cosmetic industry analysis report 2015-2016

COSMETIC INDUSTRY

SHRI DHARMASTHALA MANJUNATHESHWARA COLLEGE OF

ENGINEERING AND TECHONOLOGY

(An Autonomous Institution Affiliated to VTU Belgaum)Dharwad-580002, Karnataka

2015-16

Department of Management Studies

COSMETIC INDUSTRIES

COURSE INSTRUCTOR: Prof. SUPREETA LAGALI

Submitted by:

RAJPUROHIT RAMESH RAHUL GULAGANJI

1Department of Management SDMCET

COSMETIC INDUSTRY

CERTIFICATE

This is to certify that we are the students of department of management SDMCET, have prepared this project report titled as “COSMETIC INDUSTRY” Under the guidance of Mrs. SUPREETA LAGALI, Faculty, Department of Management Studies, SDM College of Engineering & Technology Dharwad. (Affiliated to V.T.U Belgaum).

Place: Dharwad

Date: 15-12-2015

Prof: SUPREETA LAGALI

Department of Management Studies (MBA)

SDMCET, DHARWAD


COSMETIC INDUSTRY

ACKNOWLEDGEMENT

With pleasure we are placing before you this report titled as “COSMETIC INDUSTRY”.

I express my sincere thanks and heartful gratitude to professor Mrs. Supreeta Lagali department

of management SDMCET Dharwad, for her excellent and inspiring guidance and suggestions

through the repot work without her inspiring encouragement it would have been not possible for

us to bring out this report and giving us this opportunity, because it had been a very good attempt

to educate the youth regarding the report on company in a practical way, as we earlier studied in

theory, which makes us perfect in the subject.

We are very much grateful to Professor Mr. Madhusudhan K Vyapari (HOD of the Management

department) and also Dr. S.B. Vanakudre (principle of the college) for providing necessary

infrastructure facilities for preparing this report work.

Last but not the least, my sincere thanks to everybody who has helped us directly or indirectly

for the completion of this report work.


COSMETIC INDUSTRY

EXECUTIVE SUMMERY

Executive summary of COSMETIC INDUSTRY through our research, I have calculated the cost

of the capital. A firms cost of capital is imperative because it represents the funds used to

finance the firm assets and operations. First you have to estimate the cost of capital in order to

minimize it. In estimating the cost of the capital to find out the each capital component on then

combined the components costs. Brief history about the COSMETIC INDUSTRY and the

various details about the industry.


COSMETIC INDUSTRY

Contents

SR. NO. PARTICULAR PAGE NO.

1 Introduction 1

2 Indian Cosmetic Industries Introduction 3

3 Major Players of Cosmetic Industries 5

4 Milestones & Achievements’ 8

5 Portfolio of Industries 9

6 Trends from Last Two Year 12

7 Bibliography 16

INTRODUCTION


COSMETIC INDUSTRY

Cosmetics:

Cosmetics, also known as makeup or make-up, are care substances used to enhance the

appearance or order of the human body. They are generally mixtures of chemical compounds,

some being derived from natural sources (such as coconut oil) and many being synthetics.

In the U.S., the Food and Drug Administration (FDA), which regulates cosmetics, defines

cosmetics as "intended to be applied to the human body for cleansing, beautifying, promoting

attractiveness, or altering the appearance without affecting the body's structure or functions."

This broad definition includes any material intended for use as a component of a cosmetic

product. The FDA specifically excludes soap from this category

NAME:

The word cosmetics derives from the “Greek κοσμητικὴτέχνη (kosmetikētekhnē)”, meaning

"Technique of dress and Ornament", from κοσμητικός (kosmētikos), "Skilled in ordering or

Arranging" and that from κόσμος (kosmos), meaning amongst others "Order" &"Ornament”

INDUSTRY:

The manufacture of cosmetics is dominated by a small number of multinational corporations that

originated in the early 20th century, but the distribution and sale of cosmetics is spread among a

wide range of businesses. The world's largest cosmetic companies are L’Oreal, Procter

&Gamble, Unilever, Shiseido and Estée Lauder. In 2005, the market volume of the cosmetics

industry in the US, Europe, and Japan was about EUR 70 By. In the United States, the cosmetic

industry's size was US$42.8 billion in 2008.In Germany, the cosmetic industry generated €12.6

billion of retail sales in 2008,which makes the German cosmetic industry the third largest in the

world, after Japan and the United States. German exports of cosmetics reached €5.8 billion in

2008, whereas imports of cosmetics totaled €3 billion.

