India Market Exploding, But Per Capita Spending Still Down Versus Neighbors
This article was originally published in The Rose Sheet
Executive Summary
Rapid growth of the personal-care market in India will put the country's per capita spending on par with China in two to three years, but it still will lag considerably behind other Asian nations, according to the Associated Chambers of Commerce and Industry of India (ASSOCHAM)
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Rapid growth of the personal-care market in India will put the country's per capita spending on par with China in two to three years, but it still will lag considerably behind other Asian nations, according to the Associated Chambers of Commerce and Industry of India (ASSOCHAM). Currently, per capita spending in India is roughly $0.68, ASSOCHAM says. That figure is roughly 50 times less than per capita consumption in Hong Kong ($40), 18 times less than that in Japan ($12), and half that of China ($1.50), the organization notes. ASSOCHAM analysts estimate that per capita spending in the Phillipines, Malaysia and Taiwan is $9, $10 and $10, respectively. In the next two to three years, the cosmetics and toiletries market in India is projected to increase from $950 million to $1.4 billion, according to the release. The sector has been growing 15 percent to 20 percent annually in recent years, the organization says. ASSOCHAM President Venugopal N. Dhoot explains that only one-fifth of India's population uses "well-known branded products" from such companies as Unilever, Procter & Gamble, Godrej and Dabur. The remaining 80 million consumers opt for "low-cost" offerings - for instance, Boroline for wrinkle-reduction, which retails for roughly $0.31, versus pricier creams from Garnier and Pond's , which cost more than $10. The dramatic price differential is attributed partly to "very high" tariffs on imported cosmetics (approximately 40 percent). Foreign brands represent only about 20 percent of the overall market, ASSOCHAM says. In order to compete, "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." Many companies have introduced more affordable mini-versions of their products, according to ASSOCHAM. Research firm Kline and Company highlighted the opportunity for personal-care marketers in India in a September 2007 release ('The Rose Sheet' Sept. 10, 2007, In Brief). - Ryan Nelson ([email protected]) |