1. The document discusses the success of pure-play beauty companies. It analyzes major pure-play beauty players globally and compares their approaches and key performance indicators to identify successful traits. 2. It finds that focus is a major driver of success, with pure-play beauty companies performing better on average than FMCG-led beauty companies. Pure-play companies are more adaptable to rapid consumer changes. 3. Indian pure-play beauty companies are also operating successfully using philosophies of localization, fast execution, and omnichannel disruption combined with learnings from incumbents. L'Oreal, Nykaa and Honasa are front-runners in India.

1. © 2023 Redseer Strategy Consultants Confidential and Proprietary Information
September 2023
Beauty unveiled -
Decoding the
success of pure-play
beauty companies
A report by Redseer and Peak XV

2. © Redseer 02
About us
Peak XV Partners (formerly Sequoia Capital India & SEA) is a leading venture capital and
growth investing firm investing across India, Southeast Asia and beyond. Peak XV
(pronounced Peak Fifteen) was the name used for Mount Everest before it was called
that. It embodies everything we believe about building long-lasting businesses that
stand tall and inspire greatness.
Over the last 17 years of our operations in the region, Peak XV has grown to manage over
USD 9 billion in capital across 13 funds and invested in over 400 companies. To know
more, check out peakxv.com.
Redseer Strategy Consultants is a leading strategy consulting firm that has been at
the forefront of shaping the new age business landscape in India for the past 14 years.
Redseer’s relentless focus on innovation, deep consumer understanding, and strong
entrepreneurial mindset has established it as the go-to advisory firm for new-age
consumer-focused businesses. Redseer is the # 1 advisor to new age firms planning
IPO strategy, a leading advisor to PE on making the right investment calls and works
closely with the founders and board on long-term sustainable businesses. Redseer &
and its partner OC&C with over 1000+ consultants, create positive impact for their
clients from 22 cities across 5 continents.
To see our work visit redseer.com, and follow us on LinkedIn.

3. Glossary
Beauty & personal care – includes products belonging to hair
care, oral care, bath & shower, skin care, fragrance, make up,
and men’s grooming categories (excluding BPC appliances)
BPC
1.
Value of all goods and services produced
by an economy
GDP
2.
Umbrella term used to describe BPC regimes and
products from South Korea
K-Beauty
3.
People born between the years 1997 and 2012
Gen-Z
4.
Direct-to-consumer brands are independent brands which
have more than 50% revenue from online channels, and
they must have own website /app
D2C brands
5.
Players with products in multiple FMCG categories including BPC
FMCG-led
brands or
companies
6.
Shorthand for Electronic Retailing which refers to the
sale of goods through the internet
E-tailing
8.
BPC products that are made from natural, plant-based ingredients and
are free from synthetic chemicals, artificial fragrances, and potentially
harmful additives
Herbals and
Organics
9.
E-tailing players which sell (mostly single) specific categories
Vertical
players
10.
E-tailing players which sell multiple categories
Horizontal
Players
11.
Brands or retailers where BPC contributes more than 70% of revenues
Pure-play
brands or
companies
7.
© Redseer 03

4. The Beauty and Personal Care (BPC) industry is a very attractive category globally. It is
a front-running category in terms of growth and profitability. In the last decade, it has
seen material changes to consumer behaviour. Consumers are increasingly adopting
the latest trends. Their expectations from BPC products are that they should be made
for them and solve their specific problems effectively. Further, with the effect of social
media and the internet economy, the number of touchpoints where consumers are
present have increased significantly. In this context of a highly attractive market and
rapid evolution, multiple brands are emerging in the market. Through this report we
have tried to identify the traits of successful BPC players.
In this report we have analysed multiple large BPC brands globally which are present in
multiple countries and compared their approaches to operate as BPC players. We also
compared their key performance indicators to identify which of the approaches work
better. Further, we compare the learnings from the global context to the Indian market
to better understand the Indian BPC players. Through this exercise, our goal is to
identify some of the best practices that enable success for BPC players globally and in
India, and to uncover associations between the traits of the companies that are leading
these best practices.
© Redseer 04
Preface

5. © Redseer 05
Executive summary
Globally, BPC is the most attractive sizable consumption category. It’s projected to be a US$
660 billion market and US$ 2.2-2.7 Tn market cap by 2027. Among the larger consumption
categories, it has the highest growth rate and the highest gross margin. The BPC
opportunities in developing countries like India and Indonesia are even more attractive.
Consumer behaviour in BPC has changed fundamentally and similarly across the globe. They
need localised products, want to keep up with the rapidly changing trends, are willing to pay
premiums for products that solve their specific issues. Further, they are looking beyond
offline shelves and into online and evolving technologies for their shopping needs. The
opportunity size and flux are leading to significant brand creation, filling the consumer
need-gaps with sharper propositions. To understand the key success levers in this
environment, we have compared the largest BPC companies and their brands in the world.
Focus is the most significant driver of BPC players’ ability to adjust to rapid changes. We call
these focused players as pure-play BPC players. Pure-play BPC players produce localised
products, are faster to market and engage and reach consumers across multiple channels
and are pioneers of the online channel. They hit the right checkboxes to align with the rapid
evolution of consumer needs. Hence, they tend to perform better on average against the
FMCG-led BPC players (players which sell multiple categories including BPC). Following are
the headline statistics. Average revenue growth (2017-22) for major pure-play BPC players
was ~5x of FMCG-led BPC players. Average gross margin (2022) for major pure-play BPC
players (2022) was ~1.6x of FMCG-led BPC players. And Pure-play BPC players are valued
better – P/E is ~1.8x of FMCG-led.
India is a shining star with the highest BPC growth rate vs. comparable countries (next best
are Indonesia and China). Indian pure-play BPC players are operating through the
philosophies of localization, fast execution and omnichannel disruption. Additionally, Indian
pure-play BPC players are getting better by layering their capabilities with learnings from the
incumbents. One of their key learnings is the importance of the offline channel. L’Oreal,
Nykaa and Honasa are among the front-runners of pure-play BPC plays in India.
While BPC is still evolving in India, as indicated by the low BPC spend per capita currently in
the country, Indian pure-play BPC players have the right ingredients for success and are
poised to do well going forward.