The worldwide cosmetics and perfume industry currently generates an estimated annual turnover

of US$170 billion (according to Eurostaf – May 2007). Europe is the leading market,

representing approximately €63 billion, while sales in France reached €6.5 billion in 2006,

according to FIPAR (Federation des Industries de la Perfumeries – the French federation for the 6

Department of Management SDMCET

COSMETIC INDUSTRY

perfume industry). France is another country in which the cosmetic industry plays an important

role, both nationally and internationally. According to data from 2008, the cosmetic industry has

grown constantly in France for 40 consecutive years. In 2006, this industrial sector reached a

record level of €6.5 billion. Famous cosmetic brands produced in France include Vichy, Yves

Saint Laurent, Yves Rocher and many others.

The Italian cosmetic industry is also an important player in the European cosmetic market.

Although not as large as in other European countries, the cosmetic industry in Italy was

estimated to reach €9 billion in 2007. The Italian cosmetic industry is dominated by hair and

body products and not makeup as in many other European countries. In Italy, hair and body

products make up approximately 30% of the cosmetic market. Makeup and facial care, however,

are the most common cosmetic products exported to the United States.

Due to the popularity of cosmetics, especially fragrances and perfumes, many designers who are

not necessarily involved in the cosmetic industry came up with perfumes carrying their names.

Moreover, some actors and singers(such as Celine Dion) have their own perfume line. Designer

perfumes are, like any other designer products, the most expensive in the industry as the

consumer pays for the product and the brand. Famous Italian fragrances are produced by Giorgio

Armani, Dolce and Gabbana, and others.

Procter & Gamble, which sells Cover Girl and Dolce & Gabbana makeup, funded a study

concluding that makeup makes women seem more competent.

INDIAN COSMETIC INDUSTRY

INTRODUCTION:


COSMETIC INDUSTRY

Since 1991 with the liberalization along with the crowning of many Indian women at

international beauty pageants, the cosmetic industry has come into the limelight in a bigger way.

Subsequently their has been a change in the cosmetic consumption and this trend is fueling

growth in the cosmetic sector. Indian cosmetic Industry had rapid growth in the last couple of

years, growing at a CAGR of around 7.5% between 2006 and 2008. While this is due to the

improving purchasing power and increasing fashion consciousness, the industry is expected to

maintain the growth momentum during the period 2009-2012. In the Indian Cosmetic Industry

both electronic as well as print media are playing an important role in spreading awareness about

the cosmetic products and developing fashion consciousness among the Indian consumers.

The Indian Cosmetics Industry is defined as skin care, hair care, color cosmetics, fragrances and

oral care segments which stood at an estimated $2.5 billion in 2008 and is expected to grow at

7%, according to an analysis of the sector.Today herbal cosmetics industry is driving growth in

the beauty business in India and is expected to grow at a rate of 7% as more people shun

chemical products in favour of organic ones.

The emphasis of the herbal cosmetic has been on the spectacular growth of the herbal and

ayurvedic beauty products business as conveyed by beauty expert Shahnaz Husain who was the

first to introduce the concept of ayurvedic cosmetics to the world when she launched her

products way back in 1970. Today, the Indian cosmetics industry has a plethora of herbal

cosmetic brands like Forest Essentials, Biotique, Himalaya, Blossom Kochhar, VLCC, Dabur

and Lotus and many more. The Indian cosmetics industry has emerged as one of the unique

industries holding huge potential for further growth. In 2009, the cosmetics industry registered

sales of INR 356.6 Billion (US$ 7.1 Billion) despite the global economic recession. Indian

cosmetics Industry has mainly been driven by improved purchasing power and rising fashion

consciousness of the Indian population and industry players spending readily on the promotional

activities to increase consumer awareness and develop their products.

The companies have started going for rural expansion and are offering specialized products to

generate revenues from all the corners of the country. Improvement and strengthening of the

Indian economy in the coming years will also pave the way for the Indian cosmetics market over

the forecast period and develop the Cosmetic Industry.


