Reliance Retail eyes Kiko Milano acquisition to cement position in India beauty market

05 Mar 2024 --- Reliance Retail is reportedly in talks to acquire Italian beauty brand Kiko Milano. The play by India’s largest retail company would solidify the firm’s stake in a rapidly expanding local beauty market.

The deal is estimated at roughly Rs 100 crore (US$12 million) and could potentially include the rights to franchise Kiko Milano’s brand products across India.

Reliance Retail has yet to release an official statement confirming the deal, which would comprise premium eye, lip and face make-up and skin care items. Reliance Retail’s competitors in India’s commercial beauty arena include Nykaa and Shoppers Stop. 

The retail giant, headed by the Ambani family, is apparently sizing up the quickly growing Indian beauty market as it prepares to make its moves. Last September, Redseer issued a report predicting the Indian market — worth US$19 billion at the time — could expand at 10% per annum in five years to hit US$30 billion by 2027.

India’s beauty boom
Over the last decade, India has seen consistent growth in the personal care and cosmetics market with increasing shelf space in boutiques and retail stores across the country, according to reports by India Brand Equity Foundation (IBEF).

The deal is estimated at roughly Rs 100 crore (US$12 million) and could potentially include the rights to franchise Kiko Milano’s brand products across India.Many international brands like Revlon, Avon, Burberry, Calvin Klein, Cartier, Christian Dior, Estee Lauder, Lancome, Coty, L’Oreal, Schwarzkopf, Escada, Nina, Ricci, Rochas, Yves St. Laurent, Tommy Hilfiger, Shiseido, Maybelline New York and MAC have been present in India for quite some time now.

“Many multinational brands have entered the Indian market, primarily aided by dedicated support structures and their respective pricing strategies,” reveals IBEF.

The Indian cosmetics industry is majorly categorized into skin care, hair care, oral care, fragrances and color cosmetics segments. The overall market share is expected to grow to US$20 billion by 2025 with a CAGR of 25%, reports IBEF. On the other hand, the global cosmetics industry is growing at 4.3% CAGR and will reach US$450 billion by 2025.

Notable beauty players have enjoyed traction in India in the recent year, with The Body Shop India observing a “strong brand affinity built in India” amid local scale-up activities focusing on omnichannel expansion and “new opportunities” in retail, quick commerce and high convenience formats.

A recent whitepaper by Kearney and LUX Asia tells us that Southeast Asia and India are poised to be the next “gold rush” particularly in luxury beauty, reaching a market potential of US$7.6 billion by 2026, with a projected 11% CAGR between 2021 and 2031. The growth in this segment is expected to continue, with the market size almost tripling in ten years.

India to hit top five global beauty markets
By 2025, IBEF forecasts India will constitute 5% of the total cosmetics market and reach the top five global markets in terms of revenue. Additionally, it predicts the market will continue to rise strongly due to consumers’ growing choice of specialty cosmetic products such as organic, herbal and ayurvedic items. 

“Color cosmetics, perfumes, specialized skin care, hair care and makeup cosmetics are the main industries predicted to increase,” IBEF reports. “The market competition for domestic brands is increasing due to a growing number of international companies entering the Indian personal care and cosmetics market.”

However, bigger players in the industry like Dabur and Marico continue to dominate the market due to the availability of ayurvedic and herbal cosmetic products in their respective product portfolios.

“Due to the widespread belief among customers that foreign brands are of higher quality, international cosmetics brands have had a significant impact on the Indian market,” states IBEF.

“Aspirational customers have been drawn to these brands, which have accelerated the growth of the Indian market. Indian customers are switching from basic functional products to more sophisticated and specialized cosmetic products, which is driving up demand for high-end goods in India.”

By Benjamin Ferrer