India is at a place today where China was some years back in terms of aspirational growth and consumption, Anchit Nayar, executive director and CEO at beauty and lifestyle retailer Nykaa Beauty, said in an interview. “Consumption patterns in India are very promising. The next ten years will look really good for beauty and retail… this is a multi-decade story,” he said.
Speaking about increased competition in the beauty market with the entry of some of India’s largest business groups including Reliance Retail-backed Tira and Tata CLiQ Palette, Nayar said: “Competition has been around since we started, that time also we would be asked how we would ‘Amazon-proof’ our business. It’s not like there were no competitors in 2012”.
He said Nykaa would continue to focus on what it does best. “We understand this consumer better than anyone else.. Having said that, newer competitors will expand the market and accelerate consumption of the category,” he told ET, at an event to announce scale up plans for the Estee Lauder Companies (ELC) and Nykaa-backed New Incubation Ventures, a strategic early-stage investment and incubation arm which invests in beauty businesses.
The ELC on Wednesday announced the second edition of Beauty&You, a platform created by New Incubation Ventures in partnership with Nykaa.
New Incubation Ventures will scale up partnerships with founders and entrepreneurs to fund emerging beauty brands and new business models, Shana Randhava, senior vice president, New Incubation Ventures, ELC, said. “With a higher degree of consumer awareness and an influx of options, India represents an exciting opportunity for the global beauty ecosystem,” she said.
Randhava said the platform will identify opportunities strategically and identify more brands to invest in. “We have set a target of doing 5-7 investments in a year. We are long-term investors and will invest not only dollars but resources as well,” she said.
For the quarter ended March 31, FSN E-Commerce Ventures, which operates Nykaa, saw its net profit fell 72% year-on-year to ₹2.3 crore impacted by higher raw material price, employee-related costs and tax expenses. However, revenue from operations went up 34% to ₹1,302 crore over the corresponding year-ago quarter.
Nykaa debuted on the stock market in November 2021 with a healthy listing, but lost out its initial momentum as tech stocks came under severe pressure globally.
While a spate of direct-to-consumer brands are pushing entry-level packs, Nykaa will continue to straddle premium products and mass brands. Nayar said the company would also continue to look for tuck-in acquisitions across beauty and fashion verticals.
Besides its own label, Estee Lauder Companies’ products are sold under Aramis, Clinique, Lab Series, M·A·C, and Bobbi Brown.
The size of India’s beauty and personal care market is forecasted to reach ₹2.2 lakh crore by 2025. A report by Avendus said that the number of beauty and personal care shoppers could multiply in excess of four times by FY25, led by higher discretionary spending, aspirational demand, social media and smaller tier-2 and tier-3 markets.