6. BPC is the most
attractive sizable
consumption
category globally
and it is undergoing
landscape-altering
changes.
1.

7. © Redseer 07
Globally,BPC is projected to be a US$ 660 Bn+ market valued at
US$ 2.2-2.7 Tn by 2027,growing faster than other large consumption categories
BPC is a highly resilient category as it’s a fundamental
human need. Its resilience came to the fore during the
2020-21 lockdowns, when BPC saw 4% YOY drop in sales,
whereas many major economies had contracted much
more significantly. This was driven by consumer behaviour
shifting to include practices like online shopping and
home-based routines.
The growth acceleration of BPC is being driven by multiple factors coinciding, as below:
BPC’s attractiveness is further underscored when it’s
compared to other sizable consumption categories. BPC’s
growth is the highest compared to sizable consumption
buckets like fashion, packaged food and beverages and the
overall global retail market. The forward-looking growth of
the global BPC market is 1.5x that of retail.
421
473 455
498
531
661
Global BPC market size
US$ Bn
Estimated total market
capitalization (US$ Tn)
2015 2019 2020 2022 2023P 2027P
COVID-19
Projected growth rates (CAGRs)
2022-27P
5.8%
5.7%
4.3%
4.0%
3.1%
BPC
Fashion
Foods &
Beverages
Retail
GDP
BPC is among the fastest growing
consumption categories
By 2027,the global BPC market will be ~ 2%
of the global retail market
Increasing awareness and usage: Investments into
customer education and awareness, along with growing
prominence of influencers is driving the industry forward.
Trade-up to premium or masstige products: BPC
products are becoming increasingly more effective and
are able to target specific consumer issues. Consumers
are willing to pay more for such products and that’s
driving value.
Supply evolution in the face of evolving consumer
needs: Evolving consumer behaviour is driving disruption
and brand creation, with supply doubling down on
innovation, creating significant value.
Projected growth rates (CAGRs) of BPC markets in the countries
2022-27P
Projected CAGR of the
global retail market
in the same period (4%)
Annual BPC spends per capita < US$ 150
Annual BPC spends per capita > US$ 150
India Indonesia China Canada Brazil USA Mexico Italy Germany UK Japan Spain South
Korea
UAE France
10%
8%
7%
6% 6%
5% 4%
3% 3% 3% 3%
2% 2%
1% 1%
1.3+ 1.5-2 2.2-2.7
India stands out as one of the largest and fastest growing BPC markets across the globe.
Rapidly expanding developing countries’ markets: As
emerging economies prosper, consumer spending on
BPC products rises sharply. Growing middle classes in
countries like India, Indonesia, and Brazil represent
significantly large and untapped markets of
brand-conscious consumers, driving demand across
BPC categories.
+3%
+6%
-4%
+7%
xx

8. © Redseer 08
BPC²
Jewelry &
Watches
Pharamacy
& Wellbeing
Packaged
F&B
Home &
Living
Consumer
Electronics
Consumer
Durables
Fashion
BPC has highest gross margin among the large consumption categories
Avg. gross margins (global)¹
2022
72%
72%
54%
54%
44%
34%
31%
30%
Note(s): 1 Avg. of leading companies globally in each category 2. Players for which BPC contribute more than 70% of revenue
BPC lends well to premiumisation, which drives its gross
margin. As seen above, it has the highest gross margin in
comparison to categories such as fashion, pharmacy &
wellbeing, packaged F&B, home & living, consumer
electronics, etc.
Jewellery and Watches, a much lower frequency category
with higher average spends is the only comparable
category here.

9. Consumer behaviour has transformed, from having simplistic awareness of BPC and using generic-use products to
adopting newer trends and seeking products that meet their specific needs.
© Redseer 09
Source(s): Secondary research and Expert inputs
Consumer traits in BPC in early 2000s
Current BPC trends (2010 onwards)
Black Beauty Halal Beauty Diversity & Inclusivity Beauty Tech
Clean Beauty Gen-Z Influence Minimalist Skincare K-Beauty
Gender Neutral Brands Influencer Marketing
Men’s Grooming
Live Commerce
The global BPC market is increasingly being characterised
by the significant evolution
Lack of awareness about
ingredients
Consumers had limited awareness
(at scale) about the effect of ingredients
that were used in beauty & personal
care products
Exposure largely limited to
general-use products
Consumers used shampoos, facewash
etc. but didn’t expect the products to
address their own unique issues or to
be made for them specifically
Influenced by mainstream
celebrities
Makeup trends were largely influenced
by the mainstream pop culture and the
most popular celebrities of those times

10. © Redseer 10
While change is associated with most consumption
categories, but nowhere is it more transformative than in
BPC. Social media has increased awareness and amplified
the need for BPC products. Consumer experimentation
has opened up new regimes and practises that need
specific products. There is a paradigm shift in perceptions
around gender and beauty.
Consumers care more about inclusive beauty,
beauty-tech, and experimenting with new ingredients
class like Halal. Further, there is stronger demand for
sustainable and clean products, and greater influence of
generation Z customers.
Consumer behaviour evolution can further be summed up under 3 buckets
Seeking‘made for
them’products
Exploring various
shopping avenues
Willing to pay
premium
for what works
Consumers are seeking
products to solve their
pain-points and that are
suitable for their skin/
body type
Consumers are using internet
and consulting people to learn
more about BPC products,
while they search online as
well as offline to find products
that they like
While consumer demands have
evolved, their willingness to
pay has also increased for safe
and effective solutions.
1 2 3

