Shiseido Plans Local Manufacturing in India to Tap Growing Luxury Beauty Market

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AuthorWhalesbook News Team|Published at:
Shiseido Plans Local Manufacturing in India to Tap Growing Luxury Beauty Market
Overview

Japanese luxury beauty giant Shiseido plans to start manufacturing in India, seeking advantages like lower import duties in the rapidly growing market. It joins global competitors such as Estée Lauder Companies and The Body Shop, which are also exploring local production. India's luxury beauty market is projected to reach $4 billion by 2035, attracting brands looking for alternatives to China's slowing consumer spending.

Japanese luxury beauty product maker Shiseido is planning to begin manufacturing operations in India. This strategic move aims to capitalize on the country's rapidly expanding market and gain benefits such as reduced import duties. Shiseido Group's Country Head in India, Sanjay Sharma, stated that local manufacturing offers "inherent advantages" and will be evaluated based on the company's scale in India. Currently, Shiseido imports its entire product range into the country.

India's luxury beauty products market is a significant growth area, with projections estimating it to reach $4 billion in sales by 2035, up from $800 million in 2023. This growth is particularly attractive as China faces economic challenges and decreased consumer spending in the luxury segment. Other major global players are also stepping up their presence in India. Estée Lauder Companies, owner of brands like MAC and Clinique, and The Body Shop are reportedly in talks with local partners to initiate or enhance their production capabilities in the country. Estée Lauder has even approved "massive investment" in India to meet rising aspirational demand, with plans to offer luxury products at more accessible price points through smaller product sizes. Several celebrity-owned brands like Rare Beauty and Fenty Beauty have also recently entered the Indian market.

Impact:
This news is expected to boost investment in India's beauty and personal care manufacturing sector, potentially creating jobs and strengthening the local supply chain. Increased local production could lead to more competitive pricing for luxury goods, making them more accessible to Indian consumers and driving further market growth. It also signifies India's increasing importance as a global manufacturing hub for premium products. The impact on the Indian stock market could be indirect, potentially benefiting companies involved in contract manufacturing, ingredient supply, or packaging for the beauty industry, and signaling positive sentiment for the consumer discretionary sector. Rating: 7/10.

Difficult terms:

  • Inherent advantages: Natural benefits or strengths that a company has because of its situation or location, which give it an advantage over others.
  • Economic headwinds: Negative economic factors or difficulties that slow down growth or cause problems for businesses and markets.
  • Aspirational demand: The desire of consumers to purchase products that represent a higher social status or lifestyle, even if they are premium priced.
  • Third-party manufacturers: Companies that produce goods on behalf of another company, which then sells them under its own brand name.
  • Import duties: Taxes imposed by a government on goods brought into the country from abroad.
  • Integrated goods and services tax (IGST): A tax levied on the inter-state supply of goods and services in India.
  • Social welfare surcharge: An additional tax applied to certain goods to fund social welfare programs.
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