The beauty and personal care category is considered inflation resistant. This is primarily because the key drivers of shopper conversion in this category are perceived product effectiveness, the quality of the ingredients and the emotional need that these products fulfil, rather than price alone. This explains why, in spite of rising global inflationary pressures, the category registers year-on-year growth. In 2017, the beauty and personal care market size was valued at $455.3 billion with expected estimates of a 5.9% compound annual growth rate (CAGR) until 2025 (source: Euromonitor).

For context, when Aurora last covered the category in 2011, beauty and personal care was a $382 billion business, which means that the size of the pie has increased by almost 19% in the last seven years, with the emerging markets of the Asia Pacific region leading the way. Analysts at Euromonitor have identified the emergence of a young, urban population with increasing disposable incomes, mounting aspirations of achieving an attractive appearance, an increase in the number of working women and greater product choice (and availability given the growth of e-commerce) as the drivers responsible for the market advancement of the personal care and beauty industry in this region. While China and India are the most lucrative markets, given their population and changing lifestyles, attracting massive investments from global beauty and personal care companies, the Pakistani market often does not receive the attention it deserves, simply because of the lack of official revenue figures.

As is the case with many ‘under-regulated, high value’ industries in Pakistan (think real estate), the lack of documentation, coupled with the existence of huge informal and grey segments, make it impossible to determine the real worth of the beauty and personal care market. As per Euromonitor and some scattered commissioned reports by market research companies, the ballpark figure of the worth of the domestic market is $1.7 billion, with an annual growth rate somewhere around the 15% mark. The personal care companies and industry experts that Aurora spoke to for the story were of the view that this figure is an underestimation, for the simple reason that formal production and imports only account for approximately 20% of the actual business.

The question of whether increasing competition from local players will prove to be a threat for the global brands however, was met by an emphatic “no.” As Salar Farooki, Marketing Director, L’Oreal Pakistan, points out, “the influx of more local players can only raise awareness and offer more choice to consumers. In Pakistan, the penetration of most formats within the beauty category is still quite low and therefore, there is plenty of room for all kinds of local and international brands to carve out a niche across geographies, price points and propositions.”

Despite these inconsistencies, the expanding portfolios of personal care and beauty brands in Pakistan are sufficient proof of the considerable market potential that the country has to offer. Traditionally, Pakistan’s beauty market has largely been dominated by global conglomerates – Colgate Palmolive, Johnson & Johnson, P&G and Unilever, with L’Oreal and Reckitt Benckiser (RB) relatively late entrants. Holding their own against these giants, albeit with a comparatively smaller, yet loyal consumer base, are several heritage brands, including Hashmi, Kala Kola, Medora, Saeed Ghani and Tibet to name a few. An interesting development on the competitive landscape has been the launch of a host of homegrown personal care and beauty brands. J. Cosmetics and Fragrances is perhaps the most noteworthy, with offerings providing the trifecta of functionality, quality and variety, that until now was exclusive to the global brands.

The question of whether increasing competition from local players will prove to be a threat for the global brands however, was met by an emphatic “no.” As Salar Farooki, Marketing Director, L’Oreal Pakistan, points out, “the influx of more local players can only raise awareness and offer more choice to consumers. In Pakistan, the penetration of most formats within the beauty category is still quite low and therefore, there is plenty of room for all kinds of local and international brands to carve out a niche across geographies, price points and propositions.”

Farooki’s optimism is well-founded. In addition to lower than (global) average penetration of brands in personal care, Pakistan is home to a population of which 57% are young people and the average age in the country is 23 years, factors that greatly drive consumption and spending. Providing more impetus are improved lifestyles, leading to evolving consumer preferences. According to The Economic Survey of Pakistan 2017-18, the increasing rate of urbanisation combined with rising per capita disposable incomes (largely due to the increased contribution of women in the workforce) has created a robust demand for quality personal care solutions.

Less easily quantifiable, yet equally important, is how increasing internet and smartphone penetration is influencing consumer awareness and product demand. Humayun Farooq, Marketing Director, RB Health, best sums up how access to technology and social media is reshaping the category dynamics. “With the added exposure to, and awareness of, international beauty trends consumer propensity to spend on personal care needs has increased, as has the demand for products that fulfil higher order needs.”

Farooki seconds this viewpoint and adds that since digital has made information ubiquitous, the lag in the flow of beauty trends from global to local to remote areas within Pakistan has almost vanished. He cites the increased online ordering of premium brands from second- and third-tier cities, which often do not even have a physical retail presence of high-end brands, as evidence of the changing face of the beauty consumer living in a 24/7 connected world. It is this connectivity that has paved the way for four global trends to make their way into Pakistan’s personal care market.

1. Beauty with a purpose

In the 2017 September-October issue of Aurora on Brand Activism, an online dipstick survey revealed that Millennials want to support causes that are important to them through the brands they patronise and they want to know that their purchase decisions will benefit society in meaningful ways. With more than a 100 million buyers prioritising activism, it is not surprising that personal care brands in Pakistan have realised that to appeal to young people, they have to offer more than functionality and affordability. Asima Haq, Director, Personal Care, Unilever Pakistan, is of the view that when brands are talking to Millennials, they must be aware of two things: Millennials are very practical when it comes to their beauty needs. They are also driven by purpose and their mindset is to select brands that do good for society and deliver real value by solving problems they deem to be important.