11. © Redseer 11
Consumer demands for clean products,inclusivity and
personalization has increased
1
The need for transparency is accentuated by the
increasingly aware customers. This is more critical in a
category like BPC where customers are extremely
sensitive about the effect of various ingredients on
them. Also, with increasing awareness on empathetic
growth, consumers appreciate cruelty-free ways of
developing BPC products.
Consumers seek localisation in terms of specific
preferences, needs, cultural nuances, skin type, climate,
traditions, and beauty standards. Additionally,
personalization has gained more prominence with
advancing technology. Consumers seek personalization
and prefer products that cater to their specific needs
and pain points.
The enhanced focus on inclusivity is a result of
heightened awareness around diverse consumer
identities, skin tones and genders. Consumers
appreciate representation and value authenticity.
Preference for clean ingredients Appreciation for inclusive offerings
Seeking personalized/ localised
solutions
Consumers want clean and
sustainable products that are
toxin free, ideally based on vegan/
organic ingredients
They appreciate brands that are
environmentally safe and
cruelty-free
With increasing sensitization
around gender equality, consumer
expect their BPC brands to follow
the same standards of inclusivity
in their offerings
Consumers want products that
are made for their skin types and
that do not cause any side effects
They also expect brands to
personalize products for them
better
Consumer are
consciously looking
for products
containing clean and
toxin-free ingredients
Consumers want
products that suit their
specific skin colour.
There is increasing
prominence for
genderless beauty
Consumers have
become aware of what
kind of ingredients that
suit them and make
ingredient specific
purchases
Consumers want
products that align
with their social and
cultural beliefs
Consumers are exposed
to tech solutions want
that can customize
products (like serums)
to their needs and
skintype.

12. Consumers are willing to pay higher for products that are
suited for them and are effective against their specific
issues. There is a growing cohort of consumers seeking
elevated experiences while minimally stretching their
budgets.
As a result, we see the masstige and premium segments
in the USA, China and India growing significantly faster
than the mass market segment.
© Redseer 12
Consumers are willing to pay premiums for what works for them,
as seen in the high growth of the masstige and premium categories
2
Change in market share of price segments
Projected change between 2022 and 2027
In the key countries,as consumer behaviour evolves,
their willingness to pay premiums is going up
This is evident from the growth in revenue for premium
calegories for large brands like Shiseido and L’Oreal
Premium
Masstige
Mass
InUS&China,masstigeandpremiumismorethan50%ofthemarket
InIndia,masstigeisgrowing2xasfastasthemassmarket(CAGR-wise)
Revenuesegmentedbypricesegments
Byvalue
2016 2019 2022
40%
60%
46%
54%
60%
40%
Prestige
Category
Others
2016 2019 2022
31%
69%
37%
63%
38%
62%
L’OrealLuxe
Others
The growth of the masstige and premium segments is even more pronounced in India where they
are growing 2x as fast as the mass market segment.Also,the masstige and premium categories
have the highest growth across these 3 countries.

13. Today’s consumers purchase BPC products quite
differently from how it was purchased a couple of decades
ago. In fact, consumers leverage multiple channels across
their product journey. They build awareness through
influencers or by talking to their friends/ family or
beauticians, perform their own research on social media
and YouTube, like to try products offline, appreciate the
trust of talking to an expert in a physical shop, and while
the first purchase could be in an offline store,
subsequent purchases might be online.
© Redseer 13
Consumers are increasingly learning about and purchasing BPC
products across multiple channels
3
How they get to know about BPC
products
Consumers become aware about
products by talking to friends/
family, beauticians etc. or by
coming across online or offline
advertisements
How they research products
before zeroing on a purchase
To understand more about the
products and their uses, consumer
prefer to use online customer
reviews, blogs, interactive content
etc.
How they purchase
Consumers make their purchase
either online (as it is more convenient)
or offline (to get the touch & feel of
the product or to talk to the sales
expert) depending on their
preferences

14. BPC brands created across the last several decades
As depicted
Prevalence of traditional FMCG brands
with a focus on generic categories such
as bath and body care.
Emergence of Pure Play brands
to cater niche consumer cohorts
as the consumer use cases and
preferences evolve over time
Digitally led beauty and
personal care brands
emerged with increase in
product personalization
demand
Average number of companies
started per year
X ~15x ~110x
Total
GMV
of
Global
BPC
Brands
Pre 1990 1990’s 2010’s 2020’s
BPC lends extremely
well to creation of
D2C brands
Emergence of BPC
brands focused on
personalization,
sustainable
products and
inclusive beauty
Given the attractiveness of the BPC market across multiple geographies and the disruption opportunities
provided as a result of the evolving landscape, there is a clear trend of new brands trying to enter the market.
In the face of the attractive opportunity and rapid evolution
in the BPC space, what does it take to succeed in this
market?
We explore the answers by examining the 2 most
prominent types of BPC companies in the next section.
This opportunity has led to significant brand creation,filling the consumer
need-gaps with sharper proposition
© Redseer 14
BPC – A highly attractive market
Consumer behaviour is evolving rapidly
US$ 660 Bn+ market by 2027
Faster growth and higher GM than most other retail
categories
Very high growth in developing countries
Need localised products
Want personalization, transparency and inclusivity
Are willing to pay more
Leveraging online
Opportunity is attracting entreprenuers
Rate of brand-creation has increased dramatically
To put things in perspective, the avg. # of BPC
brands created per year over the last 2 decades is
almost 7 times that of the 1990s
What does it
take to succeed
in this dynamic
market ?
Indicative and non-exhaustive brands

15. The players who
are only focused on
BPC can adjust to the
evolving consumer
needs better and are
well positioned to
win the market.
2.

