Here’s Why Revlon Is Increasing Focus On India

In an attempt to increase its footprint in India, Revlon (NYSE:REV) is looking to open 80 exclusive outlets in the country by the end of 2017. The $10 billion Indian cosmetics market is expected to grow at a CAGR (compounded annual growth rate) of 10% and reach $ 17 billion by 2020. Revlon’s expansion is aimed towards capturing this growth in the region. Revlon was the first international cosmetics brand to be launched in India (in 1995) and the company commands a 20-25% share in its colour cosmetics market.  India’ rural population (which accounts for nearly two-thirds of its total population) is now warming up to Western style hair care regimes such as using shampoos instead of soaps.  With economic growth, this section of the population can drive sales of hair care products in the region. India is one of the fastest growing regions for the shampoo segment. While 70% of Revlon’s sales in India come from the colour cosmetics segment, the company has been introducing more mass brands from its portfolio to the region, including its range of shampoos.

The colour cosmetics market in India is expected to witness significant growth in the next few years, with som observers projecting more than 20% growth by 2020. This is primarily due to changing lifestyles in the region and an increasing number of women joining the workforce. The Indian colour cosmetics industry is also projected to experience a shift from traditionally dominant domestic players to international market players by 2020.  Hence,  an increased focus on the Indian market can benefit Revlon. Colour Cosmetics is the most valuable segment for Revlon, according to our estimates, and accounts for nearly 60% of its valuation. We expect Revlon’s market share in the global make-up market to increase significantly from 2.8% in 2016 to nearly 4.2% by the end of our forecast period.

While most of Revlon’s competitors have been gaining volumes from emerging markets, Revlon is currently lagging behind. Half of the company’s revenues still come from the U.S., which is a lower growth rate market compared to India or China. However, Revlon is now looking to focus aggressively on these emerging markets to capture a share in their significant growth.

India holds strong potential for Revlon and the company has a strong brand image in the region, given its early entry in the country. As Indian consumers shift towards international brands and the rural population contributes towards the growth in the cosmetics and hair care industry, Revlon’s focus on the region will ensure that it can increase its global cosmetics market share and drive sales in the long term, in our view.