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

India's personal care market is changing fast driven by Gen Z's shifting tastes. Their choices are shaking up the industry pushing companies to come up with new ideas and change to keep up with what customers now expect.

Gen Z: A Catalyst for Change

With a population size of about 377 million, Gen Z is a substantial portion of India's population. As per a study by Boston Consulting Group and Snap Inc., this generation already contributes $860 billion to consumer spending in India, representing 43% of overall household expenditure. Their straight-line spending is expected to grow to $250 billion by 2025, highlighting their increasing economic influence.

Market Dynamics: The boom in personal care comes from changes in population more money to spend, city growth, and online shopping.

Market Size and Growth Projections

As per the India Brand Equity Foundation (IBEF), a trust set up by the Department of Commerce, Ministry of Commerce and Industry, Government of India, the Indian beauty and personal care (BPC) industry was worth USD 15 billion in 2022, and is projected to reach USD 28 billion by 2025, with a growth rate of 11% CAGR.

The Gen Z Effect: Conscious Consumption Shift

This generation:

1. Values vegan, cruelty-free, and eco friendly products.


2. Seeks open labeling and sustainable packaging.


3. Embraces customizable skincare solutions, which are increasingly influenced by digital interfaces.

E-commerce Acceleration & Digital Behavior

Statistics by the Ministry of Electronics & IT (MeitY) under the Digital India Programme indicate that India's e-commerce industry, especially in personal care and FMCG, is expected to expand from USD 70 billion in 2022 to USD 350 billion by 2030.

Ayurveda & Wellness: A Government-Supported Sectoral Boost

As per the Ministry of AYUSH:

● The Indian Ayurveda and herbal personal care market is likely to grow at a CAGR of 15-16%, reaching INR 70,000 crores (~USD 8.5 billion) by 2025.

● AYUSH Ministry is empowering more than 200+ start-ups and MSMEs under schemes such as the Champion Services Sector Scheme.

"Consumers, particularly youth, are yearning for the revival of traditional knowledge systems. Ayurvedic personal care is both cultural and commercial success." – Ministry of AYUSH

Below are two database-format charts:

1. Market Size Projection (USD Billion):

1. The Beauty & Personal Care market is expected to increase from $15B in 2022 to $28B by 2025.


2. The Ayurvedic Personal Care business is projected to increase from approximately $4B to $8.5B during the same time frame.

2. CAGR Comparison:

1.  Beauty & Personal Care segment: 11% CAGR.


2. Ayurvedic Personal Care: 15.5% average CAGR.

Tier 2 & Tier 3 Cities: Untapped Goldmine

As per the Retailers Association of India, personal care products sell 14–18% YoY higher in tier 2 and 3 cities, driven primarily by digital-first, value-for-money-led consumption among young consumers. Rural youth has been made digitally literate through the Pradhan Mantri Gramin Digital Saksharta Abhiyan (PMGDISHA), leading to e-commerce consumption patterns for non-metro markets.

Significant Trends that Fuel Product innovation

1. Focus on Natural and Organic Products

The tendency toward natural and organic products of gen Z allows encouraging firms to be innovative in using Ayurvedic ingredients and plant-based compounds. The shift is also in conformity with the government promotion of the traditional indigenous wellness systems.

2. Sustainability and Ethical Practices

The characteristic feature of Gen Z consumers is concern with the environment. Firms are adopting sustainability,

3. Personalization and Customization

The quest for customized products is triggering innovation in customized skincare and haircare treatments.

4. Digital Engagement and E-commerce

Gen Z's digital DNA is impacting the expansion of online platforms and social media advertising. The government's initiative for Digital India aids this development.

This is facilitated by the government effort on Digital India. Government Programs that support Innovation.

● Make in India: Favors local production, even of the cosmetics and personal care industry.

● Startup India: Provides grants and mentorship to any startup in the personal care industry.

● Ayushman Bharat: Promotes the holistic wellness and health, as a demand complement to natural personal care products.

● Digital India: Enabling online availability and growth of e-commerce.

Global Trade Impact: Trump Tariff Impact (2018–2020)

While aimed mostly at China, the American tariffs during the regime of former President Donald Trump had worldwide implications, indirectly affecting India's personal care industry:

● Raw Material Price Spike

The tariffs on imported steel, aluminum, and packaging materials disrupted supply chain across the world resulting in higher prices on cosmetic packaging materials imported by the Indian companies.

●China+1 Strategy Emergence

Global tensions between the U.S. and China led to companies diversifying their sources of sourcing—advantaging India as a substitute base for processing natural ingredients as well as eco-friendly packaging manufacturing.

●Push for Local Innovation

Global uncertainty prompted Indian MSMEs and startups to create local solutions, such as Ayurveda-formulated products and green packaging compliant with Gen Z values.

●Export Opportunity Boost

Decreased U.S.–China trade created room for India's clean beauty and herbal exports, with Gen Z's pull towards genuine and ethical product driving the need.

Conclusion

Gen Z plays a big role in shaping India's personal care market. It has an influence on both product ideas and how companies plan their strategies. The focus on being real, sustainable, and personal is causing a shift in the industry since brands need to change and come up with fresh ideas. With government support behind it and a rapidly growing market, the personal care sector has a rosy future that is consistent with the values and expectations of this influential generation. With the new Trump Tariffs; MarketGenics in-depth research reports further providing a clear image of the growth in technology and statistics, a personal care business can expand exponentially.