16. To understand the key success factors,we compared the 2 core BPC
models – pure-play and FMCG-led BPC players
© Redseer 16
In the evolving BPC market, which is being driven by
innovation and rapid iteration, success depends on the
players’ capabilities to be agile and differentiated. To
accomplish the above, players need focus.
Focus is perhaps among the most significant
differentiators across BPC businesses because
consumers form brand associations based on specific
use-cases (issues). So, brands need to demonstrate
efficacy on very specific use-cases. But doing just that is
not enough. Because size of addressable markets shrinks
with increased specificity.
Before deep diving on the driving forces of efficacy of BPC players, we define our consideration set as two kinds of BPC players
distinct from each other because of their different focus on the space. Below are the definitions of the 2 types of players:
So, brands need to provide solutions for multiple
use-cases in their categories. This requires significant
research and development, keen understanding of
consumer issues, focus on iterations etc. The upside here
is the strong moats that are created through high brand
loyalty, recognition and word of mouth. Hence, the starting
point of dissecting BPC companies is the level of focus
they have on the category.
Pure-play BPC players: Brands or retailers where BPC
contributes more than 70% of revenues are defined as
pure-play players.
FMCG-led BPC players: Players with products in multiple
consumer categories incl. BPC, are defined as FMCG-led
BPC players.
We compared these 2 types of models
on the below aspects
Cateringtotherightcustomerstoenable
sustainablegrowth,withfastexecution
Growth
Pricingpowerofthebrands
Gross margins
Thetrade-offsbetweenmaximising
targetedreachandcosts
Efficient reach
Howmuchmoneythebusinessgenerates
Earnings
before taxes
Howinvestorsvaluethebusinesses
Market
Valuations
Pure-play BPC players (global)
Brands or retailers where BPC contributes more than
70% of revenues,are defined as pure-play players
Non-exhaustive
FMCG-led BPC players (global)
Players with products in multiple FMCG categories
including BPC,are defined as FMCG-led BPC players
Non-exhaustive

17. © Redseer 17
Growth rates for major pure-play BPC companies are significantly higher
1
BPC companies’ global revenue growth (CAGR)
2017-2022
Pure-play BPC Companies FMCG-led BPC companies¹
The ability to provide specialized products to consumers
through comprehensive product ranges has driven growth
for pure-play BPC players. Most of the disruptions in the
space were led by pure-play brands offering specialized
solutions, made with better ingredients. In fact,
specialization is one of the anchors and reasons to exist
for pure-play BPC brands. The efficacy of this strategy
has led FMCG-led BPC players to adopt it, building
capabilities through acquisitions.
The key to cracking specialisation is iterations and speed
of execution. Brands need to be able to tackle multiple
use-cases, to provide multiple purchase options to
consumers and be the first to do so. A good metric to
understand in this context is the number of products the
brands bring to the market.
0
1%
2%
3%
4%
5%
6%
7%
8%
30%
Pure-play BPC brands disrupted the market
by targeting specific use-cases
And have much higher number of products vs FMCG-led brands,
showcasing their speed of execution
Eucerin Anti – Pigment Dual
Serum
(Reduces pigment spots andprevents
re-appearance)
Eucerin Hyaluron FillerVitamin
C Booster
(An anti-aging serum with
10% Vitamin C )
Skin Caviar Luxe Eye Cream
(Lifting and firming eye cream)
Cellular Hydrating Serum
(Provides an intensive &
long-lasting hydration)
Number of products in the US¹
As of Aug 2023
Source(s): Company filings
Note(s): 1 Number of Products are calculated from brand’s own website in USA
Note(s): 1. Their BPC revenues
Pure-play BPC brands
FMCG-led BPC brands
10X
8X
8X
5X
3X
3X
2X 2X
X
(Beiersdorf Brand)
(Beiersdorf Brand)
Propelled through fast execution,pure-play BPC players have 3x+ the
average number of products as FMCG-led brands.

18. © Redseer 18
0
20%
40%
60%
80%
Pure-play BPC companies FMCG-led BPC companies¹
Gross margins
2022
On average,large pure-play BPC companies command
28 p.p.higher GMs than FMCG-led BPC companies
2
Note(s): 1. Median per ounce prices shown in Amazon.com for each category as of 28th Aug 2023
Source(s): Company filings
Note(s): 1. For the FMCG companies' gross margin is calculated on overall company accounts due to unavailability of BPC specific data
Focusing on specific consumer needs allows brands to
build trust, leading to consumers willing to pay higher. This
targeted/localised approach empowers pure-play BPC
players to command superior pricing power.
This is true across categories wherein the like-to-like, per
unit price of pure-play BPC players is materially higher
than that of FMCG-led BPC players. This leads to
pure-play players generating higher gross margins.
Per unit price-points of comparable SKUs (targeting same use-cases) of
brands across select categories¹
As of Aug 2023
Pure-play BPC companies
FMCG-led BPC companies¹
Face Wash
Shampoo
Body Cream
Face Sunscreen
x
4x
x
2x
2x
x
3x
x
The average GM for pure-play BPC cohorts is 72% vs.44% for FMCG-led BPC cohort.

19. © Redseer 19
Pure-play brands are increasingly investing in multiple
channels to meet consumers where they are
3
Note(s): 1. Number of Instagram followers 2. Average search trends is calculated from CeraVe, L'Oréal, Garnier and Revlon search results 3. Average search trends is calculated from Dove, Olay,
Braun and Vaseline search results 4. For the FMCG companies’ % of online sales are calculated on overall company accounts due to unavailability of BPC specific data
Source(s): Company filings, Secondary research, Amazon.com and Instagram
E-commerce
Shiseido aims to pursue
their goal of 35% online
revenue contribution across
geographies and over 50%
in China soon
Estee Lauder’s online
sales grew by 11% in
2022 & comprised
28% of the overall
global sales
D2C
Beiersdorf launched
personalized AI powered
D2C brand O.W.N. using
multiple consumer survey
data points for
formulations
Companies like Loreal
& Shiseido have
deployed D2C strategy
for their respective
brands & partnering
up with local players.
Live Commerce
Estee Lauder’s first
stream was watched
by 8k+ customers and
witnessed 500% more
sale conversions
Shiseido partnering
with Isetan Mitsukoshi
group to conduct live
commerce sessions
VR/AR Stores
Laura Mercier has
already introduced a
metaverse store that
features AR technology
Loreal, Estee Lauder
& Shiseido have
started embracing
AI technology
Offline
channels
Brands such as L’Oréal,
Shiseido and Estee Lauder
continue to enhance
customer engagement via
their EBOs
L’Oréal leverages various
offline channels including
hair salons, department
stores, drugs stores, etc.
With consumers leveraging multiple channels during their
purchase journey, brands are focusing on meeting the
customers where they are. This includes covering all bases
such as providing offline (general trade stores, EBOs &
MBOs) as well as online (e-commerce platforms, brand
websites, social media, etc.) modes of purchase.
Pure-play BPC players were the ones who led the online
disruption with FMCG-led BPC players playing catch-up.
Higher online engagement by pure-play BPC has led to
higher brand salience for them in the channel. Ultimately,
translating into higher online revenue contributions.
53
11
5
1.1 1.0 0.8
0.6 0.4
Social media engagement1
# in Mn, As of August 2023
Pure-play BPC brands
FMCG-led BPC brands
Pure-play BPC brands
FMCG-led BPC brands⁴
Pure-play brands engage better with
consumers on social media
Google search trends
2004-23
Pure-play brands have higher demand among
consumers who shop online
% revenue contribution of online channels
2022
Thereby leading to higher online revenue
contribution
15
20
25
30
35
40
45
50
2000 2005 2010 2015 2020 2025
Pure Play BPC²
FMCG led BPC³
0
10%
20%
30%
40%