A case in point of a brand that changed its marketing communications to incorporate ‘beauty with a purpose’ is RB’s Veet. Eight years ago, the brand pioneered the ‘Veet Celebration of Beauty’, an event through which new models and fashion designers were launched, an offshoot of which was the Miss Veet Super Model, a competition that provided young women, aspiring to join the world of show business, a platform to showcase their talent. However, Farooq points out that there was soon a realisation that the event did not have a larger purpose to it. As one of the top beauty brands in Pakistan, Veet wanted a more holistic approach that would reach out to a wider cross-section of young women and make a difference in their lives. That is when the Veet Academy initiative was launched as a purpose-oriented contest in which young women are mentored on improving different aspects of their personality – confidence, communication skills, charm, fitness and intelligence, with the most accomplished young woman crowned Miss Veet Pakistan. As Farooq puts it, “every RB brand is driven by a purpose and for Veet, it is to give confidence to the Pakistani woman.” The move from Miss Veet Super Model to Miss Veet Pakistan reflects a crucial shift in the brand’s messaging. Veet is still celebrating ‘beauty’; the difference is that the concept of beauty is no longer promoted as being ‘skin deep’.

While ‘clean eating’ and ‘conscious fashion’ were the buzz phrases of last year, it’s the ‘clean beauty’ movement that is causing a stir in 2018. Around the world and in Pakistan, the talk is all about going back to natural ingredients to solve skin and hair problems (the two largest segments within personal care in terms of consumer spending). Haq explains that, “Pakistani women are looking for solutions with natural goodness because they have grown up with todkas about how herbs boost beauty. The modern consumer wants a specific benefit (fairness, for example) through natural elements.”

Another example of a successful, purpose-driven activation is the Lux Style Awards, a platform which has been promoting young talent and acknowledging the contributions of veterans from television, films and fashion for the last 17 years. As Haq explains, “nowhere are we selling soap. The purpose is to recognise celebrities who have excelled in their fields and provide entertainment to people while they discover the latest beauty and style trends by watching the show.” So successful has the event been that it has prompted other countries, such as India, to launch similar events. For Unilever Pakistan, the Lux Style Awards have served another far more basic purpose. With sanitisers, hand and face washes gaining traction in urban areas, the event allows the brand to remain top-of-mind, which is important because within skincare in Pakistan, soaps still account for a hefty share of revenues and the category cannot be ignored.

A discussion on brands moving beyond promoting features and benefits would not be complete without a mention of the Pond’s Miracle Journey, an initiative which started in 2014, whereby women who have excelled in different fields (corporate, education, social welfare, entrepreneurship, media and show business) are identified and mentored by high-achieving women. In terms of relative market share, Pond’s may be one of Unilever’s smaller brands in Pakistan, but as consumer needs continue to evolve, specifically with regards to using anti-wrinkle and anti-ageing products, it is essential for Pond’s to position itself as a responsible brand, providing women with a platform to showcase their talent as this will foster consumer loyalty and love for the brand.

2. The rise and rise of naturals

While ‘clean eating’ and ‘conscious fashion’ were the buzz phrases of last year, it’s the ‘clean beauty’ movement that is causing a stir in 2018. Around the world and in Pakistan, the talk is all about going back to natural ingredients to solve skin and hair problems (the two largest segments within personal care in terms of consumer spending). Haq explains that, “Pakistani women are looking for solutions with natural goodness because they have grown up with todkas about how herbs boost beauty. The modern consumer wants a specific benefit (fairness, for example) through natural elements.” This explains the recent launch of Fair & Lovely Herbal, which was introduced as a variant for people who wanted a natural solution to attain flawless fairness.

In line with the rising demand for naturals is the expanding niche of ‘halal beauty’, which has been identified as a significant growth driver for global personal care companies. With close to 300 million middle-class Muslim families worldwide, projected to grow to 900 million within a few years’ time, the interest in halal-certified products is understandable. However, according to DinarStandard, a growth strategy research and advisory firm focusing on the Organisation of Islamic Cooperation countries, the demand is also stemming from millions of health-conscious, non-Muslim consumers who are looking for a holistic approach to realise their beauty and wellbeing goals. This explains why between 2013 and 2016, halal product launches accounted for 2.5% of all launches in the global beauty and personal care category, while in the Asia Pacific region, with a predominantly Muslim population, the percentage goes up to 72%. In Pakistan, Masarrat Misbah Makeup, Odho Cosmetics and Luscious Cosmetics are three homegrown halal makeup options for consumers. However, claiming ‘halal-certified’ is complicated for the simple reason that every country seems to have a different set of parameters. For Pakistan, it is the guidelines provided by the Pakistan National Accreditation Council (PNAC), which is a member of the International Accreditation Forum (IAF) along with more than 70 countries. With giants such as L’Oreal and Unilever having already stepped up their game to acquire halal certifications for their personal care and beauty brands, the battle to cash in on halal beauty will only intensify.