COSMETIC INDUSTRY

The Indian Cosmetic market which 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 them.

The size of Indian Cosmetics Industry globally is $ 274 billion, while that of the Indian cosmetic

industry is $ 4.6 billion. The current size of the Indian Cosmetic Industry is approx US$ 600

million. Among these fastest growing segment is color cosmetics, accounting for around US$ 60

million of the market. Industry sources estimate a rapid growth rate of 20% per annum across

different segments of the cosmetics industry reflecting with an increasing demand for all kinds of

beauty and personal care product. Growth in the Indian Cosmetic Industry has come mainly from

the low and medium-priced categories that account for 90 % of the cosmetics market in terms of

volume.

MARKET CAPITALIZATION:

Costs for importing other products are much higher than producing it in the country. India

usually allows the entry of imported cosmetics without any restrictions but the average import

tariff on cosmetics products is currently very high at 39.2%...

MAJOR PLAYERS IN INDUSTRY

1) LAKME:


COSMETIC INDUSTRY

A Brand of Hindustan Unilever Limited, Lakme is the leading cosmetic brand in India and

accounts for the major share of products in the cosmetic segment. Introduced in the year 1952,

Lakme grew into a major cosmetic brand in a few decades and presently it is one of the most

preferred cosmetic brands in India.

Some of the Lakme products are Lipsticks, Nail Paints, Eye Liners, Face Wash, Sunscreens,

Creams, etc. Apart from making good quality cosmetic products, Lakme actively participates in

promoting the fashion events and is a co-organizer and a sponsor of “Lakme Fashion Week”.

2) PONDS:

Ponds Pond's Cream is a brand of beauty and health care products that is produced by the Ponds

Institute which is owned by the multinational company Unilever. Pond's Cream was invented in

the United States as a medicine by scientist Theron T. Pond (1800–1852) in 1846. Mr. Pond

extracted a healing tea from witch hazel, with which he discovered he could heal small cuts and

other ailments. The product was named "Golden Treasure", after Theron died, it would be known

as "Pond's Extract". By the twentieth century, the company's main strategy was geared towards

selling cosmetics products, and so the "Pond's Vanishing Cream" and the "Pond's Cold Cream"

were created, marking the entrance of Pond's products into the facial care industry. Today Ponds

is sold around the world. Its strengths are in Spain, India, Japan and Thailand. Pond's Company

was merged in 1955 with the Chesebrough Manufacturing Company, which had a good

percentage of brands in the facial care field. With this merger, "Pond's Creams" would become

sisters with the Cutex nail polish brand and the Matchabelli perfumes. In 1987, the Chesebrough

Manufacturing Company by most known as "Chesebrough-Ponds", was acquired by Anglo-

Dutch company Unilever, giving "Pond's Creams" a more international reach. Then 14% of the

company was subsequently traded privately to Bhosle Group of Industries for an undisclosed

amount of money. The Brand Trust Report, India Study, 2011, conducted by the Trust Research

Advisory included Pond's in the list of the most trusted brand in India.

3) PROCTER& GAMBLE:

Procter & Gamble Hygiene and Health Care Ltd was incorporated in the year 1964, as

Richardson Hindustan Ltd (RHL). The company initially manufactured menthol, dementholised

peppermint oil and Vicks range of products. RHL was acquired by Procter & Gamble, USA in


COSMETIC INDUSTRY

the year 1985 consequent to which its name was changed to Procter & Gamble India Ltd. In the

year 1999, the company got its present name

Executive the company manufactures and markets two types of products - healthcare products

and female hygiene products which are sold under the famous brands 'Vicks' and 'Whisper'

respectively. There are variants under each of these two brands. But the two brands dominate the

offerings. P&G has sold a number of non-core businesses and brands. The company divested its

laundry and detergent business to its sister concern P&GHP in 1992--93 even as it continued to

contract manufacture detergents for it. In October 2005, the company completely exited the

detergent business after transferring its manufacturing facility to P&GHP. The company divested

Medikar anti-lice shampoo business to Marico Industries in 1998--99. Another manufacturing

tie-up for shampoo, formed with P&GHP, was terminated in 1999--2000 after a formulation

change of the product had necessitated huge capital investment. In 2000--01, the company

divested one of its earlier brands, Clearasil. Old Spice brand of products, which the company

started marketing in the year 1993 was licensed (trademark & business) to Menezes Cosmetics

Pvt. Ltd in December 2002.

