Ayurvedic renaissance

Blitz Bureau

NEW DELHI: The history of Indian beauty is a journey from the domestic to the digital. It can be categorised into three distinct eras:

The era of functionality (pre-1990s): Beauty was synonymous with health. Brands like Vicco (1952) and Biotique (1992) dominated. They were found in pharmacies, not luxury boutiques. Their appeal was “problem-solving”— curing acne with neem or whitening teeth with vajradanti.

The era of prestige (2000-2015): This was the “Forest Essentials Era.” Founded in 2000, it reimagined ayurveda as “skin food.” By 2008, Estée Lauder had already sensed its potential, taking a 20 per cent minority stake — the first such move by a global major in India. Simultaneously, Kama Ayurveda (2002) began standardising clinical-grade ayurvedic formulations, moving the needle towards high-end retail.

The era of disruption (2016-present): The rise of D2C (direct-to-consumer) giants such as Mamaearth (Honasa Consumer) and Nykaa. These brands used data, not just “tradition,” to scale. In FY26, Honasa Consumer reported a quarterly revenue of ₹602 crore with a profit jump of 93 per cent, showing that Indian brands can now achieve massive scale independently through the public markets rather than just private exits.

In mass-market ayurveda, the cost of the “juice” (the product inside the bottle) is relatively high compared to the selling price. For a ₹100 neem face wash, the packaging, logistics, and raw materials often consume ₹60. The profit comes from volume.

In luxury ayurveda, the “juice” is technically superior (cold-pressed oils, steam-distilled waters), but the price premium is so high that the raw material cost becomes a fraction of the price. When Forest Essentials sells a “Soundarya Cream” for ₹5,000, the gross margin is often north of 80 per cent. This is where Estée Lauder sees the value — it is much easier to maintain a global empire on 80 per cent margins than on 40 per cent.

While Indian mass-market brands like Patanjali (which saw its FMCG revenue hit ₹3,248 crore in Q3 FY26) operate on thin margins (5-6 per cent EBITDA), French luxury brands often enjoy double-digit margins by leveraging the “brand premium.” This is exactly what Estée Lauder hopes to extract from Forest Essentials — the high-margin “prestige” juice.

Despite a high gross margin of 70 per cent, direct-to-consumer brands like Mamaearth historically spent nearly 40 per cent of their revenue on digital ads (Google / Meta) to acquire customers. By Q3 FY26, they finally hit an EBITDA of 10.9 per cent by reducing this “burn.”

Forest Essentials, on the other hand, does not buy as many Facebook ads. Instead, they invest in “boutique economics.” Their money goes into high-end retail stores in places like Khan Market or Chanakyapuri. These stores act as permanent billboards. Once a customer enters the “luxury funnel,” their Customer Lifetime Value (CLV) is massive. A luxury customer is 5x more likely to be a repeat buyer than a discount-seeking mass-market consumer.

The Indian market is currently undergoing a “K-shaped” recovery. While the mass market (Patanjali) is growing steadily at 5-6 per cent, the premium segment is exploding at upwards of 15 per cent. The psychology is simple: the Indian middle class is “trading up.” They may still buy Patanjali for their dish soap, but they want Forest Essentials for their face. This is why a company like Kama Ayurveda (backed by the Spanish giant Puig) can maintain an EBITDA margin of nearly 19 per cent, even while expanding globally.

The French footprint
France has been the primary architect of the modern Indian beauty consumer’s aspirations. The market size for French-origin beauty in India has seen a CAGR of 12-15 per cent over the last five years.

• L’Oréal India (the titan): Entering in 1994, L’Oréal didn’t just sell products; they built the ecosystem. By FY25, L’Oréal India reported a staggering revenue of ₹5,925 crore, with a net profit of ₹598 crore (a 23 per cent YoY increase). Their strategy was “globalisation”—using French technology to solve Indian problems like humidity-induced frizz or dust-related skin damage.
• The luxury tier (Chanel & Dior): These brands operate on a different psychology. They don’t seek “market share”; they seek “mind share.” While they don’t disclose India-specific P&L, industry estimates suggest their boutiques in tier-1 cities (Delhi, Mumbai, Bangalore) have the highest revenue-per-square-foot in the beauty category.
• The revenue mix: Interestingly, for French majors in India, 40 per cent of revenue now comes from “professional products” (the salon industry), where they have trained over 3.5 million Indian professionals.