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INDUSTRY REPORT Beauty & Wellness Industry 2019

August, 2019

INDEX Overview of Beauty & Wellness Industry in India …3

Why Telangana & Andhra Pradesh? …4

Demand Drivers

o Brand conscious customer base ...5

o Growing disposable income & higher discretionary expenditure ...6

o Rising awareness of healthy lifestyle ...7

Government Support …8

Why Hyderabad as a Destination for Organizing

Expos on Beauty & Wellness Industry …9

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Overview of Beauty & Wellness Industry in India

• India's estimated beauty and wellness market is INR 30,000 – 31,000 crore

o This includes the beauty products, beauty salon and SPA businesses o As per SPA Association of India, SPA industry is currently valued at INR

11,000 crore • Salon and SPA business together account for 31% of the total size of the beauty

and wellness market • Beauty & wellness business in India is growing at rate of 18% • Premium global brands are gaining sales as Indian consumers gain exposure to

the global media and move from functional items to advance and specialized cosmetic products

• Estimated market of beauty and wellness in Telangana and AP is currently about INR 1,500 to 2,000 crore and is expected to grow at a CGAR of 19-22% over next5 years

• Of the total, around INR 800 – 1,000 crore is the market of SPA industry and is expected to grow at a CGAR of 18-20% over next5 years

• Premium brands are launching their exclusive outlets in posh localities of Hyderabad

Beauty & wellness Industry in Telangana & Andhra Pradesh (refer as AP in report)

Indian Industry

Beauty & wellness

Counter sales of beauty product

Fitness & slimming

Rejuvenation

Mar

ket

Size

(IN

R c

rore

)

30,000 40,000 10,500 3,700

Sources: Beauty and wellness KPMG report, SPA association of India Online article – The Hindu, The economic Times, The Indian Express, Business world

1. Presence of prominent training institutes • VLCC, L’oreal academy, Ananda SPA, Jawad Habi Academy, Anoo's International

etc.

2. Presence of more than 1000+ large and mid size beauty parlors & hair salon within the states

• Miracle beauty, Lakme, Coccolare, Louis, Marie Claire, Mirrors Luxury, YLG etc

3. Presence of 70 + Premium & Mid range SPA Centre • O2 SPA and Salon, Meghavi, Somara, La Elan SPA etc

4. Cosmetic Shops, Retailers & Retail Chains

• Nykaa, Sephora, Kathiawar Stores, Sreeja Cosmetics, Ancient Living, NewU, Just Herbs, Innisfree, Suganda

5. Presence of 200 + Skin & Beauty Clinic

• Studio Aesthetics, O'Skin, Tvachha Skin, Allure Aesthetics

6. Presence of Hotel Groups – SPA • Novotel, Taj, Marriott, Park Hyatt, Sherton, Lemon Tree

7. Presence of 200+ Importers / Distributors of Cosmetic products • Hyderabad imports from France, Dubai, Saudi Arabia, China, Turkey, Pakistan

and Belgium

8. Presence of 350 + gyms in Hyderabad 9. India has 30,000 physiotherapists and Hyderabad alone has 1,000 of them

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Why Telangana & Andhra Pradesh?

Existing Partners

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Demand Drivers (1/3)

• Lakme along with Aptech launched a centre in

Hyderabad • With the growing rise of millennial & neo middle class.

Hyderabad is one of the prominent skill centre in India

Top brands

• YLG has recently opened three beauty centre in prime locations like Banjara Hills, Jubilee Hills and Madhapur

• “Women in Hyderabad always want to have the latest and best in beauty and grooming services and the response that our team received was fabulous” - Rahul Bhalchandra, CEO

• Marie Claire, Paris has launch its first salon& wellness franchise in Banjara Hills, inaugurated by the Global representative of Marie Claire, Roberto Bre

• French beauty brand Sephora unveils its first outlet in Hyderabad

o Hyderabad has witnessed the opening of many top brand stores in this segment from around the world

• VLCC plans to open 14 wellness centres and 5 skill development institutes in Telangana and AP

1. Brand conscious customer base

• Nykaa.com launched its signature ‘Nykaa Beauty Bar’ event in Hyderabad, which allowed customers a personalize experience with top brands

Sources: Online article – Business Standard, APN News, Telangana Today, The Hans India, Indulgexpress

• As per the World Economic Forum, Hyderabad is amongst the top-10 fastest growing cities in the world

• Telangana’s GSDP is INR 7.33 trillion in 2017-18 • Between 2011-12 and 2017-18, GSDP of the state grew at a CAGR of 12.60%

• It’s per capita GSDP is INR 1,93,410.15 during 2017-18

• Average per capita GSDP rose at a CAGR of 11.49% between 2011-12 and 2017-18

• Key sectors of the state:

• IT and ITeS exports from Telangana grew at a CAGR of 10.43% over last 5 years • Hyderabad accounts20 % share in the total export of pharmaceutical products

from India. Thus making Hyderabad as a centre for the drug production • For Agriculture produce marketing, the state government has announced a

budget of US$ 2.45 billion in 2018-19

• Around 35% of the population’s annually household income is above INR 1,000,000

• According to the American Express Luxury Spend Analysis 2018, High-end luxury product spending in Hyderabad has jumped from 16% in 2013 to 52% in 2018 adding the city to the list of high-end spenders

• Hyderabad’s per capita retail expenditure is substantially higher as compared to Chennai, thus making it one of the most important retail market in South India

• Growing consumerism and increasing migrants is further boosting the spending

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Demand Drivers (2/3)

2. Growing disposable income & higher discretionary expenditure

• Turtle Dove Lifestyle unveiled South India's first Louis salon in Hyderabad

• The franchisee unisex Salon & SPA is spread in 1,775 sq. ft. area and is set up with an investment of INR 6 million