20. Beyond just sales,pure-play BPC players focus intently on educating
customers through the right mediums
© Redseer 20
Pure-play brands invest to educate customers not
only about their brands,but also about the trends
(driving demand)…
…and focus intently on selecting the right mediums
to pass on their messages
Pure-play brands design specific campaigns to educate
their consumers about the new trends, which
generated demand
Estee lauder is implementing
influencer driven campaign
focused on product education
and demonstration
Shiseido’s personalised skin
care consultation, salesperson
educating consumers on
product characteristics
and benefits
Trends
awareness
Brand
awareness
Pure-play BPC companies invest heavily into brand building
through EBO’s, building trust and credibility via different
customer touchpoints and introducing of new product lines
Influencer marketing
campaign by Clinique
La Mar’s product review videos
L'Oréal Ad on Burj Khalifa,Dubai
With high-speed innovation around niche offerings,
pure-play brands invest in educating consumers about
the uses and benefits of the products, to create demand.
To reach the right set of customers for their specialized
products, and to provide elevated experiences, pure-play
brands leverage various marketing channels with a key focus
on influencer marketing and providing unique experiences
Consequently, pure-play BPC brands end up spending higher in marketing (in proportion) than the FMCG-led BPC brands.
0
10%
20%
30%
40%
Marketing spends¹
2022
Note(s): 1. As mentioned in company accounts 2. For the FMCG companies’ market spend % is calculated on overall company accounts due to unavailability of BPC specific data
Source(s): Company filings
Pure-play BPC companies FMCG-led BPC companies²
Investing in growth is warranted due to importance of having first-mover advantage in
brand association.Now is the right time to invest in growth.

21. © Redseer 21
Despite materially higher marketing spends,the pure-play
BPC players have largely comparable EBTs
4
While marketing drives growth, the best performing players
design their marketing activities with the strategic
prerogatives and margins in mind.
We analysed the earnings before taxes of the 2 sets of
players and they were largely comparable.
This reinforces the fact that analysing just a few cost
metrics (say, marketing) may not provide the correct
assessment of BPC companies. Especially in the context
of higher gross margins and the outsized impact growth
investments have.
In fact, with the size of the BPC opportunity and increasing
competition through brand creation, not making growth a
primary prerogative might be materially detrimental for the
BPC companies.
0
10%
20%
30%
Pure-play BPC brands FMCG-led BPC brands¹
Earnings before taxes as % of revenue
2022
Note(s): 1. For the FMCG companies’ EBT is calculated on overall company accounts due to unavailability of BPC specific data
Source(s): Company filings

22. © Redseer 22
P/E Ratio and EBT multiples
P/E ratio as of August 2023, and EBT at the end of 2022
Market Capitalization- L'Oréal vs Unilever (historical trend)
US$ Bn, 2018-23
EBT multiples - L'Oréal vs Unilever (historical trend)
2018-22
P/E - Pure-play BPC companies
P/E - FMCG-led BPC companies
EBT multiple
100
150
200
250
300
2018 2019 2020 2021 2022 2023
Market
Cap
EBT
Multiple
0x
10x
20x
30x
40x
50x
2018 2019 2020 2021 2022
Investors are rewarding growth potential and high GMs of pure-play BPC companies. Accordingly,the valuations assigned to higher
growing nascent pure-play BPC players is significantly higher
Pure-play BPC players have high growth and better gross margins, which enables them to invest in growth, while earning
industry-comparable margins.Hence,they are valued higher
Source(s): CompaniesMarketCap.com, Market Watch, Company Annual Reports and Redseer Analysis
To summarise, the rapid growth of pure-play BPC brands in
the market can be attributed to their focused customer
approach, swift execution, and investment in customer
education. These factors have collectively propelled them
to leadership positions in the global market. They have
significant growth runway as they continue investing in the
above, especially as the investments are cushioned by high
gross margins. Therefore, they are more favourably valued.
This analysis helps us answer the question raised in the
previous section - what does it take to succeed in this
market? While the answer will vary depending on the type
and scale of companies, market context etc., but some
definite key success factors are specialisation,
differentiation-led ability to charge premiums,
investing in growth through customer education, and
a 360 degree approach to reach those customers.
Avg.Rev Growth
(2017-22)
Pure-play¹ FMCG-led²
10%
5x
2%
Avg.Gross Margin
(% rev,2022)
Pure-play¹ FMCG-led²
72%
1.6x
44%
Avg.Marketing Spends
(% rev,2022)
Pure-play¹ FMCG-led²
26%
2x
13%
Avg.P/E
(Aug 2023)
Pure-play3
FMCG-led²
51
1.8x
28
Avg.EBT
(% Rev,2022)
Pure-play¹ FMCG-led²
12%
0.9x
14%
Note(s): 1. Pure-play brands considered are L'Oréal Paris, Estee Lauder, Beiersdorf, Shiseido and Natura and co. 2. FMCG-led brands considered are Unilever, Procter and Gamble,
Colgate Palmolive, Kao and Henkel 3. Pure-play brands considered are L'Oréal Paris, Estee Lauder, Beiersdorf and Shiseido
0
10
20
30
40
50
60
0
20
40
60
80
100
Benefitting from higher growth,pure-play brands are valued better than
FMCG-led BPC companies.Average P/E ratio of pure-play BPC cohort is 51,
which is 1.8x of FMCG-led BPC cohort’s 28

