the increased focus of the fast moving consumer goods (FMCG) companies on the rural markets. Moreover, the urban markets have become almost saturated with an increasing number of products, so to gain larger volumes, it has become imperative to penetrate the rural markets.

Companies are also coming out with smaller product packs to attract the consumers (those who are open to experiments and those who have lower buying capacity).

5) INDUSTRY FROM MARKET PLAYER PERSPECTIVE

Pricing, brand equity and distribution network are the key differentiating factors in the personal care market.

The major players in the market like Hindustan Lever Limited, Godrej Consumer Products Limited, Colgate-Palmolive, Emami and Dabur have build wide distribution channels with national reach. However, the big national players are facing increasing competition from local players and are losing significant market share in some areas.

One reason for this is that India, being a big country, has different demands from different regions. For example, if we consider the skin care market, North India is big on facial care and cold creams whereas South India is keen on body care applications. Hence a nationwide strategy in terms of product promotion is not showing the desired results in many cases.

Another factor is that the price wars are forcing many players to offer discounts and this has reached a stage today where some companies are launching new products with discounts. Local players with smaller distribution costs are able to compete on price, and this fact forces the companies to continue with the discounts or to lose market share.

With the retail sector getting organized in India, it is just a matter of time before the retail chains launch their own brands in the market. Even today, big companies have started to create special distribution channels for the large retailers and this is leading to some problems with the existing players in the distribution set up. Increasing competition will lead to bigger challenges on this front.

6) Demand Dynamics in Consumer Goods

The general factors driving the growth of the consumer goods sector are increase in disposable income, rural areas, and companies’ aggressive promotion of product awareness.

Rise in Disposable Income• With increasing disposable income and subsequent rise in quality of living and hygiene concerns, the average Indian’s spending on grocery and personal care products will likely increase.• Currently, the average Indian spends about 48%, also the majority, of his total income onGroceries (~40%) and personal care products (~8%)

Rise in Disposable Income (In USD Thousands)

Sources: Euro Monitor, Goldman Sachs’ BRICS Report

Higher Penetration of the Rural Population

• Many companies are deepening their penetration in the rural areas as:

The consumer goods sector in the urban areas is becoming quite saturated (though it will continue to dominate in the next 8 – 10 years) while the penetration in the rural areas are only about 1%.

The rural areas have and will continue to make up more than 50% (153 million) of India’s total households and accounting for more than its current 66% contribution to total consumption.

Rural India has a large consuming class with 41 per cent of India's middle-class and 58 per cent of the total disposable income.

Currently, nearly 34% of the off take of consumer goods companies come from rural areas.

Companies like HUL, ITC and Colgate have already established good distribution networks in these regions. Other companies would start catering to these regions in near future.

Between 2005 and 2010, this sector in the rural and semi-urban areas has experienced around 50% growth, at a CAGR of 10% and increased its market size.

7) PERSONAL CARE INDUSTRY- THE GLOBAL VIEW

The personal care industry had an excellent growth rate in all the major markets of the world. Since the past few years, people have become more conscious about their appearance and look, leading to a huge demand for these products in the whole world. New products are launched by the leading brands to attract consumers. The trends in all the leading personal care markets show that this industry is showing a massive potential for growth. The women’s beauty industry is growing at rate of approximately USD 202.254 billion every year where as the global market for cosmetics alone USD 30.33 billion somewhere around in 2007. The global personal care products industry is growing at a very rapid pace; some of the factors responsible are:

Rise in consumer spending power, Increased demand due to people consciousness,

Key demographic factors,

Entry of herbal and organic products,

Lifestyle and climactic changes, and

Massive advertising and promotion strategy

Some of the growth statistics for France, Germany, Italy, Spain, United Kingdom, United States, Russia and Brazil for the year 2007 is presented below.

France   The personal care product market in France is becoming more diversified and fragmented. In the year 2006 the personal care industry in France grew at the rate of 2.7%, earning revenue of USD 1,151.34 million according to the Federation des Industries de la Perfumeries. The largest share among all the personal care products was of body moisturizers, with sales of USD 361 m, which was 2.4% more than the previous year. 

GermanyThe German personal care market has shown a rising trend in the year 2006 with a total sale of USD 983 m as reported in IRI Germany at the rate of 3.7%. In Germany the most popular personal care products are Gels, Lotions, moisturizers and creams. 

ItalyAccording to the ECM calculations by Unipro, the Italian market figures for total sales of personal care products were USD 1,186.15 m in 2006, which was above 6.3% than the previous year.

SpainDue to increasing awareness about personal care and beauty, a large number of Spanish people are demanding good quality personal care products, which has led to a growth in the development of this industry in Spain. Body lotion and body oil accounted for the largest share among other body care products.

United Kingdom According to a study by TNS World panel, the personal care industry in UK had the total sales of $312.77m in 2006, which was 9% higher than the previous year. 