3. All in one

Within the skincare segment (expected to remain in the driver’s seat as far as personal care is concerned), it is the multi-functional product sub-category that has been attracting the maximum investment, and with good reason. With consumers increasingly time-constrained owing to their fast-paced lifestyles, people are seeking out products that provide multiple benefits.

Spearheading this multi-functional wave are BB cream brands, of all shades and prices, lining shelves across urban retail in Pakistan. Until a few years ago, BB creams, which align skincare with makeup coverage, were considered higher order beauty solutions and only a handful of imported brands, priced at a premium, were available locally. An interesting development has been the subsequent launch of localised BB creams by L’Oreal (under the Garnier label) and Unilever as well as a host of homegrown brands, at affordable price points, allowing BB creams to make their way into the consideration set of the urban middle-class. The multi-purpose trend has not remained limited to skincare. In haircare (the second largest segment in terms of market share and value in Pakistan) as well, it has become an industry-wide trend to introduce shampoos that not only promise ‘shiny, silky hair’ but additional benefits of ‘anti-dandruff, anti-hairfall and anti-greying’, all in one bottle.

As women become more financially independent and aware, price alone will have less of an impact on brand selection, at least for evolved beauty needs such as paraben-free shampoos or anti-ageing BB creams with added sun protection. As far as the more commoditised product ranges are concerned, such as soap or toothpaste, price will continue to dominate purchase decisions of the wider public.

4. Because you’re worth it

The iconic L’Oreal tagline, coined by Ilon Specht, a copywriter at McCann Erickson in 1973, best explains the current dynamics of the personal care and beauty industry. No longer is a bottle of shampoo or a cream viewed as an indulgence. The general consensus is that there is a growing group of value-conscious, highly aware people willing to pay a premium for a solution that instils confidence in their appearance, which in turn allows them to go out and achieve their ambitions.

However, Farooq is quick to point out that the massive, price-sensitive customer category cannot be ignored either. “As spending on skincare and haircare products are factored within the monthly grocery bill for this group, when prices go up, customers are forced to downgrade to smaller SKUs, reduce consumption or if possible, switch to local options that are more affordable.”

The good news is that as women become more financially independent and aware, price alone will have less of an impact on brand selection, at least for evolved beauty needs such as paraben-free shampoos or anti-ageing BB creams with added sun protection. As far as the more commoditised product ranges are concerned, such as soap or toothpaste, price will continue to dominate purchase decisions of the wider public.

Looking ahead, Haq and Farooq have identified the men’s personal care category as a key segment expected to become big in the forthcoming years. Globally, it is one of the fastest growing segments in personal care, but in Pakistan, it is nascent and dominated by the shaving part of the portfolio, with shampoos, deodorants and fragrances accounting for the rest. The presence of multinationals in the category is largely restricted to anti-dandruff shampoos (the industry leader is P&G’s Head & Shoulders with strong competition coming from Unilever’s Clear), where the bulk of sales are derived from the men’s segment because they are more prone to dandruff. While Unilever have acquired the Dollar Shave Club, there is no equivalent to a Gillette globally or in any regional market. One of Unilever’s largest brands in the category is Axe through which the company have a presence in deodorants, shower gels and shampoos and Dove Men, which offers a body and face wash, moisturiser and deodorant. But neither of these brands are legally available in Pakistan at the moment.

The rationale behind global men’s care brands not being introduced in Pakistan, according to Farooq, is that “local consumer research has revealed that in the majority of Pakistani households, there is usually one dressing table in the home which is used by the entire family. So, men end up using whatever brand is available, rather than opting for a separate set of products.”

Haq adds that “most of the purchasing in the category is still done by women. There is a need to educate men on why their personal care products should be different. At present, awareness levels are low in the category, except when it comes to shaving related products.” Given the current scenario, it might take some time before we see a Veet for men in Pakistan, a range that has been launched successfully in the international market.

It would be pertinent to point out that while all signs point towards Pakistan’s personal care category maintaining its upward trajectory, counterfeits and smuggled products pose a significant threat, as they are priced well below the market average and in the case of the former, raise concerns over consumer safety. Multinationals in Pakistan lament the lack of government support in this regard which continues to undermine their brand image and sales and consequently, the contribution of the personal care industry to the national exchequer.

Pakistan also happens to be the only country in the world which has an import duty on palm stearin (a palm oil derivate), commonly used as a soap base. Not only that, but ever since there were reports of incidents where it was sold to consumers as ghee (in its natural state, palm stearin looks exactly like it), Pakistan’s import laws now require the element to be dyed red. The catch is that after it reaches our ports, soap manufacturing companies have to remove the dye before it can be used, increasing the cost of production, which is passed along to the consumer.

Challenges notwithstanding, the opportunities for growth are significant. In fact, experts believe that given rising consumer knowledge about beauty brands, their offerings and their ingredients, along with the spending power of a burgeoning middle-class, Pakistan has the potential to become one of the top beauty markets in the world within the next decade.

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