4) L’OREAL:

L’Oreal is ranked 3rd in the list of top 10 best cosmetic brands in India. L’Oreal is a French

Cosmetics Giant started in the year 1909 and is presently a leading brand in the cosmetic

segment in India. L’Oreal is a brand that stands for quality, reliability and innovation.

L’Oreal makes a high quality cosmetic products like Mascara, Lip Sticks, Eye Liner, Nail

Colour, Creams, etc. Apart from beauty products, L’Oreal also performs its Corporate Social

Responsibility well by providing skill development training to the underprivileged women and

constructing classrooms for the students

5. HINDUSTAN UNILEVER LTD:

HUL is India’s largest Fast Moving Consumer Goods Company with categorized business like

soaps, detergents, shampoos, skin care, toothpastes, deodorants, cosmetics, tea, coffee, packaged

foods, ice cream, and water purifiers. With a market capitalization of Rs. 61,000 crores, the

Company is a part of the everyday life of millions of consumers across India. The company 11

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COSMETIC INDUSTRY

earned revenues of Rs. 5,000 crores with a net profit margin 12%. Its parent company is

Unilever, which holds about 52 % of the equity. Its portfolio can be categorized into Personal

care, Home care & Food. Some important names are Lifebuoy, Surf Excel, Rin, Wheel, Fair &

Lovely, Pepsodent, Closeup, Brooke Bond, Bru, Knorr, Kissan, Kwality Wall’s and Pureit. The

umbrella personal/ cosmetic brands include Aviance, Axe, Lakme, Fair & Lovely, Clinic Plus,

Dove, Hammam, Ayush, Lux, Sunsilk, Rexona, Pond’s.

MILESTONE & DEVELOPMENTS OF COSMETIC INDUSTRY

The Rs.29, 000 crore ($4.5 billion) Indian cosmetic market is growing briskly and attracting

more and more international brands. Experts credit awareness among the middle-class, increase


COSMETIC INDUSTRY

in departmental stores and the tremendous growth opportunities that are luring global players

like Bobbi Brown Cosmetics and BellePierre Cosmetics to tap the Indian market.

If international brands like Revlon, L'Oreal Paris, Estee Lauder, M.A.C and Maybelline are

already doing brisk business, approximately 10 brands, including NATIO and Bottega Di

Lungavita, took the plunge this year.

"The market and customers are becoming very brand conscious with the readiness to try new

brands and products," he added.

"The current wellness market stands at approximately Rs.70,000 crore and out of that beauty

care products amount to Rs.29,000 crore. This number and the tremendous growth opportunity is

attracting a lot of international players to the Indian market," Gaba said.

According to Massooma, editor at New Age Salon & Spa and knowledge partner for

International Beauty Mart 2014, the Indian cosmetics market is growing twice as fast as its US

and European counterparts.

"India's cosmetics market is reportedly growing at 15-20 percent annually, twice as fast as that of

the US and European markets. The demand for skin whitening products by men as well as

women, is driving the trend, but other beauty products are not far behind," she said.

US-based Revlon was the first international cosmetics brand to hit Indian stores in 1995. Deepak

Bhandari, director of marketing at Revlon, says the rise of departmental stores in the country has

also encouraged various brands to enter India.

The new international brands see potential in the market and so lots of brands are coming to

India and launching in departmental stores,"

PORTFOLIO OF COSMETIC INDUSTRIES

1. LAKME


COSMETIC INDUSTRY

2. PONDS

3. PROCTER& GAMBLE:


COSMETIC INDUSTRY

4. LOREAL Paris

5. HINDUSTAN UNILEVER LTD.


COSMETIC INDUSTRY

21st CENTURY OF TRENDS


COSMETIC INDUSTRY

1) ANATOMY OF THE INDIAN COSMETIC MARKET :

