How Gen Z is Driving Product Innovation in India's Personal Care Industry?

India’s personal care industry is undergoing a transformative shift, propelled by the dynamic preferences of Generation Z. Born between 1996 and 2010, this cohort is not only digitally native but also socially conscious, demanding authenticity, sustainability, and personalization in the products they consume. Their influence is reshaping the market, compelling brands to innovate and adapt to meet these evolving expectations.

Gen Z: A Catalyst for Change

With a population of approximately 377 million, Gen Z constitutes a significant segment of India’s demographic landscape. According to a report by Boston Consulting Group and Snap Inc., this generation already contributes $860 billion to India’s consumer expenditure, accounting for 43% of total household spending. Their direct spending is projected to reach $250 billion by 2025, underscoring their growing economic clout.

Market Dynamics: Unpacking the Growth of India’s Personal Care Sector

India’s personal care industry is witnessing an unprecedented surge in demand, driven by demographic shifts, rising disposable incomes, increasing urbanization, and the digitization of commerce. The influence of Generation Z—tech-savvy, environmentally aware, and quality-conscious—is becoming a central factor in this transformation.

Market Size and Growth Projections

According to the India Brand Equity Foundation (IBEF)—a trust established by the Department of Commerce, Ministry of Commerce and Industry, Government of India—the Indian beauty and personal care (BPC) market was valued at USD 15 billion in 2022, and is expected to reach USD 28 billion by 2025, growing at a CAGR of 11%.

“India’s beauty and wellness sector is one of the fastest-growing consumer segments, with strong demand from urban and semi-urban youth, especially those in Gen Z.” – IBEF

The Gen Z Effect: A Shift Toward Conscious Consumption

This generation:

• Prioritizes cruelty-free, vegan, and eco-conscious products.
• Prefers transparent labeling and sustainable packaging.
• Engages with customizable skincare solutions, often driven by digital interfaces.

E-commerce Acceleration & Digital Behavior

Data from the Ministry of Electronics & IT (MeitY) under the Digital India Programme suggests that India’s e-commerce sector, particularly in FMCG and personal care, is projected to grow from USD 70 billion in 2022 to USD 350 billion by 2030. Much of this is attributed to the digital behavior of Gen Z users, who rely on mobile apps, social media influencers, peer reviews, and AI-driven recommendations for making purchase decisions.

“E-commerce and mobile platforms are increasingly central to how Gen Z shops for daily needs, including personal care. They expect convenience, personalization, and brand accountability.” – MeitY Report (2023)

Ayurveda & Wellness: A Government-Backed Sectoral Boost

According to the Ministry of AYUSH:

• The Indian Ayurveda and herbal personal care market is expected to grow at a CAGR of 15-16%, reaching INR 70,000 crores (~USD 8.5 billion) by 2025.
• The AYUSH Ministry is supporting over 200+ start-ups and MSMEs through schemes like the Champion Services Sector Scheme.

“Consumers, especially the youth, are seeking a return to traditional knowledge systems. Ayurvedic personal care is both a cultural and commercial win.” – Ministry of AYUSH

Here are two database-style charts:

1. Market Size Projection (USD Billion):
   
   

○      The Beauty & Personal Care market is projected to grow from $15B in 2022 to $28B by 2025.

○      The Ayurvedic Personal Care segment is estimated to grow from around $4B to $8.5B in the same period.

2. CAGR Comparison:
   

○      Beauty & Personal Care segment: 11% CAGR.

○      Ayurvedic Personal Care: 15.5% average CAGR. 

Tier 2 & Tier 3 Cities: Untapped Goldmine

According to the Retailers Association of India, there is a 14–18% YoY growth in personal care product sales in tier 2 and 3 cities, largely driven by young consumers seeking digital-first, value-for-money products. The Pradhan Mantri Gramin Digital Saksharta Abhiyan (PMGDISHA) has helped rural youth become digitally literate, expanding e-commerce consumption patterns into non-metro markets.

Key Trends Shaping Product Innovation

1. Emphasis on Natural and Organic Products
   Gen Z’s preference for natural and organic products is prompting brands to innovate with Ayurvedic formulations and plant-based ingredients. This shift aligns with the government’s promotion of traditional Indian wellness systems.
2. Sustainability and Ethical Practices
   Environmental consciousness is a hallmark of Gen Z consumers. Brands are adopting sustainable practices, aligning with national initiatives like the Swachh Bharat Abhiyan.
3. Personalization and Customization
   The desire for individualized products is leading to innovations in personalized skincare and haircare solutions.
4. Digital Engagement and E-commerce
   Gen Z’s digital nativity is influencing the proliferation of online platforms and social media marketing. The government’s Digital India initiative supports this transformation.

Government Initiatives Supporting Innovation

• Make in India: Encourages domestic manufacturing, including in the cosmetics and personal care industry.
• Startup India: Supports startups in the personal care sector with funding and mentorship.
• Ayushman Bharat: Promotes holistic health and wellness, aligning with demand for natural personal care products.
• Digital India: Facilitates online accessibility and e-commerce growth.

Global Trade Influence: Impact of Trump Tariffs (2018–2020)

Although primarily targeted at China, the U.S. tariffs under former President Donald Trump had global repercussions, indirectly influencing India’s personal care sector:

• Raw Material Cost Spike
  Tariffs on imported steel, aluminum, and packaging components disrupted global supply chains, causing higher prices for cosmetic packaging materials used by Indian manufacturers.
• China+1 Strategy Emergence
  S.–China tensions prompted global firms to diversify sourcing—benefiting India as an alternative base for natural ingredient processing and sustainable packaging production.
• Push for Local Innovation
  Global uncertainty encouraged Indian startups and MSMEs to develop indigenous solutions, including Ayurveda-based formulations and eco-friendly packaging suited to Gen Z preferences.
• Export Opportunity Boost
  Reduced U.S.–China trade opened space for India’s herbal and clean beauty exports, with Gen Z’s demand for authentic and ethical products acting as a driver.

Conclusion

Generation Z is undeniably a driving force in India’s personal care industry, influencing product innovation and market strategies. Their preferences for authenticity, sustainability, and personalization are reshaping the sector, compelling brands to adapt and innovate. Supported by government initiatives and a rapidly growing market, the personal care industry is poised for a future that aligns with the values and expectations of this influential generation. With the new Trump Tariffs; MarketGenics‘ detailed research reports further giving a clear picture of the advancement in technology and statistics, a personal care company can grow exponentially.