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Higher prices keep cosmetic, toiletries consumption low in India

By Staff

New Delhi, Jan 6 (UNI) Price-sensitivity of consumers, high import tariffs and price differentiation between international and domestic brands means that despite a population of one billion people, India's per capita consumption of cosmetic and toiletries is low compared to its Asian counterparts.

Industry chamber Assocham in a statement said, India's per capita consumtion of cosmetic and toiletries is 50 times lesser than that of Hong Kong, 18 times of Japan, 15 times of Taiwan, 12 times of Philippines&Malaysia and half of China.

However, the optimistic assessment of domestic cosmetic and toiletries industry show that with increased awakening, which is growing even in rural India, the segments size will grow in next 2-3 years to around 1,400 million dollars from current level of 950 million dollars.

By then, India's per capita consumption of cosmetic and toiletry products could be at par with that of China which currently is 1.5 dollars, says chamber's analysis.

Assocham's Paper on Cosmetics : A Comparative Study between India and Asian countries' finds that domestic cosmetics and toiletry industry has been growing at 15-20 per cent in the last few years, However, it is yet to take its per capita cosmetics and toiletries consumption to a comparative levels with other Asian countries.

''Of over one billion population, India's per capita consumption for cosmetics and toiletries for well-known branded products stands at 0.68 dollars as against 40 dollars in HongKong, 9 dollars of Philippines, 10 dollars in Malaysia and Taiwan, 12 dollars of Japan and 1.5 dollars of China,'' Assocham President Venugopal N Dhoot said.

Hong Kong has the highest per capita consumption for cosmetics and toiletry products because it is the launching pad for such products for most of Asian countries.

Citing the reasons for such a low per capita consumption for branded cosmetics and toiletry products, Mr Dhoot said India's 20 million use well-known branded products made by Unilever, Procter&Gamble, Godrej, Dabur etc. Remaining 80 million use low-cost cosmetics and toiletry products.

A case for example is that most of Indians use Boroline to remove the wrinkles and skin bruises which cost only Rs 12 a piece as against Garnier and Pond's brand of wrinkle creme, which cost their customers over Rs 400.

According to Assocham, in the skin care segment the market size is just 200 million dollars as against a market size for hair market at around 325 million dollars.

Interestingly, Assocham said, women and men between the age-group of 23 to 50, majority of which are in the female segment, are the major target audience for branded cosmetics and toiletry products with 50 per cent of MNCs sale arising from this segment. Bath and shower products market size in India is estimated at 425 million dollars.

The reason for low penetration levels of international cosmetic brands in India is because of price differentiation, as a result of which, foreign brands currently constitutes only 20 per cent of the market.

The toiletries market in India is well developed and dominated by multinational companies and a few large Indian companies.

A few major players, high entry barriers, fairly high rate of new product launches and high advertisement spendings characterise this segment.

Cost of importing products are much higher than producing it in the country. India allows entry of imported cosmetics without any restrictions but the average import tariffs on cosmetics products is currently very high at about 40 per cent.

This makes imported products very expensive for most consumers.

The Indian cosmetic market, which has been traditionally a stronghold of a few major Indian players like Lakme and Ponds has seen a lot of foreign entrants to the market within the last decade.

''India is a very price sensitive market and the cosmetics and personal care product companies, especially the new entrants have had to work out new innovative strategies to suit Indian preferences and budgets to establish a hold on the market and establish a niche market for themselves,'' said a statement.

Given the price-sensitivity of the Indian consumer who do not normally prefer to fork out a large sum at one time, many cosmetic and toiletries companies launched their products in smaller pack sizes to make them more affordable.


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