HANDMADE SOAP MANUFACTURING BUSINESS
As a soapmaker, you'll formulate soaps and perhaps other personal cleansing and beauty products according to your own recipes. You will market your offerings along sales channels that might include e-commerce, farmers markets, arts festivals, wholesale placement in spas and boutiques, and even door-to-door sales. You'll explore a range of options to see where you can find a loyal customer base
BUSINESS MARKET SIZE
Handmade soaps are generally made from plant-based ingredients like natural oils & pure herbs of different flavors. They are produced by using traditional methods in small batches. Handmade soaps contain glycerin which softens and moisturize the skin. These soaps are organic in nature and free of chemical additives such as parabens, SLS, and other petrochemicals products.
Rising awareness regarding skin and beauty care coupled with high demand for chemical-free skin and hair care products across the globe is driving the market growth. The shift in customer focus towards the use of natural and safe ingredients is further fueling the market growth. Increasing demand for organic soaps from emerging markets is presumed to foster the market growth in the forecasting period. The time-consuming production process is likely to hinder the market growth.
This detailed market study is centered on the data obtained from multiple sources and is analyzed using numerous tools including porter’s five forces analysis, market attractiveness analysis, and value chain analysis.
These tools are employed to gain insights of the potential value of the market facilitating the business strategists with the latest growth opportunities. Additionally, these tools also provide a detailed analysis of each application/product segment in the global market of handmade.
Pune, June 01, 2020 (GLOBE NEWSWIRE) –
The global Shop Market size is projected to reach USD 55.29
billion by 2027, exhibiting a CAGR of 5.0% during
the forecast period. Rapid transmission of the COVID-19 infection is set to play a central role in fueling the growth of this market, states Fortune Business Insights™ in its recent report, titled “Soap Market Size, Share & Industry Analysis, By Product Type (Bath & Body Soaps, Kitchen Soaps, and Laundry Soaps), Form (Solid and Liquid), Application (Household and Commercial), Distribution Channel (Hypermarkets/Supermarkets, Pharmacies, Online Channels, and Others), and Regional Forecast, 2020-2027”. According to the World Health Organization (WHO), the coronavirus spreads through respiratory droplets and physical contact. Therefore, to avoid spreading the virus through these routes, the WHO along with many other bodies such as the Centers for Disease Control and Prevention (CDC) has recommended regular washing of hands using soap and water. Comprehensive washing of hands kills the virus and this practice is currently seen as the most effective way to preventing transmission among people, especially given that a vaccine for the infection is many months away. Thus, the demand for soaps in all shapes and forms is slated to experience a meteoric rise as the COVID-19 pandemic intensifies and worsens during the current year.
The broad handmade soap market has been sub-grouped into method and application. The report studies these subsets with respect to the geographical segmentation. The strategists can gain detailed insight and devise appropriate strategies to target a specific market. This detail will lead to a focused approach leading to the identification of better opportunities.
The soap manufacturing industry is one of the oldest industries operating in the FMCG sector in India, and accounts for more than 50% of the consumer goods sector. The soap and detergent industry covers laundry and toilet soaps, and synthetic detergents in the form of liquid, powder, and bar. Bar soaps can be classified into three sections - premium, popular, and economic.
Around 50% of soaps produced are sold in rural markets. Increasing awareness of hygienic standards in rural areas is providing growth opportunities to several players. Manufacturers are introducing soaps in different sizes and ranges, targeting consumers from low-income groups. Currently, there are around 5 Mn retail outlets in India which sell soaps, out
of which 3.75 Mn operate in rural areas.
Herbal soap is the fastest-growing category in the soap market in India. Margo and Medimix dominate the herbal and medicinal soap segment. Government initiatives like Swachh Bharat
Mission, which promotes health and hygiene, has led to the growth of the soap manufacturing industry. During FY 2017, the United Arab Emirates (UAE), Nepal, and the United States of America (U.S.A.) were the top three export destinations of soaps.
MARKET SEGMENT INSIGHT
The soap market in India is segmented based on brands, (Lux, Dove, Pears, Santoor, etc.), category (beauty soaps, health soaps, and others), and players operating in the market (Hindustan Unilever, ITC, Wipro, and others). During FY 2017, the beauty soaps segment had a market share of ~50%, followed by the health soaps segment. Popular beauty soap brands operating in the market are Lux, Dove, Pears, Santoor, and Vivel. During the same period, Lux was the leading soap brand with a market share of ~13.5%, followed by Santoor, Vivel, and other brands.
As per the Drugs and Cosmetics Act and Rule, the Central Government and the State Government makes rule regarding issuance of license to a person for manufacturing cosmetics. Basically, it is the State Drug Authorities of respective States, who are authorized to issue manufacturing licenses.
- Firstly, a person applying for a manufacturing licence for hand made soap needs to fill the application form 31 along with it; the person is required to pay an amount of Rs 3,500 and Rs 2,500 as a government and inspection fee of 2500 respectively.
