The beauty market is an industry which encompasses body care, hair care, fragrances and cosmetics. In Asia, the beauty industry has long been praised by the media for its ability to create innovative products with exotic ingredients and unique selling points, which manage to attract an extremely wide clientele. In addition to their unique creations, beauty companies in Asia have also been highly complimented for their ability to capture the needs of consumers and for redefining their product experience with tailor-made marketing strategies and aesthetically appealing packaging. With an increase of over 6.4% in beauty and personal care products in Asia in 2017, the beauty market has reached over $149bn in sales and today represents one of the most valuable segments of consumer goods worldwide.
The Digital World As a Key Driver
The Asian beauty market is characterised by the rapid launch of new brands, new products and new technologies, all fueled by an adoption of the digital world. Today, the retail market is being completely reshaped by the internet. With over 9.9% of beauty product sales occuring online in Asia, it seems that digital channels have lowered barriers to entry, enabling consumers from all generation to purchase their desired beauty products anywhere.
Although online sales still account for a small part of the beauty market, the digital landscape is exerting an important influence over Asian consumers. In Asia, consumers’ interest in beauty brands extends beyond product information and pricing, as millennials are looking online for product usage videos, with key influencers uploading those videos, as well as to search through online referrals and admire marketing campaigns. Thus, online vlogs, editorial blogs, tutorials, consumer reviews and social media channels have become an important arena for consumer decision-making – and companies must ensure their online presence remains satisfactory since consumers see the internet as a crucial channel for communication and knowledge.
South Korea, among the top 10 global beauty markets, representing nearly 2.9% of the global industry, has managed to achieve successful growth in the last decade by approaching the beauty sector with the strategy of functionality rather than brand awareness. In Korea, beauty products are not perceived as “treats”, instead, beauty products are considered useful and life-changing.
Daily beauty creams are developed with sunscreen claims, cosmetics have anti-pollution filters, skin care products have elasticity boosting benefits, venom serum or snails skin facials are rejuvenating. It appears that the Korean market has quickly established itself as a market leader in innovation, and as an arena for companies to test new ingredients and technologies.
In Japan, Shiseido launched its newest range, Waso, a skincare product line with natural ingredients such as carrot, loquat, honey, tofu and white jelly mushroom mixed in innovative formulas as active components. With a lower price point than competing brands, this line is specifically designed to appeal to millennial consumers.
Emerging Asian Markets
The influence of Asia over the beauty industry worldwide is not solely limited to its main market leaders such as Korea and Japan. It appears that emerging markets such as Indonesia, the Philippines and Vietnam are catching up on key trends and improving their global sales after a period of low growth.
The beauty industry in Indonesia has witnessed strong growth due to rising spending power of the middle class. The strongest trend developed in the beauty sector is the rise of products with “halal” and “herbal” options, which strongly resonates with the Indonesian consumer (as an estimation of over 87.2% of Indonesians identify as Muslim). Therefore, for beauty companies, developing “halal-certified” products has become a priority.
In the Philippines, the desire for skin whitening products continues to gain ground, as having “dark skin” can lead to discrimination and backlash among the younger population. An estimate by Mintel Research group shows that skin whiteners and lighteners recorded the highest retail value projection in 2016 (of about $240m), outperforming all other market segments. With a relatively young population, Filipino millennials are investing in social media to discover new products and become more educated on beauty practices, allowing them to purchase whitening products with relatively “reduced-health risks” claims.
Finally, the Vietnam beauty market should not be underestimated by the business world. Market researchers have projected this industry to grow at a CAGR (Compound Annual Growth Rate) of as much as 8.6% over the 2018-2021 period, placing the country as a leader for business expansion, worldwide.
So, What’s Next?
Amidst their successful business models and pioneering approach to beauty, the Asian beauty industry needs to keep an eye out for long-term challenges. Today, Asian customers are becoming more knowledgeable and more demanding, and their voices have become increasingly powerful online. Consumers are now extremely receptive to the latest trends, listening to both advocates of beauty brands in retail and online. Therefore, companies should continue to expand through digital channels, to ensure effective targeting.
Experience, innovation and functionality appear as the key drivers of growth in Asia. With new ingredients booming in everyday beauty products, the rise of new technologies and the importance of the digital world, the possibilities for innovation are endless. Hopefully, the Asian beauty success story will be a source of inspiration worldwide.
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