As such, the beauty industry has taken the biggest hit from the Covid pandemic. Even in Unlock 1.0 and 2.0, the beauty sector has received a low priority, with salons continuing to remain closed. Beauty parlours, initially allowed to open for a while, can now open only for maintenance.

It is a double tragedy for the industry that it has hit the roadblock at a time when it was all set to go great guns. On the back of rising disposable incomes, particularly for those who care for beauty, the Indian beauty and personal care market, estimated at $14-15 billion in 2-17, was eying a compound annual growth of 9 percent, to hit $22-23 billion by 2022.

The growth was to be driven by an explosion of the herbal, which had become the catchword in the beauty business. Herbal cosmetics products were witnessing unprecedented levels of popularity, with the segment expected to grow 15-20 percent as opposed to the estimated 9 percent for the industry as a whole, as beauty consumers showed an obsession with the risk of constant use of chemical formulations.

All leading players plunged into the ‘herbal’ segment, launching premium products invoking ancient knowledge such as the Vedas and Ayurveda. The race was also joined by the super premium brands such as Shahnaz Hussain, Kama, Forest Essentials etc.

But Covid has thrown a spanner in the works. Not just in India, but globally. A Standard & Poor’s report on the impact of Covid on the consumer goods sector has shown the thumbs down to the beauty industry. According to S&P, demand for personal luxury goods and parts of the beauty segment is not expected to pick up any significantly in the post-Covid period.

It says that a large chunk of consumption has shifted from outside to inside the home under coronavirus lockdowns and social distancing. The lockdowns have pushed certain consumer product segments to the fore, especially those seen as essential, such as the packaged foods and home care segments.

While the stockpiling and stocking up seen during the initial days of the lockdown have subsided, these segments are expected to continue to benefit from the general shift to in-home consumption. Before the pandemic, staples had suffered from low growth and some global brands were battling to stay relevant in the eyes of consumers.

At the same time, luxury goods and prestige beauty grew rapidly, fuelled by an upswing in global travel and demand from Chinese consumers, both at home and abroad. Covid has led to sharp turn of fortunes across the different segments of the consumer goods sector.

Despite the gradual reopening of economies around the world, it is clear that social distancing will continue in some shape or form across many areas of human activity. Places of work and leisure including offices, shops, restaurants, bars, and cafeswhen they openwill have to comply with a plethora of strict regulations including some level of social distancing. This, coupled with reduced leisure and business travel and increased working from home, will hinder any rebound in consumption outside the home to pre-pandemic levels, for at least the next year.

The rating agency forecasts that consumer product companies will focus more on products that are consumed at home. Those companies that can make this shift should be able to offset the decline in demand in consumption outside the home.

Despite the gradual reopening of economies around the world, it is clear that social distancing will continue in some shape or form across many areas of human activity. Places of work and leisure including offices, shops, restaurants, bars, and cafeswhen they openwill have to comply with a plethora of strict regulations including some level of social distancing.

According to S&P, this, coupled with reduced leisure and business travel and increased working from home, will hinder any rebound in consumption outside the home to pre-pandemic levels, for at least the next year. It says consumer product companies will focus more on products that are consumed at home. Those companies that can make this shift should be able to offset the decline in demand in consumption outside the home.

The economic downturn will erode personal disposable incomes and further accelerate the tendency for customers to seek value and gravitate toward discounters, as in the previous recession. This trend will become even more pronounced over the next quarters when government furlough and income support schemes adopted in many countries are slowly withdrawn.

As such, a strong value-for-money proposition is expected to become strategic to maintain or even enlarge the customer base for consumer product companies. For branded consumer goods, this could mean a rethink of the appeal of some products so they can offer the benefit of brands at the best possible price. (IPA Service)