23. Although the
Indian BPC market
is nascent,it’s
witnessing similar
trends of disruption
by pure-play
BPC players.
3.

24. Also, currently India’s BPC spends per capita is very low
compared to other countries. As India prospers, the growth
headroom will materialise strongly.
The Indian BPC market is poised for rapid expansion, to
be sized at $30 billion by 2027, comprising ~5% of the
global BPC market. As more consumers seek
higher-quality products and adopt beauty and self-care
routines, the market offers a promising landscape for
brands to tap into and has witnessed the emergence of
various home-grown brands as well.
India is uniquely positioned as one of the most attractive
BPC markets globally
Indian BPC market overview
As depicted
BPC spend per capita – Global benchmarks
US$, 2022
Significant growth headroom for Indian
BPC given its current under-penetration
313
38
30
14
© Redseer 24
US$ 19 billion
India BPC 2022 India BPC 2027P
Total BPC GMV
US$ 3 billion
Online BPC GMV
67 million
Online BPC users (ATU)
US$ 30 billion
Total BPC GMV
US$ 10 billion
Online BPC GMV
150 million+
Online BPC users (ATU)
1.6X
3.3X
2.2X
Note(s): The BPC market sizes mentioned here do not include the market size of BPC appliances

25. © Redseer 25
India’s growth is propelled by various factors
2,500
2,000
1,500
2016 2017 2018 2019 2020 2021 2022
Rising incomes Rapidly rising middle-class
GNI per capita – India
US$, 2016-22
Indian Population (Households) segmented by Income
As depicted, 2022, 2027
Rising incomes leading to a large middle-class population,
which is a key driver of private consumption.
Urbanization
Urbanization as % of Population
%, 2016-22
2016 2019 2020 2021 2022
33%
34% 35% 35% 36%
The increase in income strongly fuels greater private spending, and this is quite evident in India. BPC benefits
disproportionately from that increasing consumption pool as it is a fundamental need.
Rising incomes leading to higher consumption
1
Middle-class households are exposed to good quality products and have higher awareness; hence they have higher
propensity to purchase branded products and through organized channels.
Upward mobility giving rise to sizable middle-class which can buy premium products
2
Urban areas have higher concentration of relatively higher income individuals, particularly among millennials and
generation Z. This allows smaller brands to come up with sizable target audiences readily available in dense urban
clusters. Higher urbanisation will potentially lead to newer brands.
Urbanisation leading to higher brand creation
3
Educated and financially empowered women play pivotal roles in household decisions, including for BPC needs. This is
more true for a category like BPC. There is significant growth to be unlocked here.
Material value unlock with higher prominence of women shoppers
4
Women increasingly participating in the economy
Employment in services
% , 2016, 2019
32.0%
35.0%
25.0%
28.0%
Female Male
Further growth potential to be unlocked with increase in
participation of women in the labor force,particularly services.
39 M
(12%)
66 Mn
(20%)
100 Mn (31%)
121 Mn (37%)
High Income
households
Upper Middle-
class Households
Middle-class
Households
Low-income
Households
58 Mn (16%)
89 Mn (25%)
109 Mn (30%)
105 Mn (29%)
2022 2027
3 p.p.+
3 p.p.+
2016 2019

26. The rate of growth of pure-play BPC brands is more than twice
that of the FMCG-led BPC brands.
As the market evolves and grows ahead,the growing success of pure-play BPC brands will
lead to creation of multiple hundred-million-dollar+ pure-play BPC brands in India
© Redseer 26
In line with global trends,pure-play BPC brands are disrupting the market,
growing 2x+ as fast as the FMCG-led players
Note(s): 1.Brands or retailers where BPC contributes more than 70% of revenues, are defined as pure-play players
Indian BPC market split by type of brands
Market size in US$ Bn, bubbles represent CAGR
19 30
30%
70%
33%
67%
42%
58%
2019 2022 2027P
Pure-play
FMCG-led
9% 15%
7%
4%
16
Traditionally, the Indian BPC market has been dominated
by large FMCG players. It was because India is a large yet
fragmented market that is significantly unorganised. Now,
the traditional FMCG players had developed supply chains.
And, with technology and emergence of new-age logistics
partners, the barriers to entry have lowered and the
market has opened for a larger set of players.
With pure-play BPC brands gaining prominence, similar
patterns are playing out as seen in the global market.
Therefore, the strategic advantages that work in other
markets also apply to India. Advantages like agility,
specificity, innovation, new-age focus, online orientation
are helping the Indian new-age pure-play BPC brands
scale fast. Pure-play BPC brands in India are expected to
contribute ~42% of the market by 2027.

