FMCG makers tap the next big thing in beauty care — onions

“We realized that onion was used by consumers increasingly in their hair care regime and hence we decided to launch hair oils and shampoos with onion,” said Manish Chowdhary, co-founder of Wow Skin Science
According to Chowdhary, the onion hair oil and onion shampoo are among the company’s top-selling products.

According to the company’s web site, its Onion Black Seed Oil is “nature’s treasure trove of nutrition that tackles almost every hair woe effectively and efficiently.”

Surge of D2C

The beauty and personal care products market, which includes shampoo and hair oil, has in recent years been witness to the launch of a slew of companies that operate in the D2C segment.

Mamaearth, Plum Goodness and Wow Skin Science are among the brands that have emerged in the D2C category. The strategy of these brands, besides their e-commerce-first initiative, revolves around the use of natural ingredients in their products and a mid-premium positioning.

These brands promise consumers the benefits that are touted by premium brands like Forest Essentials or The Body Shop, but at a lower price point.

The use of onion in hair care products is a part of the strategy.

To be sure, the use of onion as an ingredient in personal care products is a relatively new phenomenon. Until now it has been confined to Indian kitchens and recipes.

“With the success of a few D2C brands, traditional players have realized that there is no need to be so conservative and that there is a huge opportunity in these segments,” said Rajat Wahi, a partner at Deloitte India.

Indian consumers, too, have become more experimental. helping in the emergence of D2C companies and the launch of products containing ingredients like onion.

The consumer has “evolved and is open to trying out new products even in tough categories like hair oils and shampoos, which were considered very challenging to penetrate,” said Wahi.

A report by Avendus Capital says beauty and personal care will be a $30 billion market by 2025, out of which, digital-first brands could have a $10-15 billion share.

To grab a bigger share of the market, FMCG companies have acquired D2C brands or are launching products with natural ingredients. Marico acquired D2C brand JustHerbs and ITC Ltd has invested in Mother Sparsh.

“We are witnessing launches of several products with natural ingredients by the FMCG companies. There are making a play for ayurvedic and organic products,” said Dipankar Maganty, principal, AT Kearney.

Besides onion-based products, for instance, Marico has also introduced ayurvedic hair oil Marico Jataa for Men. Bajaj Consumer Care has launched Argon Oil under the brand Natyv Soul.

An ongoing premiumisation drive by FMCG companies, which so far have confined themselves mainly to mass categories, is another compelling reason for their entry into niche segments.

“The products being launched are priced two to four times higher than the regular hair oils by these companies,” said Maganty of AT Kearney.

Portfolio expansion

According to experts, the emergence of these niche categories also presents an opportunity for companies to expand their portfolios.

“If you look at Western countries, the shampoos and hair oils take up entire aisles in supermarkets but that is not the case in India,” said Wahi.

Expert say the personal care products segment will see the emergence of more such categories in the future as companies launch products to address every small need of the consumer.

These products will likely contribute only a small share to their business. Industry analysts say hat while new categories like onion oil are growing at 15-20 percent, they form only a 7-10 percent share of the hair oil market.

The category is expected to reach $112 million (or Rs 700-800 crore) by 2030, according to industry estimates. The overall hair oil market is now estimated at Rs 12,000-15,000 crores.