Skin Care in Asia-Pacific: Key Trends and Opportunities

12 April 2018

Skin Care in Asia-Pacific: Key Trends and Opportunities

In-Cosmetics Asia Presentation Summary by Sunny Um, Research Analyst at Euromonitor International

Asia leads the global premium skin care scene, contributing over 50% of the total value sales as of 2016. Despite the cooling economy in top sales markets like Japan, China and South Korea, the region witnessed a healthy growth in skin care, thanks to the soaring consumer interest and rising middle-class income in developing markets.

Euromonitor International will uncover key drivers behind Asia’s dominant position in the world’s skin care industry, discussing regional trends, opportunities and the future outlook.

Asia, the Dominant Leader in Global Skin Care Scene

As of 2016, Asia contributed 51% of the world’s skin care value sales, reaching US$59 billion. Despite the cooling economy and discouraged consumer confidence in top sales markets China, Japan and South Korea, the overall region witnessed a healthy growth of 5% year-on-year, thanks to the soaring consumer interest, rising income in developing markets, increasing female spending power derived from women’s extended career life, and international brands’ aggressive expansion.

Vietnam and Indonesia registered outstanding growth in 2016, at 14% and 12% respectively, with their market sizes more than doubled during 2011-2016 to reach US$1.4 billion and US$290 million each. India and Thailand also witnessed healthy growth at 10% and 9%, to reach US$1.6 billion and US$2 billion respectively in 2016. Local governments’ supports such as Indonesia’s halal certificate promotion and Thailand’s year-end shopping tax refund campaign contributed to such growth, encouraging consumers for more beauty shopping.

Shift to Premium and Natural

Asia leads the global premium skin care scene, contributing 56% of the total value sales as of 2016. In this region, the premium skin care growth is predicted to accelerate, with 4.2% in 2021, while mass skin care growth slows down to 3.9% in the same year. China is expected to overtake Japan, the current leader in Asia’s premium skin care sales, contributing 37% of the total regional value sales by 2021.

Asian consumers’ proactive attitude towards skin care, boosted by the Korean and Japanese beauty trends and vibrant online communities, led to the positive growth of skin care sales. Their desire for radiant skin and fear for the widespread haze and smog led them to grow as “self-educating” consumers, who care about product efficacy, active ingredients and the time and efforts invested in skin care. This resulted in the vibrant growth of premium skin care, derma-cosmetics, customised formulation, as well as the skin care routine expansion, with the number of items reaching to as many as 10 to 15.

To take advantage of consumers’ such sophisticated taste, Asian brands are expanding their premium line customer targets beyond women at age 30s and above – to young ladies at 20s. Young women in this region are eager to stay abreast of beauty trends and increasingly dare to splurge on discretionary items. To give themselves the best possible treatment they deserve, they are bold to explore a wide range of skin care universe. The growing popularity of anti-ager among 20s is one evidence for such experimental attitude. Anti-ager manufacturers are also responding to growing demand by presenting young celebrity endorsers to stay relevant to 20s. This marketing has been well-received in Asia, where celebrity power plays a big role in consumers’ purchase decision.

Rapid industrialisation, busy urban lifestyle and environmental pollution also influence consumers to grow highly conscious about personal well-being and sustainability, leading to the megatrend of natural skin care. Product claims such as “green”, “organic” and “free from” are impacting consumers’ purchase decision. Natural products formulated with oriental ingredients, such as medicinal herbs, turmeric, ginger, ginseng and charcoal, have already gained sizeable traction in both developed and developing markets. Premium Korean players such as Sulwhasoo and The History of Whoo achieved strong sales and brand presence in Asia – and even in North America and Europe with a cult following.

Outlook by 2021

By 2021, skin care in Asia is expected to further expand at 4% of compounded annual growth rate (CAGR), reaching US$ 72 billion. China, Japan and South Korea will maintain their position as a top three markets in value sales, with regional market shares of 47%, 24% and 9%, thanks to the sheer size of customer base, dynamic brand offerings and consumers’ maturing taste.
Vietnam, Indonesia, China and Thailand are expected to grow fast in Asia by 2021, at 10.1%, 9.9% 5.7% and 5.6% of CAGR respectively. High internet/mobile penetration, rising income, and increasing awareness for well-being in these countries will expose consumers to a variety of beautifying and personal care methods, stimulating their desire to indulge in premium and affordable luxury products, as well as international brands. As such, in order to stay accessible for consumers, brand owners are expected to further increase their investment in distribution channel network, especially in standalone boutiques and luxury department store counters for premium positioning, and in online retailing, via proprietary platforms or partnerships with local e-commerce giants, to reach out to untapped customers in lower-tier cities.