As half the population of India is below 25 years of age, there will be more youths joining the workforce, earning, saving and spending more. That places the youths of India firmly in the driver’s seat, unlike youths in many other global markets.
There are an estimated 8 million of them. The “Indies” are financially independent men and women aged 20 to 25 who are brand conscious and love to spend. Unlike their parents, these youths are heavily exposed to Western media, the Internet and are open to certain foreign “values”.
A typical upper middle class young consumer is likely to look beyond the utility aspect of a product to seek intangibles like the aspirational aspect of a brand and the lifestyle associated with the product. In line with this trend, these young women spend more on cosmetics and the men are likewise very appearance-conscious. Their increased interest in looking and feeling good is giving the beauty sector a real boost.
These new consumers value innovation, quality, performance and creativity and have no intention of downgrading; they appreciate the efficacy and usage features of modern cosmetics. For this reason, L’Oréal is giving increased priority to its upscale products in parallel to its initial strategy focused on more affordable options.
Global Source: RNCOS
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1/ Despite talk of a slowing Indian economy, small-town shoppers are starting to splurge.
Sheltered by government subsidies, good monsoons, high land prices and a low reliance on credit, rural incomes were up by 12% last year and have been growing more rapidly than urban ones since 2008 according to brokers Kotak Institutional Equities.
2/ The Indian middle class is defined by a system of 12 socio economic classes (SEC) from A1 to E3 (each letter has 3 levels).
This system results from the crossing of education with the number of durable objects owned by each household (color TV, refrigerator, washing machine …) and possession of agricultural lands. To give an idea of the corresponding income level, the middle classes begin at A2 for the highest and stop at B2.
In terms of income per household:
- A monthly income of 30 000 to 40 000 rupees corresponds to SEC B1/B2 (approximately 461 to 615 euros)
- A monthly income of 40 000 to 50 000 rupees is the SEC A2/A3 (approximately 615 to 769 euro)
3/ “The typical consumption cycle always begins with cosmetics, then watches, leather goods, and jewellery before fashion or travel”
Senior Partner and Managing Director of Boston Consulting Group
“La Chine, pays du bonheur des géants du luxe pour encore au moins cinq ans”
[China, heaven for the luxury giants for at least five more years]
17 May 2012