27. Like their global peers,the Indian pure-play BPC players are executing fast to
address the evolving needs of the Indian consumers
The awareness of Indian consumers regarding their BPC
needs is evolving swiftly. A quick analysis of google search
trends clearly highlights the growing prominence of
evolved consumer needs. The same is also clearly visible in
how the Indian BPC market segmentation is evolving. The
market share of specific use-case products in the Indian
skincare market is expected to be 60% by 2027. The trend
will only intensify, as already seen in the global markets.
Pure-play brands have led this disruption through their
specific and differentiated offerings.
Pure-play BPC players have made conscious strategic
choices that have made such specificity possible.
Specificity needs localisation and fast execution.
Pure-play BPC players in India have adopted leaner R&D
and product development cycles, effectively
shortening the time it takes to bring products to
market by around 50% in many cases. As a result, they
efficiently introduce new offerings and capitalize on
emerging trends, thereby solidifying their position in the
market in niche use-cases. More importantly, the speed of
execution enables them to target a greater number of
specific use-cases, maximising their addressable market.
© Redseer 27
Google search trends – Face Serums (India)
2004-22
There has been a sharp increase in the consumers’
interest in ingredients that tackle specific issues
India skincare market
US$ Bn
Driving the growth of BPC specific
use-case products
Average product launch time comparison
Months
Pure-play BPC players have an advantage to cater
to these specific needs due to faster execution
Source(s): Google, Redseer IP and Expert inputs
Note: 1. Specific Use Cases include skin protection, skin tone management, anti-ageing, acne management, etc.
0
10
20
30
40
50
60
70
80
2005 2010 2015 2020 2025
Vitamin C Serum
Salicylic Acid
Niacinamide Serum
Hyaluronic Acid
50%
40%
50%
CAGR
(2022-27)
60%
Specific
Use
Cases¹
Generic
Use
Cases
16%
2022 2027P
7%
FMCG led BPC Pure Play BPC
14-15 Months
6-7 Months

28. © Redseer 28
Pure-play brands are able to leverage the online channel effectively through
better engagement and‘presence’
1300
776
461
130 121
18 17 16 12
Instagram following1
000’s, As of Aug 2023
Pure-play BPC brands
FMCG-led BPC brands¹
Google search trends
2016-2023
20
15
10
5
0
2016 2017 2018 2019 2020 2021 2022 2023
25
30
35
40
45
70
60
55
50
75
80
65
Dotted lines are pure-play FMCG brands and solid lines are
FMCG-led BPC brands
Recognizing the power of the online channel along with the
effect tailoring messages to specific consumer segments,
various brands have now shifted to influencer-led models.
But not all brands have been able crack the code. Pure-play
BPC brands, which led the disruption of leveraging
influencers in marketing, tend to be the most effective at it.
By leveraging influencers, brands are able to solve for
relatability and nudge the consumers to purchase more
effectively.
Consequently, brands adopting targeted marketing
strategies, experience significantly greater engagement
on social media platforms and higher recall.
Source(s): Instagram, Google
Note: 1. India Specific pages are considered for Instagram following
BPC is one of the categories that has done well in the
online channels in India. This is helped by the fact that BPC
products have compact sizes leading to ease of shipping,
new features like virtual try-on tools, personalized
recommendations, in-depth product reviews, and
interactive content.

29. The pure-play BPC brands have had significant learnings from incumbents
and are developing omnichannel capabilities accordingly
© Redseer 29
Brand journey comparison- Unilever and Honasa
Descriptive
With FMCG players having seen multiple market cycles and iterated accordingly…
Launched Lifebuoy in
1895 as second product
after Sunlight soap in
1888
Launched LUX &
acquired Pears
Added multiple sub-
categories with Close
up and Sunsilk
shampoo &Dove
soap bar
Launched Axe Body
Spray Acquired Calvin
Klein Cosmetics Company
Added hair oil
category
with Indulekha
Entered D2C online
market with Dermalogica
&Acnesquad
Mass Product Specialized
Product
Higher Priced
Product
Category
Expansion
…new-age pure-play BPC players have benefited immensely from their learnings
Launched
Mamaearth with
a catalogue of
6 baby products
Certified as Asia’s
1st ‘Made Safe’
brand. In 2017,
launched beauty
&skin care
products for
moms
Received cruelty-free
certification by PETA.
Continued expanding
product lines
Further expands
product lines in
existing categories
&launches new
categories such as
haircare, serums, etc
Launched skincare
brand The
Derma Co.
Crossed annual
revenue of INR
1,000 million
Launched
Aqualogica
&Ayuga
Opened 1st EBO
for Mamaearth
Acquired Bblunt
&Dr. Sheth’s
Launched makeup
&fragrance
categories
New-age pure-play BPC players in India benefit immensely
from the learnings of FMCG-led BPC players in India. They
have been able to fine-tune their strategies, avoid pitfalls,
adopt best practices, and optimize their operations. So,
the pure-play BPC players have had a good launchpad.
The most significant of those learnings is the importance
of the offline channel in India. India is a unique market
compared to other (especially, western) markets being
characterized by deeply ingrained offline purchasing
habits.
Touch and feel are a necessity of many Indian consumers
who are yet to build confidence in online shopping.
Therefore offline is important. While many will try offline
expansion, the way to differentiate is through high levels
of seamlessness and integration across the online and
offline channels to provide consumers unified shopping
experiences.
…Hence,new-age pure-play BPC players are increasing their
offline presence
Despite its advantages,eCommerce is yet evolving in India…
Offline channel contribution
to GMV (FY23)
Offline channel contribution
to GMV (H1 FY23)
Offline
Offline
8-10%
50+
Luxe Stores
50+
On-trend Stores
30+
Modern retail
channel
35+
EBOs
1.1 lakh+
General Trade
stores
32-36%
Ecommerce penetration (as % of overall retail) by country
%, 2022
27%
15%
6%
Therefore,new-age pure-play BPC players have proactively expanded their offline presence.
1890’s 2020’s
2016 2022