In the last 20 years cosmetic Beauty Market has grown by 12-13% a year on average.with

annual growth rates ranging from around 10 to 11%. Also known as Cosmetics and

Toiletries or Personal Care Products, this market has proven both its ability to achieve

stable and continuous growth as well as its capacity for resilience in unfavorable

economic conditions. The Global Beauty Market is usually divided into five main

business segments: skincare, haircare, color (make-up), fragrances and toiletries. These

segments are complementary and through their diversity they are able to satisfy all

consumers’ needs and expectations with regard to cosmetics

2) MARKETING TRENDS:

Owing to the recent growth of importance of the Indian market, the cosmetic companies

shifted their focus to the mass market, particularly in the fragrance category which is

dominated by mass brands in this region. A trend worth mentioning is the continued

product diversification in the context of product line prices, as new product lines are

being released at lowering price levels.

3) DISTRIBUTION TRENDS:

In the recent years a systematic change in the pattern of distribution channels was

observed. These changes, which took place between 2000 and 2010, are presented in

following table


COSMETIC INDUSTRY

Non Store Re-tailing

Drug stores Deparments Store

Beauty Specialist

Super Hyper market

All Others0

5

10

15

20

25

30

201220132014

The market share of the non-store retailing channel is gradually increasing in india. This

channel includes direct sale and sale over the internet. Companies relying on direct sale

managed to create a powerful sales network, especially in the fastest-growing emerging

markets such as Brazil, China. It was, to a large extent, enabled by the characteristics of

the new customers who are just entering the market, expecting professional advice,

analysis of their needs and support in choosing the right products. The online cosmetics

sales channel is also growing fast as per International’s estimates,

the online channel’s share in the global cosmetics sales reached 15-20% in 2014, while

in the top three online sales markets - South Korea, France and United States - it reached

a level of, respectively, 22% to 25%.

4) PRODUCT CATEGORIES TRENDS :


COSMETIC INDUSTRY

During the first decade of the 21st century the product structure of sales underwent fairly significant changes, as presented in the following table.

Skin Care Hair Care Color Fragrances Toileteries Others0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

20122014

In the period from 2000 to 2013 total cosmetics sales (beauty and personal care products) more

than doubled: from 25 billion USD to 82 to 90 billion USD. In 2000, the largest segment was

haircare – it accounted for more than 20% of global sales. Throughout 2013 skincare was the

most significant segment, with its 23% of the market share and its growth driven primarily by the

Indian market.The Indian skincare market is divided into facial care (2/3 of the total sales), hand

and body care and sun care. The success of this segment is a prerequisite for the prosperity of the

whole beauty industry. Although the economic downturn reduced the growth rate here, it was

possible to restore its pre-recession growth in subsequent years. A particularity of the indian

skincare markets is the leading role of face-whitening products, as pale skin continues to be

considered the beauty ideal in india.

CONCLUSION


COSMETIC INDUSTRY

CONCLUSION Analysis of the trends present in the global cosmetics market in the beginning of the 21st century leads to the following conclusions:

1. The demand for cosmetics will keep growing, fueled mostly by the emerging markets of Asia and Latin America, what will contribute to creation of new products, shape new spending patterns and perhaps even establish new beauty canons.

2. Global cosmetics manufacturers will have to differentiate their products to adjust them to the expectations of their new customers, originating from different, non-Western cultures and behaving differently.

3. Skincare is the segment with the biggest growth potential. It will remain the flagship segment on the cosmetic market over the next few years.

4. The deciding factor for market success will be mass cosmetics sales - they will be setting the tone for the entire market. Growing awareness of mass cosmetics being almost as good as prestige cosmetics will facilitate the growth of the masstige segment.

5. The distribution structure is changing as well, as supermarkets and hypermarkets as well as online sales channels increase their shares in the overall market.

6. New product launches are based in an increasing way upon advanced research and technologies. On the other hand, there is a growing demand for organic products, manufactured in a sustainable way, often according to the fair trade philosophy.

BIBLIOGRAPHY


COSMETIC INDUSTRY

1. www. indian mirror.com 2. www.firstpost.com 3. www.business.mapsofindia.com 4. www.slideshare.net 5. www.wellnessindia.com


http://www.wellnessindia.com/

http://www.slideshare.net/

http://www.business.mapsofindia.com/

http://www.firstpost.com/

http://www.indianmirror.com/

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