Could South-East Asia and India become the new frontiers for global luxury beauty brands? That’s the intriguing prospect put forward by international consultancy firm Kearney and Luxasia, a leading distributor of premium beauty products in the Asia-Pacific region. In their study titled «Unlocking Hypergrowth in Asia’s Luxury Beauty Landscape,» they highlight the remarkable potential.
According to the report, the prestige beauty market in South-East Asia and India is forecasted to experience an impressive average annual growth rate of 11% until 2031. This stands in stark contrast to the 4 to 6% growth anticipated for the global luxury beauty market, effectively tripling in size over the next decade. By 2026, it could represent a staggering $7.6 billion in these regions.
Siddharth Pathak, Director of Consumer Industries and Trade for Asia Pacific at Kearney, emphasizes, «South East Asia and India should be on the agenda of every global luxury beauty CEO, as these markets are poised to lead the next stage of luxury beauty growth.»
While the Chinese market is recovering more slowly than expected, and markets like Japan and South Korea face saturation of cosmetics brands, the allure of South Asia and India is stronger than ever for international luxury beauty brands, as well as local brands.
This burgeoning opportunity is further enhanced by the growing upper and middle classes in these regions, expected to exceed one billion people by 2026, showing a growing inclination towards luxury consumption. The study aptly describes it as «a limited but golden opportunity for luxury beauty brands to enter today and flourish.»
The Rush to India: Luxury brands have already recognized the immense potential of the Indian market. A year ago, global beauty giant L’Oréal relaunched Lancôme, the flagship brand of its luxury division, in India. Six years ago, Lancôme had made a brief foray into the Indian market but faced low demand for luxury products. L’Oréal India aims to achieve a business worth one billion euros within three to five years, with double the growth rate of the Indian beauty market.
In September, the Japanese cosmetics group Shiseido introduced its Nars brand in Indian beauty shops. The Body Shop, although not a pure luxury brand but positioned as premium, is also significantly expanding its store presence in India, where it has maintained a presence since 2006 through 200 outlets. The goal is to open around thirty stores annually.
Global players are also investing in local Indian brands. In May 2022, Sugar Cosmetics, a young Indian beauty brand, secured a $50 million financing round with investors, including the Asian branch of L. Catterton, the Franco-American investment fund co-founded by LVMH. In July 2022, the American group Estée Lauder, facing challenges in China, collaborated with the Indian company Nykaa, a specialist in online beauty product sales, to launch Beauty & You India, a program designed to support young Indian beauty labels and entrepreneurs in their ventures in the sector.
However, both India and South-East Asia are complex markets with highly diversified ecosystems, presenting luxury brands with six major challenges. These include dealing with multi-dimensional omni-retail networks, varying local product preferences, distinct marketing approaches, intricate regulatory frameworks, costly and unique supply chain landscapes, and making strategic partner choices amidst information asymmetry, as cautioned by the study.