- Secondly, the cosmetics for which the licence is being acquired should be specified into classes of cosmetics, as has been mentioned under Schedule M-II, where the cosmetics have been classified into 10 categories.
- A person applying for the license of manufacturing handmade soap or any other cosmetics should have passed the intermediate exam with Chemistry as one of its subject or any examination which is recognized by the Licensing Authority.
- Apart from it to get a license it is required to hold a diploma in Pharmacy which should be certified and approved either under the Pharmacy Council of India under the Pharmacy Act, 1948 or under the Pharmacy Act, 1948 At the time of applying for the license, it is required to mention other information like the lists of equipment, manufacturing facility details with minimum area required for manufacturing, Technical Competent personnel details,etc.
- Apart from those details the licensing authority also considers before approving the license whether the cosmetic is misbranded or is a spurious cosmetic.
- For renewal also the manufacturer is required to categorize the cosmetics as per Schedule M-II, apart from it Rs. 1000 has to be paid as a charge for every inspection for renewal
It is mandatory for the Licensing Authority to direct an inspection of the area where manufacturing will take place, before approving or rejecting the application of license. After the inspection, a report is sent to the Licensing Authority on the basis of which they either approve the license application or reject it.
The investment required for starting a small soap manufacturing business is minimal. A soap manufacturing unit setup with an investment of about Rs.15 lacs, can generate revenues of upto Rs.50 lacs and a profit of Rs.8 lacs, if operated successfully. The breakup of the investment required and the assumptions for revenue are as under:
LAND & BUILDING
A small soap manufacturing unit requires a space of about 750 square feet of which around 500 square feet must be constructed. For the financial model, we have assumed that such a place can be obtained with an investment of about Rs.5 lakhs with the necessary power and water supply.
A small soap-making business with minimal investment in machinery. A typical list of soap making machinery required for soap manufacturing are plodder machine, miller machine, sap stamping machine, and soap cutting machine. Based on the type of product to be manufactured and the scale, the type and investment required in machinery would vary. Investment in a small soap manufacturing unit can vary between Rs. 1 and Rs. 5 lacs. The typical time for setting up of a unit is about 3 to 6 months for obtaining the necessary licenses, equipment, raw material, etc.,
The main working capital expenditure for a soap manufacturing unit are raw material, salaries and wages, power costs and receivables. Raw material to the tune of Rs.2.5 lakhs must be on-stock for operating a soap manufacturing unit smoothly, with an additional working capital requirement of Rs.1 to 2 lacs required for other expenditures like salaries, power and receivable. Hence, taking into a three-month working capital cycle, the promoters must have about Rs.6 to 10 lacs of working capital funds to operate smoothly.
SUCCESS STORY (MOTI SOAP)
After the introduction of soap in India variety of soaps came in to the market by multinational and local players. Among these Moti was quite popular during the seventies. It is a thick round shaped soap positioned as luxury soap.It was a brand of Tata Oil Mills Company ( TOMCO). In 1993 after merger of TOMCO with HUL, it became the property of HUL. Moti soap was launched keeping in mind certain points to differentiate it from other competitors. Such as its shape and thickness which was different from rest of the competitors. Its name was taken from Hindi language whose meaning is Pearl. It was introduced in different variants such as Sandal, Rose and Khus.
At the time, Sandal, Rose, and Khus were perceived to be precious and devout in our Indian society. In Hindu mythology, it has been found that queens used to take baths with exotic herbs and flowers such as Rose, Khas, Sandal etc. In this way, soap was positioned as exotic soap.
As it was promoted as luxurious soap, it was priced around 25/- per soap in the eighties competing for other brand such as Dettol, Lux etc. But at the same time as it was quite big in shape so it was long-lasting. The packaging was simple with the respective colour of variants such as orange for sandal and pink for a rose.
TWO VARIANT OF MOTI SOAP
It was promoted heavily and as the name of the product was “Moti”, print advertisement was giving importance to pearls. One of the popular print advertisements for magazines shows a soap anchored in a big seashell on a beach, just like pearl. It also gave stress on its ingredients.
Though the market share of Moti soap is very low, but still it exists and people know this brand. Moti soap is available in retail outlets, shopping malls and even on some of the popular online retail outlets such as Amazon.com. But stocks are more seasonal. Currently, 150 gm soap is available for 56/-. Looking at the overall journey of this brand it can be concluded that it’s a successful brand because sustaining for more than 40 years is not an easy task and that too in the era of a dynamic market. While it has a selected and small market, It still has its set of loyal customers. Using Moti soap on special occasions has become a tradition and is getting passed on to next generations as a cultural heritage in most of Indian middle-class families.
How we can help you ?
We can develop your brand to make you reach more customers. you can also start a shop business from your home as well. We can help you with registering your business, complying with legal formalities, marketing, website development and maintenance, reputation management, software development, hiring the right people, and so on. Contact us and let us help you grow and increase your revenues!
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HBF Direct Limited at a glance