Market cap of global beauty and personal care firms to hit $2.7 trillion by 2027; here’s all you need to know
In a report, Redseer says India is a shining star with the highest BPC growth rate at a CAGR of 10 per cent 2022-27
- Sep 1, 2023,
- Updated Sep 1, 2023 4:16 PM IST
The beauty and personal care (BPC) industry is set to experience a meteoric rise and its market size is projected to grow to $660 billion and market capitalisation to $2.2-2.7 trillion by 2027, according to a report released by Redseer Strategy Consultants in collaboration with Peak XV.
According to the report, the market cap of the BPC industry has risen from $1.3 trillion in 2015 to $1.5–2 trillion at present.
The report further highlighted that the BPC market has been on a resilient path in the face of global disruptions brought about by the 2020-21 lockdowns. Industry was affected marginally while the broader economies were much more severely affected. This underlines BPC’s role as a fundamental human need.
“Globally, there’s a growing need among consumers for products ‘made for them’, tailored to individual skin or body types. They are increasingly willing to pay premiums for effective and safe solutions, leading to rapid growth in the masstige and premium categories. While consumers use the internet to research products, they are willing to shop across both online and offline channels,” said Rohan Agarwal, Partner, Redseer Strategy Consultants.
Brands focused solely on BPC have disrupted the market by targeting specific use cases, leading to higher growth rates, gross margins, and profitability compared to FMCG-led BPC players. The average revenue growth of the largest pure-play BPC players was 5 times of the largest FMCG-led BPC players (2017-22)
Indian BPC Market
As far as Indian markets are concerned, the report reveals that the country is a shining star with the highest BPC growth rate (CAGR of 10 per cent 2022-27) against comparable countries (the next best is Indonesia at 8 per cent and China at 7 per cent). The Indian BPC market is projected to be $30 billion by 2027, making up about 5 per cent of the global opportunity. The growth prospects of the Indian BPC industry are further strengthened in light of how underpenetrated the Indian BPC market is. On per capita BPC spending, while the US leads at $313 and China at $38, India lags significantly at just $14. Online is a significant channel for BPC in India as it is projected to become a $10 billion market by 2027, accounting for roughly 33 per cent of the market then.
Similar to the global market, pure-play BPC brands are leading the disruption in India. The report revealed that the Indian BPC market is growing at a rate twice as fast as FMCG-led brands, signalling the significance of specialised, BPC-focused players. As the Indian BPC market matures, the report anticipates the emergence of multiple hundred-million-dollar pure-play BPC brands.
Value creators
The BPC landscape's transformation has also birthed a slew of innovative brands like L’Oréal, Nykaa, Honasa and Pure Play Skin Sciences with niche offerings. These players, wholly dedicated to BPC, are more agile in responding to evolving consumer needs, positioning themselves as leaders in this dynamic market.
The report further said that the pure-play BPC players are performing well in terms of growth and margins and, therefore, are valued better. In 2022, the average gross margin for major pure-play BPC companies globally was significantly higher (72 per cent) than that of FMCG-led BPC companies (44 per cent). Despite their heavy investments in research and development and customer education, these pure-play companies maintain bottom lines that are competitive with FMCG-led companies. The average EBT (earnings before taxes) stands at 12 per cent for large pure-play BPC companies globally, compared to 14 per cent for FMCG-led companies.
“This results in pure-play BPC companies being valued better. The Price-to-Earnings (P/E) ratio for the large pure-play BPC companies globally is approximately 1.8 times that for FMCG-led BPC companies,” the report added.
The beauty and personal care (BPC) industry is set to experience a meteoric rise and its market size is projected to grow to $660 billion and market capitalisation to $2.2-2.7 trillion by 2027, according to a report released by Redseer Strategy Consultants in collaboration with Peak XV.
According to the report, the market cap of the BPC industry has risen from $1.3 trillion in 2015 to $1.5–2 trillion at present.
The report further highlighted that the BPC market has been on a resilient path in the face of global disruptions brought about by the 2020-21 lockdowns. Industry was affected marginally while the broader economies were much more severely affected. This underlines BPC’s role as a fundamental human need.
“Globally, there’s a growing need among consumers for products ‘made for them’, tailored to individual skin or body types. They are increasingly willing to pay premiums for effective and safe solutions, leading to rapid growth in the masstige and premium categories. While consumers use the internet to research products, they are willing to shop across both online and offline channels,” said Rohan Agarwal, Partner, Redseer Strategy Consultants.
Brands focused solely on BPC have disrupted the market by targeting specific use cases, leading to higher growth rates, gross margins, and profitability compared to FMCG-led BPC players. The average revenue growth of the largest pure-play BPC players was 5 times of the largest FMCG-led BPC players (2017-22)
Indian BPC Market
As far as Indian markets are concerned, the report reveals that the country is a shining star with the highest BPC growth rate (CAGR of 10 per cent 2022-27) against comparable countries (the next best is Indonesia at 8 per cent and China at 7 per cent). The Indian BPC market is projected to be $30 billion by 2027, making up about 5 per cent of the global opportunity. The growth prospects of the Indian BPC industry are further strengthened in light of how underpenetrated the Indian BPC market is. On per capita BPC spending, while the US leads at $313 and China at $38, India lags significantly at just $14. Online is a significant channel for BPC in India as it is projected to become a $10 billion market by 2027, accounting for roughly 33 per cent of the market then.
Similar to the global market, pure-play BPC brands are leading the disruption in India. The report revealed that the Indian BPC market is growing at a rate twice as fast as FMCG-led brands, signalling the significance of specialised, BPC-focused players. As the Indian BPC market matures, the report anticipates the emergence of multiple hundred-million-dollar pure-play BPC brands.
Value creators
The BPC landscape's transformation has also birthed a slew of innovative brands like L’Oréal, Nykaa, Honasa and Pure Play Skin Sciences with niche offerings. These players, wholly dedicated to BPC, are more agile in responding to evolving consumer needs, positioning themselves as leaders in this dynamic market.
The report further said that the pure-play BPC players are performing well in terms of growth and margins and, therefore, are valued better. In 2022, the average gross margin for major pure-play BPC companies globally was significantly higher (72 per cent) than that of FMCG-led BPC companies (44 per cent). Despite their heavy investments in research and development and customer education, these pure-play companies maintain bottom lines that are competitive with FMCG-led companies. The average EBT (earnings before taxes) stands at 12 per cent for large pure-play BPC companies globally, compared to 14 per cent for FMCG-led companies.
“This results in pure-play BPC companies being valued better. The Price-to-Earnings (P/E) ratio for the large pure-play BPC companies globally is approximately 1.8 times that for FMCG-led BPC companies,” the report added.