The Rise of Niche Hair Care Brands in India

Legacy Hair Care Dominance Challenged

Indian hair care market leaders such as Hindustan Unilever Ltd (HUL), Dabur India, and P&G have traditionally focused on solutions promoting "straight" and "shiny" hair while addressing concerns like dandruff.

"Legacy brands have been trying to use a one-size-fits-all approach for years," said Madhok. "That has led to a rise in opportunities for brands looking to cater to very specific use cases."

Slick Organics: Tapping Latent Market

Launched in 2018, Slick Organics has carved out a niche in hair styling products, diversifying into shampoos, conditioners, serums, and related products. The D2C company recently raised $4 million in a Series A funding round led by Unilever Ventures.

Rise of New-Age Consumer Brands

The shift in consumer preferences is evident across categories. Data from Bain and Company shows that the share of new-age consumer brands in beauty and personal care hit 3% in 2023, 10% in electronic wearables and devices, and is growing rapidly in jewelry, apparel, and lifestyle.

"These brands are growing 2-3x faster, on average, compared to market growth across categories," said Dhruv Aggarwal of Bain & Co.

Expansion of D2C Brands

D2C companies bypass wholesalers and retailers, selling directly to customers. They are now present in categories such as beauty and personal care, mattresses, apparel, and food. They are also making their way into regular channels and quick commerce.

India's Growing Consumer Base

Despite being a massive retail market, India has historically been brand-starved. New-age brands could unlock a $50 billion market capitalization by 2030 as households expand their spending.

"At least 300 plus brands will cross the ₹100 crore mark by maybe 2030," said Chirag Chadha of Elevation Capital. "Approximately 25-30 brands will become large enough to be listed companies."

Incumbents Fight Back

While D2C brands present a challenge, incumbents like HUL, Aditya Birla Group, and Marico are responding with their digital-first brands and investments in existing companies.

"Traditional brands are not sitting idle," said Mrigank Gutgutia of RedSeer Strategy Consultants.

Investments and Challenges

The D2C ecosystem has faced challenges, including the impact of the pandemic. Namun, venture capital money continues to flow, with over $4.7 billion invested in insurgent brands between 2018 and 2022.

"Investors are expecting brands to display greater financial austerity and reduce cash burn," said Shubhika Jain of RAS Luxury Skincare.

Early investors remain bullish, with Deepak Shahdadpuri of DSG Consumer Partners stating, "We believe consumers will continue looking for new products and solutions."

Offline Expansion: A Challenge

Expanding offline remains a challenge for many D2C companies, as incumbents dominate general trade stores with their extensive distribution networks.

Quick Commerce as an Ally

Quick-commerce platforms such as Zepto have provided opportunities for D2C brands to list on their platforms. "We have seen growing demand for smaller, independent brands," said Devendra Meel of Zepto.

The Future of Consumer Brands

"Eventually, many of these brands will likely follow several paths," said Bain & Co.'s Aggarwal. "Either grow independently, potentially going public, partner with larger companies, or be acquired by larger players."

Experts believe that "acquisitions will continue, but the emergence of new-age, disruptive brands remains a significant trend."