French beauty brand Clarins sets up fund to deepen investments in India

When French personal care brand, Clarins, launched in India way back in 1999, there was hardly a market for prestige skincare. That was the time many premium and luxury brands entered India, but chose to exit when they realised that Indian consumers couldn’t afford them. They instead moved their focus to China as that was where consumerism was booming and people were lapping up premium and luxury brands. However, the company, remembers Jonathan Zrihen, CEO and president, chose to stay the course in India.

“For 15 years we waited for the infrastructure to come, for the consumer to have the disposable income. And, what we've seen over the last five years is an enormous build of locations, infrastructure and distribution that can create a point of rendezvous between emerging consumers and the brands,” says Zrihen. In fact, the €2 billion beauty conglomerate has set up a special India fund to accelerate its growth in the country. “We have several emerging markets like Brazil or Indonesia, but I believe that the real one is India, and I don't want to disperse ourselves. The special India fund is to make sure that, in the next 5-10 years, it will be one of the biggest markets for Clarins. That's what we did in China 20 years ago, and today, China is the number one market for us.” Around 35% of Clarins revenue comes from China.

Around a third of the beauty major’s business comes from Asia and a third from Europe. America contributes 20%, while 15% is with travel retail. The European market, says, Zrihen, has been slowing down for the past several years. “China has become our number one market because we invested for the long-term. We are one of the top skincare brands in China. We really wanted to reduce our dependence on Europe which was slowing down. US is catching up now,” he explains. However, the deepening of investments in India is to actually reduce its dependence on China, where growth according to Zrihen has started to plateau.

“We are also seeing a certain maturity reaching China. Even though we have been growing well to catch up on market share, the market itself hasn't grown for two or three years. There are too many brands there and the economic situation is also complicated. Despite China talking about a 5% GDP growth, there's a real-estate bubble, there's unemployment, there's an ageing population.”

On the other hand, Clarins India grew by 35% last year. “If I look at the CAGR for the last three years, the growth is about 42%. So, we have been nearly doubling our business every two or three years,” says Zrihen. While China has primarily been a skincare market for Clarins, Zrihen says the company has a right to win in India in make-up too. “We believe we can get 10% of the prestige market in skincare and close to 6%-7% in make-up too. We are going to build Clarins with two legs, as in India, makeup is going to grow faster than skincare.”