In the eyewear industry, it is estimated that 35 per cent of Indias population, i.e. approximately 350 million people, are in need of vision correction, which may be done by surgery, laser therapy, spectacles or contact lenses. However, only about 25% of people have their vision corrected i.e. 87.5 million people. Approximately 94 per cent of these wear spectacles, 6% wear contact lenses and 2.5% wear both. The eyewear industry is broadly divided into three categories: eyewear (Sunglasses/Frames), vision care (Contact lenses) and others (Surgical/Healthcare).
In India, eyewear is at the forefront compared to the global markets where vision care has a strong presence. A near stagnant market has been converted into one of the fastest growing industries recording a 20% growth annually. Nevertheless, in global terms the industry in India remains underdeveloped even today. The Indian markets account for about 1% of the worlds consumption.
Spectacles and sunglasses are used by over 1/3rd of Indias population & a wide range is available to cater to the vanity of the consumers. With the incre-ase in the level of the self-awar-eness among the consumers, the emphasis is more on the look of the glasses and the ima-ge the customer seeks to create. There has been a noticeable shift in consumer purchases for eyewear from form and function to form and fashion.
In past few years, the awareness of consumer towards branded eyewear products and eye care have been increasing and people are ready to spend on premium brands. In fact sunglasses are now being looked at, more as a fashion device rather than a protective device with the entry of international brands like Ray Ban, Benetton, Gucci, Police etc.
The sunglasses and spectacle frames business in India has great potential with only a few organised players like Luxott-ica (with their Ray-Ban products), Safilo and Colorsoft. New entrants also getting into the fray and some of the old distributors, who operated throu-gh the grey market, are now also getting more organised in their approach and dealings. The unorganised sector (grey market) exists in a big way & almost all international brands are available through this route.
The high duty tariff of around 63% on the optical products is acting as a deterrent for serious business players and encouraging grey market grow-th. Since there is no local manufacturing of optical wears in India the high duty tariff really makes no sense. And the grey market is leading to loss of revenue to the government.
There are several other international brands of sunglasses & frames available in the market. These are either smuggled into the country or are job lots purchased by local opticians on their visits abroad. Though the grey market supply is regular, the product range available is very limited. In addition, these products have no consumer awareness or advertising support guarantee and its sales & brand image are dependant solely on the retailers sales staff. The current eyewear market is made up of products retailed above and below Rs 1,000 a pair. The first segment, i.e. over Rs 1,000 a pair, is the premium segment and is placed at a sales turnover of about Rs 100 crore. Taking an average price of approximately Rs 1,500 per pair, this works out to a market size of about 6,50,000 pairs/year. Ray Ban, Safilo, Luxottica, Baush & Lomb, Johnson & Johnson and Colorsoft, are the organised companies in the eye-wear/eye-care industry in India who manufacturer or import premium eye-care products into India.
In the second segment, i.e. retail prices under Rs 1,000 a pair (US 21), we have several local brands. However lately the bulk of this segment has been taken over by frames & sunglasses from Taiwan, China, Hong Kong & Korea.
While the Optical retail business is estimated to be approximately 2,300 crore. It is anticipated that the impact of the WTO regime will result in the flow of a larger variety of brands through formal channels in the near future. It is also expected that duties will get lower over the next few years facilitating entry and variety.
(The author is the CEO of Colorsoft-Ottica)