India's Beauty Market Booms with Gen Z at the Helm

The Indian beauty market is witnessing a massive boom, driven by the growing spending power of the country's Gen Z population.

India's per capita income crossed $2,000 in 2019, a threshold beyond which discretionary spending tends to grow exponentially, according to Redseer, a business consultancy. This increased spending power, combined with improved access to distribution and product education, has led to a surge in demand for beauty products.

The internet has played a significant role in breaking down barriers to access and education, with brands leveraging social media platforms and influencers to reach consumers directly. E-commerce is expected to drive around 35% of overall beauty spending by 2030, compared with just 8% five years ago, according to Redseer's estimates.

The pandemic also had a significant impact on the industry, pushing people inward and toward self-care. This coincided with a massive wave of digital penetration in tier-one, tier-two, and tier-three towns, providing Indian consumers with access to beauty and skincare education they had never had before.

According to Vaishali Gupta, co-founder of the vegan skincare company Hyphen and mCaffeine, the pandemic created a consumer who knew exactly what they wanted. This knowledge base led to a boom in Indian skincare, with Gupta's brands growing their top line by 100% in the past year.

The growth in customers is coming from all corners of the country and isn't restricted to big cities. What's also striking is that the Gen Z is driving it, spending roughly double what millennials did on skincare and personal care.

Data from Wamart-backed Flipkart, India's largest e-commerce platform, corroborates this. Some 56% of its beauty and personal care shoppers are Gen Z, with 70% of them discovering the products they buy through social media. Two out of three beauty searches on Flipkart also come from non-metro areas.

According to Redseer, Gen Z and Gen Alpha's share of beauty spending will grow from 32% in 2024 to around 50% by 2030.

The next leg of growth will be driven by niche brands innovating with specific ingredients, dermatologist-backed products, and a focus on skin nutrition, say experts. While only a handful of individual brands have scaled meaningfully so far, at this pace of growth at least 10-15 beauty companies will cross $200m in revenue in the next three to five years, according to Bhatnagar.

The Indian beauty market is expected to nearly double in size to $40bn by the end of this decade, growing at twice the rate of the country's GDP and the broader retail market. This boom is expected to continue, with the consumer becoming more sophisticated as the market grows from here.