International Business: India
India: From the Runway to Runaway Sales
Global beauty-pageant wins have sparked a boom in cosmetics
Blame it on the beauty queens. Ever since India's loveliest began bringing home international crowns five years ago, the nation's beauty business has never looked so--well--attractive. Not so long ago, Indian women were limited to two brands of lipstick and cold cream. Now, thanks to market liberalization, they have plenty of choice--be it hair mousse, foot cream, or sparkly nail polish. And, inspired by the likes of Lara Dutta, crowned Miss Universe 2000 in May, they are spending with abandon.
The result is a boom in the beauty business that's lifting sales at department stores and humble stalls alike. The stampede to the cosmetics counter is only part of it: In their newfound obsession with looking hip and trim, Indian women are also rushing to join fitness centers. Even cosmetic surgery is experiencing a boom. Indian girls increasingly see Dutta and other beauty queens as role models: You can't buy advertising like that. "The impact [of the contests] on middle-class India has been huge," says Nirav Sheth, an analyst at SSKI Securities in Bombay. "Awareness has boosted demand."DREAM CUSTOMERS. The beauty pageants are yet another manifestation of the liberalizing forces at large since India opened its economy 10 years ago. The proliferation of cable television and foreign films has made Indians more open to international images of health and beauty just when Western cosmetics had become widely available. Women such as Chaaya Momaya, a 35-year-old restaurateur in Bombay, now think nothing of devoting several hours a week searching for the perfect lipstick. During a recent visit to the tony Benzer department store, Momaya dropped $150 on stick-on tattoos, glitter creams, and lipsticks. "It keeps one young and looking good," she says.
Momaya is a dream customer for global beauty merchants such as L'Oreal, Revlon, and Clarins. And there are plenty more shoppers like Momaya. Analysts estimate that India's beauty market is worth $1.5 billion and growing 20% a year--twice as fast as in the U.S. and Europe. Unilever PLC subsidiary Hindustan Lever Ltd. is launching 50 new beauty products each year. "The Indian woman no longer compares herself to other Indians," says Lever's new-ventures chief Dalip Sehgal. "She uses the international concept of beauty."
New arrivals, such as L'Oreal, which has spent $30 million on local manufacturing since 1994, have branched out from shampoos to cosmetics. Dinesh Dayal, chief operating officer of L'Oreal's local subsidiary, says Indians will pay for what he calls "innovative products." Anti-wrinkle creams, say, are commonplace in the West but a revelation in a market that was closed for decades.
Homegrown cosmetics companies are profiting from the general boom in demand as well. Dabur India Ltd., a $250 million maker of traditional medicines, has launched an herbal hair oil and shampoo that boast sales growth of 22% a year. In 1999, Dabur made $18 million in profit, up 20% from the year before.
The beauty boom is likely to pick up even more as Indians cast aside traditional notions of modesty. In Bombay, overachieving parents send kids to "personality classes" and, later, to society dames who teach the arts of diction, grooming, and deportment--a very new trend. According to Imam Siddique, a Bombay talent and casting consultant, four years ago, he would have been lucky to get four aspiring models and actors a week. Now, he gets six times as many.SURGERY, TOO. For some of India's body-conscious women, cosmetics alone don't suffice. Taking advantage of lower tariffs on workout gear, gyms are opening from Bombay to Calcutta. At trendy Talwalkars--one of 110 gyms listed in the Bombay phone book--sari-clad matrons sweat it out alongside leotarded girls for $350 a year, a princely sum by Indian standards.
Cosmetic surgery is becoming popular, too. "Women come to me from remote areas to have their skin peeled with a laser," says Dr. Narendra Patwardhan, a plastic surgeon in Pune, north of Bombay. Patwardhan, who charges $100 for a laser face peel and $750 for a nose job, has seen his patients double in number since Aishwarya Rai became Miss World in 1995.
The picture isn't all pretty, however--especially for outsiders. India's 100% duty on premier cosmetics has spawned rampant smuggling. But Western companies wouldn't dream of giving up. With the beauty market projected to grow fourfold, to 60 million women by 2004, India is an opportunity that slinks down the catwalk just once in a lifetime.By Manjeet Kripalani in Bombay