30. © Redseer 30
L'Oréal India has been a flag-bearer for Indian BPC brands,
showcasing its resilience and consistent performance over
the span of several years. Its remarkable journey has
involved more than just business success — it has played a
crucial role in sensitizing Indian customers towards global
beauty and personal care standards.
The brand has effectively bridged the gap between global
beauty norms and Indian sensibilities, becoming one of the
pioneering global pure-play brands to adeptly tap into the
potential of the Indian market.
It was already a INR 3000 cr+ brand in 2016. It has scaled
significantly ahead post that, with multiple brands, some
of which are category leaders.
It is also known for being a strong professional services
brand with high recall in that channel. The introduction of
Redken is indicative of the brand’s commitment to
double-down on India salons, especially in the premium
segment.
Source(s): Company filings and website, Secondary Research and Redseer Analysis
Diversified marketing approach to reach a wide consumer base
L'Oréal India employs a diversified marketing approach ranging
from mass marketing using famous celebrities to targeted
marketing via social media influencers. This approach enables to
connect with diverse consumers and boost brand salience
L'Oréal is one of the front-runners of the
Indian BPC landscape, having almost INR
3000 Cr. of revenues in 2016, where BPC
was still very nascent
L'Oréal understands the Indian market, and has a
wide portfolio to cater to Indian needs
15
Brands
The brand has a marked presence in the salon market
Loreal has been a pioneer brand for launching professional products that
are widely used in salons
Loreal recently brought in Redken to India and plans to boost its
premium salon presence in the country
Mass
market
Hair
&salons
Selective
distribution
Several Indian pure-play brands have achieved notable
success in the market,showcasing the potential of
growth for other pure-play brands
L’Oréal,India has been a flag-bearer for Indian BPC brands through its
resilient performance across several years

31. © Redseer 31
Nykaa has been a one-stop solution for all BPC related needs
Nykaa, a prominent player in the Indian BPC market, has
achieved remarkable success. As a platform, Nykaa has
shaped the growing trend of online shopping, offering an
extensive array of BPC products from both international
and local brands. It has scaled fast and is a sizable BPC
player now. As of FY23, it had BPC revenue of INR 4,482Cr.
Its user-friendly digital interface, enriched with informative
content and customer reviews, has ensured a seamless
shopping experience for users.
Nykaa’s strategic move into private label products has
enabled greater control over branding and quality, while its
engaging marketing campaigns and loyalty programs have
fostered a loyal customer base. Moreover, Nykaa’s
expansion into physical retail outlets has complemented
its online presence, establishing a strong omnichannel
approach.
By staying attuned to market trends and swiftly adapting
to emerging demands, Nykaa has continually refreshed its
product offerings to align with customer preferences.
Note(s): 1. FY23
Source(s): Company filings, Secondary Research and Redseer Analysis
Building partnerships to provide wide assortment
of options
Leveraging innovative ways to enhance customer
engagement
As of March 2023, Nykaa has partnered with 3400+ international
&domestic brands including multiple brand launches
Nykaa has been very successful in engaging
with customers across channels. It effectively
uses its platform and collaborates with
various influencers to create stream about
product reviews, tutorials, etc.
Nykaa created a shop-in-shop experience with
Lancome; offering tools such as ‘Skin analyser’
to Retail customers
Reaching customers where they are
Nykaa has expanded offline by leveraging three different types of
concept stores
INR 4,482 Cr 937 Mn INR 1,857
Revenue¹ # of visits¹ Avg. order value(AOV)¹

32. © Redseer 32
Honasa is a high-growth and profitable House of Brands
Honasa has pioneered the digital-first approach in the
Indian BPC space, establishing a prominent presence by
curating a portfolio of leading direct-to-consumer (D2C)
brands in India. Noteworthy brands under their umbrella
include Mamaearth, The Derma Co., Aqualogica, and
Ayuga. Launched in 2016 by Ghazal and Varun Alagh, the
company has emerged as India’s largest digital-first BPC
company in India in terms of revenue from operations for
FY22. Further, as of September 2022, Mamaearth had
emerged as the fastest growing BPC brand in India to reach
an annual revenue of INR 1000 Cr (in the preceding 12
months) within six years of launch. Honasa’s revenue grew
at a CAGR of 193% for FY20-22.
Honasa’s foundation is based on tailoring its brands to
resonate with distinct consumer groups and sensibilities,
along with compelling brand positioning, innovative
product offerings, robust marketing strategies, and
efficient distribution channels. Honasa’s brands stand out
for their ingenuity in addressing diverse consumer needs.
For instance, Mamaearth gained recognition as a
trailblazer by introducing natural and organic personal
care solutions for babies in the Indian market.
Source(s): Company filings, Secondary Research and Redseer Analysis
Building partnerships to provide wide assortment
of options
Championing ‘House of Brands’Strategy
Helps in scaling the newer brands at a fast pace. These
playbooks are powered by consumer centric approach across:
Innovation process
Digital-first omni-channel distribution
Technology and data-driven marketing and consumer engagement model.
Honasa is a pioneer in effectively using a vast network of
influencers
CAGR
(Revenue)
193%
(FY20-22)
Adjusted EBITDA
+ve in FY21
Mamaearth has created a
highly engaging community of
more than 3000+ influencers,
who help in increasing brand
awareness along with several
celebrity engagements
Also, enables company to cater to consumers with different needs
and paying capacities
Widening its net,reaching consumers through various
touchpoints,including salons
Honasa acquired Bblunt to expand its salon footprint.
This gives Honasa an opportunity to push its products
through salon stylists, given they have a high influence
over customers
Honasa’s brand building playbook

33. BPC’s attractiveness
globally
Pure-play BPC
performance globally
Pure-play BPC
performance in India
CAGR (2022-27):
Gross Margins (2022):
US$ 30 Bn market size
US$ 10 Bn online market size
(~33% online penetration)
150 Mn+ online BPC users
Indian BPC snapshot (2027):
Avg.Gross Margin (2022)
Avg.rev growth (2017-22)
Avg.rev growth (2022-27)
Pure-play BPC market
share (value)
Avg.EBT (2022)
Avg.P/E (Aug 2023)
30%
2019
33%
2022
42%
2027
Pure-play FMCG-led
72% 44%
1.6X
3%
Pure-play FMCG-led
10% 2%
5X
Pure-play FMCG-led
12% 14%
0.9X
Pure-play FMCG-led
51 28
1.8X
GDP
BPC
Retail
3%
6% 4%
2X 1.5X
F&B
BPC
Retail
44%
72% 48%
1.6X 1.5X
Pure-play FMCG-led
7%
2X
15%
© Redseer 34
By 2027
US$ 660 Bn market size
US$ 2.2-2.7 Tn
market capitalisation
Summary – The report,in numbers

34. © 2023 Redseer Strategy Consultants Confidential and Proprietary Information