There has been a perfect storm of four key factors in my opinion that have led to a near deluge of skincare brands in India in the recent times.
If you think of it, there has never been a better time for the skincare industry or the larger BPC (beauty and personal care) industry. Not only are you spoilt for choices as a customer but if you are really passionate and want to start your own line even, today you can do it without even stepping out of your home. The only thing you need to do is to come up with a concept and identify a sizeable target audience who will be willing to pay for your story a.k.a. concept.
Today, it is practically possible to outsource R&D, procurement, manufacturing, packaging design, website development, graphic designing, copywriting, digital marketing, warehousing & logistics, PR, accounting, hiring. You can choose whichever part(s) you are passionate about and feel as your differentiator in-house and outsource the rest. To further ease things, there are credible outsourcing partners that are willing to start at a very small scale with you.
India is now officially the largest population by country in the world and one of the youngest at that. Companies all around the world are looking at this consumer base to deliver growth. To put things in perspective, according to a report in The Mint, the per capita spending on BPC in India is currently a meagre US$11 compared to US$250-300 in advanced economies. India’s per capita GDP is expected to increase from US$2400 to US$4,000 by FY30, per a report published in The Economic Times. As India moves towards a middle income economy, consumer spending is likely to increase at a much higher pace.
Aman Mohunta
In terms of the digital penetration, according to IBEF, India has gained 125 million online shoppers in the past three years, with another 80 million expected to join by 2025 thanks to amazing mobile connectivity & cheap data packs. Making them directly accessible via social media, marketplaces such as Nykaa and your own website. Like I said there has never been a better time for the skincare industry in India.
Until policy interest rates in the developed world were zero (or near zero), capital was plenty. And with very low to no growth in the developed world, most investors wanted in on the once in generation boom that BPC industry in India is going through led by the factors mentioned above. As a result, it had become very easy to raise seed or growth capital. However, increase in cost of capital has in turn increased focused on profitability and venture capital has indeed become more discretionary. My sense is you will see relatively fewer new brands coming up.
One can always self-fund the initial journey (or raise through friends & family) and demonstrate that there is a sizeable market for your concept and you can scale profitably. Once you achieve that, investors will find you. In my view, this is a great development as now only those brands that have a genuine differentiator will only survive in long run.
Consumers have different preferences when it comes to texture, fragrance, safety, sustainability, price point and of course we all consume the brand story also and there is demand for all kinds of brand stories. What I see in all of this is as spending capacity of such a mighty population grows, there will be demand for lot of different kinds of products, concepts, experiences & stories. For one cohort affordability will be more important. While some would focus more on potent formulation and not care about the price point. We humans are a cocktail of logic and emotions.
In conclusion, although it might appear crowded to an outsider, and progress may be gradual, there will always exist a niche for a BPC brand rooted in genuine passion and with a unique proposition, both within India and across the globe. Like I said earlier, the tasks that may have seemed tedious few years back can all be outsourced. The only industry wide hurdle I hear today for young BPC brands is increasing cost of customer acquisition through digital channels. But I am sure there are lot of creative ideas out there that are yet to be tried.
Words by Aman Mohunta, founder at Aminu Skincare
Art work by Kayehaan.