United States of AmericaAnti-aging creams and lotions have a huge demand in USA, and these products are pushing the rate of growth of this industry in this country. In USA, the personal care products market is almost USD$40 billion and according to estimates it will grow at the rate of 3.4% annually.

Russia The Russian personal care market continues to grow and in several aspects, according to some marketing specialists, doesn’t conform to the European models.

Brazil   The personal care industry in Brazil is the sixth largest in the world, and had the sales of US$9.19bn in 2006, which is up 13.6% from $8.09bn in 2005.

Figure 2: Growth in Personal Care Industry in 2006

Body care products claiming to firm, tone and lift offer consumers a quick-fix solution for body woes. The industry turns over $100 billion every year & the cosmetics market alone is worth more than $15 billion worldwide. The UK market is worth $6.2 billion with a +5.3% growth rate. People in the UK spend on average $2,000 a year on beauty treatments & cosmetics. The cosmetics market is expected to be worth $351 million by 2009. Total expenditure on male grooming products in is expected to reach $1.5 billion by 2008. Spending on own-label personal care products rose to $7.4 billion last year.

8) SWOT Analysis of FMCG Sector as a Whole

Strengths:

•Low operational costs

•Presence of established distribution networks in both urban and rural areas

•Presence of well-known brands in FMCG sector

Weaknesses:

•Lower scope of investing in technology and achieving economies of scale, especially in small sectors

•Low exports levels

•Counterfeit products, which illegally mimic the labels of the established brands. These products narrow the scope of FMCG products in rural and semi-urban market.

Opportunities:

•Untapped rural market

•Rising income levels, i.e. increase in purchasing power of consumers

•Large domestic market- a population of over one billion.

•Export potential

•High consumer goods spending

Threats:

•Removal of import restrictions resulting in replacing of domestic brands

•Slowdown in rural demand

•Tax and regulatory structure

9) The Rural Market- A Big Target

Two-thirds of the country's billion-plus population lives in rural India, generating almost half the national income. A report by Technopak Consultants and Confederation of Indian Industries (CII) estimates that rural markets generated $425 billion in revenue, up from $266 billion in 2009-10.

Hindustan Unilever (HUL), first made waves in 2001 when its Shakti project enlisted self-help groups in rural areas to build a network of women, largely from very low-income households, to sell HUL products door to door. Today, 42,000 women earn a living by selling HUL products in more than 100,000 villages in 15 states. Homegrown FMCG major Dabur, which always had good traction in rural and semi-urban markets, has also been active in improving its rural reach. 

Rise in purchasing power backed by government spending in National Rural Employment Guarantee Act, Sampoorna Grameen Rozgar Yojna, Pradhan Mantri Gram

Sadak Yojna and Swarnjayanti Gram Swarozgar Yojana with a total allocation of Rs 53,500 crore in 2009-10 and the growing minimum support price for crops at 10% to 15% year-on-year between 2005 and 2008 have fueled the rural consumption story.

The FMCG market in India grew by 14%, with rural growth punching at 18%, much higher than 12% in cities. Accordingly, the rural contribution to FMCG sales remains much higher in states that have a significant rural population. Contribution of rural India to total FMCG sales amounted to 62% in Bihar, 55% in Kerala, 51% in Assam, 50% in Chhattisgarh, and 49% in Uttaranchal. Within this segment, personal care products grew faster in rural areas than the urban areas during January-May 2010.

10) Way Ahead for Personal Care Industry in India

The outlook of more stringent regulation governing usage of active ingredients in personal care products implies the need to strengthen testing capabilities to ensure adequate product safety.Also the industry needs to self regulate to ensure performance claims made in product advertisements are commensurate with benefits delivered to consumers.

The surging demand for green products calls for better product and application R&D capabilities to use natural ingredients more effectively. Multinational players with international brands have a strong presence in the Indian formulation segment. Local brands too are gaining a foothold in the market by innovatively developing value offerings to meet the unique needs of the Indian consumer.

Going ahead, it will be important to develop R&D capabilities to further customize products for Indian consumers, create greater awareness among the burgeoning middle class and ensure effective distribution reach to service them. The companies that are able to develop a judicious

mix of the above will be the eventual winners. The time is ripe to review one’s strategy and come up with innovative approaches to help realize the full potential of the Indian personal care sector, where the ingredients market is likely to double in the next four years.

REFERENCES

http://www.tsmg.com/download/article/Personal_Care_Chemicals.pdf

http://www.fashionproducts.com/personal-care-overview.html

http://www.naukrihub.com/india/fmcg/overview/personal-care/

http://www.dabur.com/About%20Dabur-Dabur%20At-a-Glance

http://www.frost.com/prod/servlet/market-insight-top.pag?docid=10732107

http://www.researchandmarkets.com/reportinfo.asp?cat_id=37&report_id=54547&p=1

http://www.wikipedia.org/