The beauty business in India is flourishing at a rapid rate, with the future outlook seeming exceptionally bright due to new product launches which are catering to consumers’ growing requirements. The Indian market is in fact, competing with markets like the United States and Europe. According to reports, the industry will touch 20 billion dollars by 2025 with 15-20% of annual growth. Nykaa, founded by investment-banker-turned entrepreneur Falguni Nayar, is the latest PE/VC backed company in India this year to tap the capital markets in a sign of the maturity of the startup ecosystem. Nykaa reported a profit of Rs 61.9 crore during the period as compared with a loss of Rs 16.34 crore. Its GMV grew 50.7% to Rs 4,045.98 crore in the last fiscal.
Nykaa’s IPO comprises fresh issue of shares up to Rs 525 crore and an offer for sale (OFS) of up to 43.11 million shares by the shareholders, according to the draft red herring prospectus (DRHP). Investors including TPG Growth will sell shares up to 5.42 million, and Lighthouse will offload shares up to 4.89 million. The company’s promoter, Sanjay Nayar Family Trust, will sell shares up to 4.8 million.
Competitors like Purplle and The Body Shop are also taking unique steps to stay on top of the game. The Body Shop seeks to source quality ingredients and accessories from expert producers across the world, whilst enriching economically vulnerable communities. Their latest sustainability commitment of “Enrich not Exploit” outlines 14 targets for The Body Shop to achieve by 2020, which range from enriching supplier communities, to ensuring that their natural ingredients are traceable and sustainably sourced, to committing to 100% renewable or carbon-balanced energy in Body Shop stores.
On the other hand, many see Purplle as another Nykaa, the bigger online beauty retailer in the country, but with a focus on Tier 2 and 3 markets. Purplle raised $45 million from Sequoia Capital India and existing investors Verlinvest, Blume Ventures, and JSW Ventures, and aims to be a Rs 3,000-crore brand in the next few years.
The consumer base is not only expanding in terms of growth but also the awareness which can be attributed to exposure to global trends, rising disposable incomes, changing lifestyles, and even the pandemic along with consecutive lockdowns. An important attribute would also be the remarkable growth of e-commerce, with online stores becoming popular shopping destinations, especially for cosmetic products through which consumers get a plethora of choices and a wide range to choose from along with additional benefits. In the cosmetics industry product development is completely driven by consumer demand and quickly changing trends. This drive is forcing faster production and fulfillment.
The world is increasingly becoming more virtual, something that Covid-19 cemented. This has brought the future of the beauty industry, a typically in-person shopping experience, into consideration. According to Zion Market Research, the global beauty industry is pegged to reach $863 billion by 2024. The craze to look flawless is one of the biggest driving forces of the market which, despite being highly saturated, is proving to be one of the best investment bets for market players. However, increased awareness and emphasis on health are also driving favorable figures this year.