South-East Asia and India’s market size set to triple in the next ten years

Could South-East Asia and India be the new Eldorados for global luxury beauty players? At least, that’s what the international consultancy firm Kearney and Luxasia, a distributor of premium beauty products in Asia-Pacific, are saying in a study entitled “Unlocking hypergrowth in Asia’s luxury beauty landscape”.

 
According to the report, the prestige beauty market in South-East Asia and India is expected to grow at an average annual rate of 11% until 2031 – compared with growth of 4 to 6% for the global luxury beauty market – tripling in size in ten years.

By 2026, it could be worth 7.6 billion dollars in these regions. “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,” says Siddharth Pathak, Kearney’s director of consumer industries and trade for Asia Pacific.

While the Chinese market is recovering more slowly than expected, and just as in Japan and South Korea the supply of cosmetics brands is relatively saturated, the South Asian and Indian markets are attracting more than ever international luxury beauty brands as well as local brands.

All the more so as the upper and middle classes, which will exceed one billion people by 2026, are expected to turn increasingly towards luxury consumption. “This represents a limited but golden opportunity for luxury beauty brands to enter today and flourish,” summarises the study.

The rush to India  

Luxury brands have not waited long to turn their attention to India. A year ago, global beauty giant L’Oréal re-established Lancôme, the flagship brand of its luxury division, on the Indian market. Six years ago, Lancôme had already tried its hand at the Indian market, but low demand for luxury products forced it to retreat. L’Oréal India’s ambition is to see its business become worth a billion euros within three to five years, with a growth rate twice that of the Indian beauty market.

Last September, the Japanese cosmetics group Shiseido introduced its Nars brand to local beauty shops in India. Less luxury, but more premium, The Body Shop, which is due to change ownership soon, is also multiplying its store openings in the country, where it has been present since 2006 via 200 outlets. The aim is to open around thirty stores each year.

Global players are also investing in local brands. In May 2022, for example, Sugar Cosmetics, a young Indian beauty brand, closed a $50 million financing round with a group of 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, which is also suffering from disappointing results in China, joined forces with the Indian company Nykaa, a specialist in online sales of beauty products, to launch Beauty & You India, a programme designed to support young Indian beauty labels and entrepreneurs in the sector in the development of their projects.

However, India, like South-East Asia, is made up of highly diversified market ecosystems, making it a complex market.

“Luxury brands today face six major challenges in this fragmented region: multi-dimensional omni-retail networks, heterogeneous local product preferences, divergent marketing approaches, complex regulatory frameworks, costly and idiosyncratic supply chain landscapes, and partner selection amid information assymetry,” warns the study.