Over the last few years, the herbal beauty care business has emerged as the new growth frontier as far as beauty businesses in India go, with both existing and new entrants investing heavily to promote their herbal portfolio.
Ayurvedic or herbal cosmetics refer to beauty products that use natural ingredients, rooted in a Hindu system of traditional medicine based on herbal treatments rather than the chemically treated cosmetics. The overall beauty and personal care market in India is estimated at Rs 74,700 crore by retail sales value, according to a June report by market research firm Euromonitor International. As per analysts, the Ayurvedic market is estimated to be at Rs 4,500 crore at present.
With Patanjali’s sudden rise to be a Rs 5,000 crore company in less than a decade, the overall Ayurveda space is increasingly getting competitive in India since last year. Various players are rebooting their business strategies and investing in new products or making new acquisitions to reap in the benefit of the herbal age.
For instance, India’s largest packaged consumer goods company Hindustan Unilever Ltd (HUL) relaunched Lever Ayush last year for its Ayurvedic range, to be sold exclusively online. HUL also acquired Ayurvedic hair oil and shampoo brand Indulekha in December 2015 to strengthen its presence in the premium category. Similarly, Emami recently acquired the Kesh King brand of medicinal hair oil from SBS Biotech for Rs 1,651 crore.
Even international brands are beefing up their herbals portfolios: French cosmetics giant L’Oreal earlier this month announced plans to launch a herbal hair care range under its global initiative to launch natural products.
While Ayurveda might have become a must do for these companies, existing players – including Himalaya, Forest Essentials, Just Herbs, Shahnaz Hussain, Ozone, and Biotique among others – see no threat from the competition heating up in the segment and say there’s enough room for more players.
“With the popularity of Ayurvedic beauty care and holistic systems, the competition is bound to increase in Ayurvedic beauty care segment. The beauty business is booming and there is room for more players,” feels the Founder, Chairperson & Managing Director of the Shahnaz Husain Group of Companies, Shahnaz Husain.
In the same wavelength, Owner, Just Herbs, Arush Chopra says, “We are happy about the competition as it helps the market mature.”
“Safety, honesty and effectiveness will continue to be our brand differentiators going forward. Most people think that natural products are not as effective as chemically formulated ones. Our formulas are as effective as they are safe and target specific consumers concerns using certified organic and Ayurvedic herbs with proven benefits for the skin,” he adds.
Brand Re-positioning: The Must Do!
While brands don’t see any threat from competition, they agree that there is need for Ayurvedic cosmetics brands to re-position differently, especially at a time when global brands like Mac, and Bobbi Brown are selling high-end cosmetics in glitzy malls – and drawing huge crowds despite the high prices.
Testimony for this is Bio Veda Action Research Co., which recently said that it will spend Rs 250 crore this financial year on advertising and marketing its Ayurvedic personal care products brand Biotique. It’s the first time since Biotique’s launch in 1992 that founder Vinita Jain will be spending money on advertising and marketing. So far, the brand has relied on word of mouth for growth.
Himalaya Drug Co. has also increased its advertising budget by about 25 per cent year-on-year in the past couple of years. Earlier, the company used to spend about 10 per cent of sales on advertising.
In addition to advertising and marketing, the companies are also strengthening their distributing network to reach where today’s digital consumers are.
“We are constantly on a look out for the right partners to strengthen our distribution network. We are even evaluating the option to open standalone stores in high streets or malls but have so specific timelines on this,” says Chopra. Within India, Just Herbs is currently distributed through various beauty portals such as Nykaa, Amazon and also gets a chunk of traffic through its official e-store – www.justherbs.in
The brand is also available in selected physical outlets in metropolitan Indian cities such as in salons and at few organic stores in famous tourist spots such as Goa and Pondicherry. Internationally, the brand is sold across South East Asia through Sephora.com and on home shopping networks in the USA and UK.
For the Shahnaz Husain Group, too, change has become inevitable. The company, which has a strong India wide distribution network, says that the Internet has changed the way they do business.
“Today, websites are a dynamic system of providing information about your company, the products and services. There are e-commerce websites too, from where products can be sold. Since internet traffic has increased phenomenally, it is an ideal medium to find potential customers and tell them about the availability of your products. The website increases the product’s visibility and the desire to buy it. This is true of beauty products, where glamour seems to be just a click away,” explains Husain.
At present the company retails its products through 50,000 outlets in various formats. From shop-in-shop concept in malls, with trained beauty advisors, to the regular FMCG retail system of stores in local markets. Apart from these, the format includes their franchise chain of signature salons and retail outlets.
But unlike other herbal brands, Husain doesn’t feel the need to rely on commercial advertisement as far as her products are concerned. She says, “The Shahnaz Husain Group is unique to the extent that we have never relied on commercial advertising. Since I established customized beauty care, our products have grown on massive client feedback. In fact, we have relied on word of mouth rather than commercial advertising.”
“The Indian consumer has faith in our herbal heritage. By keeping up with international trends, through products innovations and by blending advanced scientific techniques with Ayurveda, we have established brand identity and loyalty,” she asserts.
The Way Ahead
Either advertisement and marketing or just product innovation, one thing is clear, the competition in the natural, herbal and ayurvedic market within beauty and personal care in India is expected to remain intense with players witnessing a healthy growth.
“Gross revenue has grown about 200 per cent over the past two years. We are looking at outperforming this growth number this fiscal,” says optimistic Chopra.
In a report by Mint, UBS Securities India Pvt. Ltd analyst Sunita Sachdev was quoted as saying that herbal products made up just 6-7 per cent of the overall personal care products market currently, but sales by volume are growing at about “twice the segment average”.
“We estimate the herbal products market could grow to about 10 per cent of the segment by FY20 as the trend accelerates,” Sachdev wrote in the report released on 14 September, 2015.