The return on investment in the beauty business is high, and the moment for investors to deep dive in it is now
Today, the Indian beauty and personal care industry has become much more than your daily colour cosmetics products. It has become a tool for transformation and expression. Consumers appear to be laying special emphasis on both looking and feeling good. This changing landscape of the Indian beauty industry has opened new avenues for consumers as well as investors and venture capitalists.
With new brands coming forth and bringing in numerous exclusive products along, the industry is growing faster than ever. While the pandemic did impact people, businesses and spending habits, the beauty industry was fast to read and analyse this pattern in consumer behaviour - provided and re-strategise both, the product innovations and marketing strategies.
India’s share in the beauty and personal care industry (BPC) is increasing exponentially and is looking quite promising. It is estimated to reach $28 billion by 2026, increasing at a CAGR of 16.39 per cent. Country’s per capita spend on beauty and personal care is increasing in proportion with its GDP, leaving ample room for record-breaking statistics.
Even when the global economy took a toll, the beauty industry managed to stay put. As a result of the ‘look good, feel good’ ideology, makeup and skincare made their place in people’s everyday routine and with this, beauty emerged to become one of the fastest-growing consumer sectors of India. If this is not a convincing enough reason for you to invest already, here’s more:
Ever-Evolving Nature of Beauty
Makeup and personal care have been around and about since forever and this industry can never go out of style which is what makes it such a good investment. At RENÉE, our bestsellers are the ones inspired by a strong sense of nostalgia. Along with this, cosmetic art is argued to have been the earliest form of ritual in human culture. It has always been a hot topic of debate and controversy. Although many people have argued makeup to be overrated and harmful for one's self-esteem, the purpose of makeup is the opposite. It gives them the freedom to transform into anything and anyone, making them feel powerful and confident. The trends of beauty may change over the years, but the confidence, liberation and transformation that comes along, is timeless.
Driven by the Digital Boom
Social media has turned out to be a boon for the beauty industry and has provided new ways to target the right set of consumers without having to spend a fortune on marketing the products. As someone in the game myself, I have realised the potential in digital for small scale brands and start-ups to achieve the desired ROI. According to a report, 41 per cent of the consumers are likely to find out about new products and brands via ads on social media and 47 per cent via the updates by brands on their social media page.
With the power of social media, today brands can track the success of their marketing efforts in a single click. This has not only helped brands in creating better campaigns, but also proved a great tool for investors in understanding their performance.
Road to Sustainability
Competition in the beauty industry is rising daily. As social media gives people one of the biggest platforms to speak out about important issues, there is real pressure for brands to enter this conversation. Sustainability and the environment are the most talked about issues and the need for eco-friendly products has skyrocketed. Nowadays, a company can’t depend on good marketing alone to sell their products. They also need to deliver quality products and stand up for a cause. Research shows that customers are much more likely to buy sustainable products and even pay more for them. A lot of brands have stepped up to introduce eco-friendly, vegan and cruelty-free products in the beauty line, taking a step forward in doing the right thing.
As sustainability becomes a chosen dialogue and people become more conscious about what they put on their faces, supporting beauty brands that are clean and conscious also helps in building an investor's image. This, in turn, helps the investor evangelize their CSR requirements and support the environment.
Celeb Trust & Endorsement
Influencer marketing on social media has become the most effective way for a brand to build its presence and market its products. Influencers and celebrities are a diverse range of people who have the power to affect the purchasing decisions of their audiences as they have developed strong followings on their social media. Apart from the obvious benefits of the increased target audience, celebrity branding can have a positive impact on the company’s finances as well. This is because people see celebrities as trustworthy figures and believe that they can invest in a particular product if it is being endorsed by the celebrity/influencer they look up to.
Destigmatising Norms of Masculinity
Regardless of what the beauty norms have you believe, skincare requirements for both men and women are the same. There are not very many brands out there that cater to men’s needs concerning skincare issues, leaving an entire market share of the population to be cashed on. With the changing standards of toxic masculinity and social media playing its part in it, men have at least become beauty curious, if not beauty enthusiasts. As of now, men account for just one per cent of the market share in the industry but is expected to grow at a CAGR of 6 per cent by 2025. For investors looking to be a part of the change and reap the benefits that await, this part of the beauty industry is heavily lucrative.
In conclusion, today, the return on investment in the beauty business is high. Being an entrepreneur and a believer the power of beauty, I can say that the industry is rapidly growing at every margin, with great opportunities. Beauty has always been a tool for transformation, and today, with its potential at an all-time high, the moment for investors to deep dive in it is now.
The author is Founder and Director, RENÉE Cosmetics
DISCLAIMER: Views expressed are the author's own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.