The lipstick index — women splurging on the lower cost cosmetic instead of bags and shoes during a slowdown — might be discredited globally, having been replaced by the nail polish index in the current decade, but it certainly stands true for India even now.
The lipstick index — women splurging on the lower cost cosmetic instead of bags and shoes during a slowdown — might be discredited globally, having been replaced by the nail polish index in the current decade, but it certainly stands true for India even now. Lipstick makers seem to be making brisk sales, showing double-digit growth, with the particular cosmetic accounting for major part of their sales.
The domestic market size (in terms of sales) of lipstick reached Rs 34.80 billion in 2018 from Rs 27.02 billion in 2016, data from Euromonitor International showed. The category is estimated to register a 13% compound annual growth rate (CAGR) from 2018-2023, as per analysts at Euromonitor International.
L’Oreal, which is the second-largest market player in the lip products category (as per Euromonitor International), said lipsticks registered double-digit sales in the seven months to July this year. “Demand for lipsticks has been consistent and has not gone down,” said Aseem Kaushik, director, consumer products division at L’Oreal India. Samir Modi, founder and CEO at Colorbar, said lipsticks have always been a growing category in both value and volume despite a general slowdown in the economy. Modi said lipstick currently contributes about 40% of Colorbar’s total revenue and the number has been growing every year.
“The price points of lipsticks are very attractive for any kind of shopper,” he said.
Lipstick Index was coined by Leonard Lauder, chairman at Estee Lauder, suggesting consumers splurge on small-ticket items like lipstick when the economy is muted. Economists have curated several indices to gauge consumer confidence during economic downturns. For instance, George Taylor introduced the Hemline Index, which proposes that skirt hemlines are higher when the economy is doing well and lower during a lull period. Former US Federal Reserve chairman Alan Greenspan came up with the dry-cleaning index, suggesting dry cleaning sales fall during slowdown. Greenspan’s men’s underwear index proposes that underwear sales plunge when the economy is in a poor shape.
India’s wedding seasons and cultural festivities all year round keep lipstick sales going, besides customers following international trends. A major push for driving sales of lipstick has been e-commerce, companies note, making it easier for brands to acquire customers from tier II cities and beyond. Consumers from smaller cities are increasingly contributing towards domestic workforce — higher disposable incomes nudge them to spend on easy luxuries like lipstick as they aspire to climb the social ladder. To suit this category, L’Oreal launched a cheaper variant of Maybelline lipstick in December 2018 priced at Rs 299. “E-commerce as a channel is leading the overall share of growth in a very big way. Globally 11% of our sales are online, with similar figures in India,” L’Oreal’s Kaushik said.
Samir Modi said today’s Indian woman has become more knowledgeable and exposed due to the advent of shopping malls, cheaper access to the internet, popularity of social media sites like Instagram, Facebook, YouTube, etc. Reena Chabbra, CEO, Nykaa, points out that a few years back, no one could have imagined launching bold colors like blue and green or even metallic lipsticks, but now consumers are open to experimenting with these.