INFOCUS

The global supply chain has suffered because of multiple issues, one of them being the outbreak of COVID-19. The increased demand of freights as compared to their availability saw a huge surge in the transport prices. Priyanka Parshurami gives an overview of how the beauty industry in India managed to get over this price war and emerge as winners in their businesses.

Priyanka Parshurami

The last two years saw the great global surge for the logistic industry, not only in India but also internationally. As per the market reports, there was a 30 per cent increase in the cost of general freight and the overall international transportation, soaring to almost 8 to 12 per cent across the different forms of transportation. All the industries faced the heat, and the beauty and wellness industry was no exception.

“An increase in the prices of the raw materials in some cases upto 3X and 4X, increase in the lead time, and upfront investment to finance trade cycles were some of the causes of concern from 2020 to late 2022,” says Ankit Virmani, Director, Esskay Beauty Resources. “The MRP of the product can be increased only once a year, hence it becomes difficult for brands to accommodate the increased freight pricing and manage in small business margins.”

“Freight plays a major role in costing especially for the hazardous category ingredients because the availability of special cargoes and vessels is less as compared to general non- hazardous category vessels,” says Harish Amdekar, Director, Chemstar. “While offering pricing to the customers, the importer and exporter factor in the validity of the quotation. Earlier it was two months or a yearly contract. But now due to the rise in the freight and transportation costs, the validity is reduced to one month. As the freight rates and even other costs have been unpredictable, making it difficult to anticipate the pattern.”

He further adds, “Instead of over committing the rates and validity period, the companies are requesting the customers to confirm the orders within a month or they revise the clauses in the contract to accept the difference in freight rates for the shipment, if any.”

Virmani says, “A few oils like the sunflower oil are important elements in any beauty product as they form the base ingredient in a majority of cosmetic formulations. Scarcity of oils swayed the prices of the beauty and cosmetic products.”

However, there was a ripple effect for the manufacturers of the beauty and cosmetics products in this price war.

“We had to raise our product prices by 15-25 per cent to continue providing high-quality beauty products to our customers. The main reason for this increase was the rise in raw material prices,” comments Suresh Sarda, Director, Biosols. “We have implemented cost-saving measures and efficient strategies to absorb most of the increase. Our goal is to provide our customers with quality products at a reasonable price while maintaining profitability. We are always seeking ways to minimise the impact on our customers.”

However, as per the recent market study and reports, the freight and transportation prices, which reached an all-time high from 2020 to 2022 are now expected to drop drastically in 2023. Therefore, the beauty industry is looking at 2023 as a year of relief from alleviated prices and drastic fluctuations.