At Fireside, we’ve been tracking the influence of Gen-Z consumers across several categories. At close to 400 million consumers, they form the single largest market in India.
Expressive, and eager to experiment, the Gen Z consumer is highly focused on personal appearance. This focus leads to several interesting areas of consumption:
Fitness – gyms, online and offline trainers, home fitness, supplements, and the like.
Fashion – fast fashion, Instagram shopping, curated drops, and more.
Beauty – salons, skin clinics, home salon treatments, and home beauty.
The business of beauty
Gen Z is, quite naturally, at the forefront of the growth in the Beauty & Personal Care, responsible for 44% of all spends. That’s a substantial proportion – worth $7-9 Bn.
We’ve already made several investments in the BPC space, with Traya, Moxie, and Iluvia in haircare; as well as Pilgrim, NatHabit, Tuco, and The Solved Skin in skincare. Though the BPC space looks a bit cluttered we believe there are several sub-segments where there is an opportunity to build large valuable business.
In our experience, we see some key drivers for products in this category:
Clean is Queen: Most consumers seek out clean and sustainable formulations, whether in makeup, or in soaps and shampoos.
Latest is greatest: Extremely trend-conscious, they cannot and will not be left behind by the latest trends.
Influencers gonna influence: They place high value on endorsements made by influencers on social media.
The sky’s the limit: Their aspirations are sky-high, and they will always pick aspirational products that deliver great value.
Try, try, try: The category itself is one of experimentation, and this generation just loves to experiment.
Brands like us: The products they choose are from brands that reflect them – youthful and quirky.
On the scent of fragrances
Within BPC, the fragrances category is predicted to grow rapidly, fuelled by Gen Z. The motivations for this uptick are several:
- Travel is a huge area of interest for Gen Z, and more international travel leads to higher aspiration quotient.
- They are happy to borrow and spend as much as their millennial counterparts – seeking value at the right price
- The twin trends of individuality and self-expression lead them to place great value in grooming.
- Greater consumer awareness results in two separate drivers – the difference between deodorants and perfumes, as well as the need for occasion-led products suited for different situations
Research bears this out, with NielsenIQ calling out that the fragrance market is a remarkably resilient one, growing at twice the rate of the overall BPC market. Industry experts, too, speak of India hitting an inflection point in this space.
Making sense of scent
There are a few areas where Indian consumers differ from their global counterparts. For instance, we’ve gone directly from deodorant to EDP (Eau De Parfum), rather than the typical step-change through EDC (Eau De Cologne) and EDT (Eau De Toilette), before arriving at EDP. This is largely due to the humid weather in India – EDP contains a higher concentration of essential oil, which makes it last long even in sultry weather.
Another area of divergence is the consumer themselves, where the Indian market is dominated by male users, rather than women. However, we believe that over the next few years, this ratio is likely to move towards the international markets as more women enter the workforce.
Currently, the fragrance space is dominated by international designer brands as they leverage on the designer aspirant quotient.
The space remains under-penetrated, and we have identified several possible levers for success.
1. The absence of successful Indian fragrance brands.
2. The opportunity to gain market share as consumers shift from unorganised to organised channels.
3. The emerging set of strong new-age Indian brands targeting Gen-Z as seen in adjacent categories, whether a Mokobara in luggage, or NewMe in fashion.
4. Precedents like Bella Vita and others that have succeeded in building large online first brands in this category.
What is Fireside looking for?
We believe that iconic fragrance brands for Gen Z are waiting to be built, serving men and women with a focus on trending notes while addressing the need gap in the market. Brands like Bella Vita have demonstrated that large online first brands can be built in this segment, and several ecosystem partners have expressed interest co-build a premium fragrance brand.
To do this, we’d look for a founding team with aspirational, brand-first thinking; experience in building and scaling businesses or scaling businesses online; and, of course, expertise and experience in the fragrances domain.
If you’re building in this space, or know a founder who is, let us know!
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