The beauty and cosmetics industry exerts a global influence, shaping beauty standards, fostering cross-cultural connections, and contributing significantly to international economies.
From the US, and Europe to China, South Korea and India, the beauty sector is a multibillion-dollar industry offering a wide range of products and services that fulfil personal care and aesthetic preferences. Being a creative industry, the beauty sector has grown today to empower consumers with better access to products and have considerable influence in shaping personal appearances, health and lifestyle.
The beauty and cosmetics industry in India is experiencing an unprecedented surge, transforming into a dynamic and lucrative global market. With a market size of $15.6 billion in 2022, this sector is poised to reach $17.4 billion by 2025, showcasing remarkable growth potential. Recent trends suggest that global beauty brands are keen to enter the Indian market to expand their global operations and ensure resilient supply chains. The ascent of domestic Indian beauty brands such as Nykaa has also gained traction both domestically and internationally, resonating with consumers due to their focus on delivering affordable, high-quality products tailored to the specific needs of Indian skin and hair.
The beauty sector also has immense potential for development in the India-Europe business corridor. With a market size of $127 billion, Europe is a global leader in the beauty and cosmetics industry, and the sector is expected to grow at 3.21% by 2028. Many European beauty majors such as Loreal, Estée Lauder, Body Shop, Beiersdorf etc. are already present in India for decades and have expressed interest to explore the Indian market further. India presents many opportunities for European beauty products and services, attributed to a confluence of factors that have reshaped consumer preferences and market dynamics.
First, the large and diverse Indian market posits a huge commercial interest for European beauty brands. Being home to over 1.4 billion people, of which 60% are under 35, the beauty of the Indian market is its large and young consumers who show interest in a wide range of beauty and cosmetics. Not just the sample size, but the quality of spending– the rising middle class with higher disposable income has also led to India becoming a feasible market for high-end and luxury beauty products, which are mainly offered by various European brands. Plus, the exponential growth of India's e-commerce sector reverberates across the beauty and cosmetics industry, providing consumers with access to a diverse range of products and brands beyond traditional retail boundaries.
Second, India’s market size, availability of raw materials and skilled labour provide European beauty companies with an alternative to China. Ever since the supply chain hiccups that were noticed globally during the Covid-19 pandemic, Europe has been keen to diversify its supply of goods from China. This is where European companies find a match in India, through local partnerships or directly setting up shop for creating resilient supply chains of beauty products to Europe and other markets. In addition, unlike in China where animal testing of cosmetics is mandatory, India promotes the manufacturing of cruelty-free cosmetics, which will not only absolve European companies from the red tape but also appeal to a widened customer base who prefer sustainable and animal-friendly products.
Third, the abundant availability of skilled and empowered labour in India is a boon for companies or entrepreneurs wishing to enter the beauty services industry. Since the beauty industry is driven by creativity and passion, a workforce with the optimum skillset is always an advantage. Unlike in the past when beauty services in India were dominated by the unorganised sector, there is a growing awareness observed amongst prospective employees who want to pursue beauty as a professional career. To top it all, most of the labour force in the beauty sector are women, which makes the industry an exemplary case for women's empowerment.
Apart from state-led programs offered by Beauty & Wellness Sector Skill Council, entrepreneur-run beauty skilling institutions/startups like Face Palette Makeup Company in Kochi, Kerala also share success stories in nurturing thousands of skilled and empowered beauty professionals, especially women. Over the past five years, Face Palette has successfully transformed over 1100 women into micro-entrepreneurs in Kerala. Through its professional Makeup and Hair courses, the organisation educates and continuously train women in the art of makeup and hairstyling. Additionally, Face Palette leverage the skill of these women artists to actively engage with clients, delivering top-notch makeup and hair services across various locations in Kerala. Face Palette, then empowers them by collaborating with these women entrepreneurs to set up Face Palette co-branded Makeup studios at strategic locations in Kerala. Witnessing the impact of makeup as a means to break the cycles of poverty, violence, and disadvantage has been profoundly rewarding.
Four, India’s prowess in digitalisation is a feature factor for promoting beauty-related technological elements or beauty tech. New-age technologies like Artificial Intelligence (AI), Augmented Reality (AR), and Virtual Reality (VR) are now being relied upon by the beauty industry to cater to enhance product quality and improve consumer experiences with brands, including AI-driven skin/hair diagnostics and AR-based makeup trials that offer tailored products/regimens. Tech startups in India and Europe are now offering diagnostic processes aided by AI to identify common skin concerns, enabling brands to customize skincare products, as well as AR-based apps which allow customers to experiment with makeup and hair colours. This new-age trend in the beauty industry opens doors for Indian beauty tech startups to reach out to European beauty companies, startups and entrepreneurs/technopreneurs wishing to enter the Indian market.
Europe has huge potential to cooperate with India in the beauty sector. With a free trade agreement (FTA)between India and the EU in cards, beauty products and companies from Europe will find more access to the Indian market. While India is keen to benefit from European investments in its domestic beauty market, concerted efforts should also be made to expand the reach of Indian beauty products in Europe, especially vegan, cruelty-free, organic and sustainable cosmetics and personal care products as well as traditional products derived from Ayurveda, Siddha, Unani etc. This will not only help India reach out to a sustainable-centric European consumers products but also drive healthy soft power narratives in Europe.
Moreover, the European beauty giants and companies wanting to diversify their operations in India should also focus on beauty services. Though beauty services in India are predominantly availed during weddings– a one-time occasion, European companies can partner with Indian influencers, beauticians and industry stakeholders to highlight and promote professional beauty services as an all-seasons industry. Additionally, the European state agencies and the EU can also collaborate with India to upskill beauty and personal care professionals– sharing best practices and skills.
Lastly, beauty industry stakeholders in India and Europe should find ways to establish constant dialogue mechanisms that focus on exchanging views on mutual interest and business cooperation. The Europe India Centre for Business & Industry (EICBI) previously had the privilege of hosting the one and only India-Europe Beauty Summit in 2019 which was held in the British Parliament in London and was attended by emerging beauty entrepreneurs and industry stakeholders from Europe and India. Such advocacy initiatives by organisations such as EICBI are essential for industry stakeholders to share thoughts, network with potential partners as well as flag potential issues in trade policy, especially since an FTA is currently under negotiations.
(K.A.Dhananjay is a Policy and Advocacy Associate fellow with Europe India Centre for Business and Industry at Europe India Centre for Business and Industry.).
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