• Wants to add 100 salons in various cities across Telugu states in next four years with an investment outlay of INR 600 million

Sources: Online article – The Hindu, The Hans India, Indian Express IBEf.org Telangana Report

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Demand Drivers (3/3)

o Hyderabad is one of the most sought after destinations for fitness enthusiasts • Leading global brands from sports, fitness and wellness industry are expanding

into Hyderabad and creating a huge market for allied products and services

o In wellness sector also, their increasing awareness of prevention of lifestyle diseases is high

3. Rising awareness of healthy lifestyle

Top brands

• Hyderabad based O2 SPA a, one of the largest SPA chains in India, is planning a major expansion with an investment of $15 million

• Having 60 centres in17 cities, and plans to set up to 150 outlets across 30 cities by the year-end

o O2 Skills Academy has signed an agreement with the Telangana government to impart skills to 1,260 students in the hospitality sector in a span of three years

• Aannda SPA, World’s leading Destination SPA is based out of Hyderabad

• The institute is ranked "BEST SPA ACADEMY" in Asia Pacific Region (Crystal awards Asia Pacific 2010) and "SPA Academy of the year" (Crystal awards Asia Pacific year 2011)

o Hyderabad has opened the first baby SPA centre with an investment of INR 30 millions

o Encouraged by the response, franchise-based start up is expanding in cities such as New Delhi, Mumbai, Bengaluru, Kolkata and Chennai.

o Cult.fit, which currently has 3 outlets in Hyderabad, is looking to set up 12 more fitness centres this year and take the total network to around 50 by next year-end

o “Hyderabad will be a huge market for us. The city has a potential for 100 centres in the long term” - Mukesh Bansal

Sources: Online article – The Hindu, Business Standard, Economic Times Ananda SPA website

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Government Support (1/2)

• The government initiated programmes to promote the wellness industry in the state

• With “The Make in India” initiative, it is expected to bring in more investments and opportunities in this sector

• The Ministry of AYUSH (Ayurvedic, Unani and Yoga) which has been exempted from service tax, will increase the investors and incubators to offer their support and will help mentoring startups in the wellness space

• AYUSH push has been raised in Telangana

• Central government is allotting funds to the state and INR 580 million are lying with the Ayush department. With that the health department is planning to start Ayurvedic hospitals in all the districts of Telangana

• The State government is planning to open 12 new wellness centres would be opened in Telangana State

• The 12 wellness centres will be in addition to the existing two centres functioning in Hyderabad

• Four centres would be established in Hyderabad and Ranga Reddy districts. The two wellness centres, started in Hyderabad last year, have been running successfully with 600-800 patients being treated daily

• The other districts where the wellness centres are likely to come up - Adilabad, Nizamabad, Karimnagar, Warangal, Khammam, Nalgonda, Mahbubnagar and Medak.

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Government Support (2/2)

Statistics in Telangana

Educational Institutions • Ayurveda Colleges o Dr. B.R.K.R Government Ayurveda College, Hyderabad o A.L. Government Ayurveda College, Warangal

• Unani Colleges o Government Nizamia Tibbi College, Charminar, Hyderabad

• Naturopathy Colleges o Gandhi Naturopathic Medical College, Ameerpet, Hyderabad

Research Institutes • Government Research Department (Ayur), Charminar, Hyderabad • Government Research Department (Unani), Charminar, Hyderabad Pharmacies • Government Indian Medicines Pharmacy (Ayurveda), Katedan, Hyderabad • Government Homoeo Pharmacy (Homoeopathy), Ramanthapur, Hyderabad • Government Indian Medicines Pharmacy (Unani), Katedan, Hyderabad

Herbarium Government Herbarium Unani, Katedan, Hyderabad Drug Testing Laboratory State Level Drug Testing Laboratory is situated at Erragadda, Hyderabad

Why Hyderabad as a Destination for Organizing Expos on Beauty & Wellness Industry

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Why Hyderabad?

• Hyderabad is a home of top domestic and international brands of India o Presence of prominent training institutes o More than 1000+ large and mid size beauty parlors o 200 + Premium & mid range SPA centre o 100 + Skin & beauty clinic o Hyderabad imports a number of fragrances from middle east, Europe and US

are in huge demand in the city

• Increasing brand awareness and consciousness amongst the millennials is one of the major driving force

o Spending on high-end premium brands has jumped from 16% in 2013 to 52% in 2018

o Hyderabad per capita retail expenditure is substantially high compared to Chennai, making it one of the most important retail market in South India

• The fact that the growing IT population has specific health issues that have remained unaddressed, is also making it a good prospective market

• Hyderabad is one of the most sought after destinations for sports and business events in India

o Leading global brands from sports, fitness and wellness industry are expanding into Hyderabad and creating a huge market for allied products and services

• Hyderabad is a well connected location for Exhibitors as well as Visitors

o Road connectivity: The density of notified national highways in Telangana is 2.90 km/100 sq.km against the national average of 2.84 km/100 sq.km

o Strong railway connectivity: The State also has an integrated railway network with railway terminals such as - Nizamabad, Mahbubnagar, Kamma Reddy, Bodhan, Jedcherala, Gadwal and Balanagar

o Access to world class airport facility: Rajiv Gandhi International Airport (RGIA), Shamshabad is one of the largest 7 modern airports in India

o Government of Telangana has entered MoU with Ministry of Civil Aviation and Airports Authority of India for development of small airports at Kothagudem and Warangal

o Government of Telangana is ranked no 1 in Ease of Doing Business given by Department of Industrial Policy & Promotion (DIPP) and World Bank

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