Global Cosmetic Markets A look at Opportunity around the world.

The Global Market

The global cosmetic market is a dynamic and ever-evolving industry that plays a pivotal role in shaping beauty standards, influencing consumer preferences, and driving innovation. As a multi-billion-dollar sector, it encompasses a wide array of products, ranging from skincare and makeup to haircare and fragrance. The global cosmetic market reflects the diverse needs and aspirations of consumers worldwide, with regional nuances and cultural influences contributing to the rich tapestry of beauty trends.

$483B in 2020 to $511B in 2027, the industry is predicted to exceed $784.6B by 2035

Breakdown of the cosmetic market in 2020 worldwide: Skincare 42%, Haircare 22%, Makeup 10%, Perfumes 10%, Hygiene products 10%

Biggest Markets: Asia Pacific 46% and North America 24%

China is the world’s second-largest cosmetics consumer market (behind the United States), with the retail sales rising by 4.2% year on year to RMB261.9 billion in 2018. In 2019, the online retail sales value of cosmetic products in China amounted to approximately 194.4 billion yuan. It’s an extremely profitable industry, in fact, this number was forecasted to exceed 350 billion yuan by 2024.

The Chinese cosmetics market is witnessing booming online sales. The penetration rate of online cosmetics has been increasing rapidly in China since 2009, reaching 25.3% in 2018, compared to UK (12.1%), the US (10.9%), and Japan (9.2%). The online penetration rate of cosmetics in China is expected to be 31.4% in 2022.

Live streaming is very popular in China and is particularly loved by users for their ability to be transparent and authentic. In fact, in China, many brands integrate live streaming into their marketing strategies to engage large masses of users in a few minutes. The KOLs are the key that guides the listening.

• Live streaming key to selling Cosmetics in China
• Using live streaming to sell products is increasingly popular year-after-year.

Tween Market

In China, children’s cosmetics are defined as those for children aged 12 and under. On e-commerce platforms, a quick search for children’s cosmetics brings up dozens of brands and thousands of products, with prices ranging widely. Products are typically sold in sets, including colourful eye shadows, blush, lip gloss, nail polish, compact powder and makeup brushes.

Compared with South Korea and much of the Western world, the market for children’s cosmetics emerged relatively late in China. In 2019, the launch of Leosotoo filled the gap. Brand founder Jiang Zhen had more than 10 years of experience in supplying raw materials for cosmetics. Jiang’s daughter was interested in cosmetics from an early age — with an eye on safety, Jiang conceived the idea of a safe brand focused on children’s cosmetics. Products include lipstick, eye shadow, blush, nail polish and more, using pure plant-based ingredients devoid of additives. At RMB 599 (around $85), the brand’s biggest seller is the Princess Cosmetics Box. Reflecting a core target audience of children who perform on stage, Leosotoo has partnered with the Shanghai Fashion Week Childrenswear Conference and the Shanghai International Children’s Photography Exhibition.

Another name to watch is Red Elephant, a high-end maternal and childcare brand owned by Chicmax (parent company of beauty brand Kans), which has also launched a cosmetics line for children focusing on plant extract ingredients. A set priced at RMB 299 (around $42) includes four products — lipstick, eye shadow, foundation and blush.

Next steps for China

China remains well behind Korea and the US. Korean beauty brand Shu Shu & Sassy opened the first physical store for children in its home country in 2013, growing to 10 branches in just two years. The city of Seoul has cafés specifically for children with beauty and spa products. US company Claire’s, the first to market low-priced jewellery specifically to young people, was founded back in 1961 and includes cosmetics and beauty products in its product lines.

But while the economic woes have certainly weighed on sales, analysts say the main issue facing the multinationals is their slowness to adjust to the shifting priorities of consumers, who have become more discerning about what they buy and are increasingly finding that local brands are more suited to their needs. Chinese consumers are still keen to spend on are high efficacy products. What you're seeing is a downgrade in lifestyle-driven luxury and premium brands

The Chinese brand, which is priced at around the same level as L'Oreal products, is known for combating redness, a concern that marketing firm iResearch reported affects two-fifth of women. Analysts from CMB International estimate Botanee's revenue will grow almost 18% this year to 5.9 billion yuan ($824 million), with Winona responsible for most of these gains. By comparison, sales for the global beauty giants are expected to fall.

DEEP DISCOUNTS

An analysis from brokerage Jefferies showed first half China sales down 8% at LVMH's beauty division, while sales at Estée Lauder Companies, which counts on China for one-third of its business, fell 12 percent over the same period. Shiseido reduced its full-year profit forecast in November on slower China demand, which has also been hit by a boycott by some consumer of Japanese products following the release of treated radioactive wastewater in August.

These results also come off the lower base of 2022, when the combined colour cosmetics and skincare markets in China lost 9.5% of their value, data from Euromonitor shows. While the market research firm expects growth of around 6% this year, it forecast won't get back to its 2021 market size of $54.4 billion until 2025.

So far, the multinationals have responded to the slowdown by offering deep discounts of up to 40% and gifts during peak shopping events such as the annual online Singles Day festival, but analysts say the data shows even that isn't really helping. Luxe skincare brand La Mer, which rarely discounts, gave so many gifts-with-purchase over Singles Day that every sale resulted in almost the same amount of product being given away.

Independent data firm Syntun estimated that GMV, or gross merchandising volume, of beauty and personal care fell 6% year-on-year across all online shopping platforms. GMV is commonly used proxy for sales among e-commerce operators. The biggest global names have seen their Tmall GMV decrease by about 40% on average during 11.11. But while these larger brands are better able to compete online than smaller companies that lack their marketing budgets, they are not immune to the slowdown in demand.

A Look at Japan

Japan is the world’s third-largest cosmetics market. The Japan cosmetics industry is much older & sophisticated, but it has remained stagnant over the past few years. Recently in 2017 cosmetics market in Japan is witnessed to recover and give competition to rest of the world. Japan is called the sleeping giant of the cosmetics industry which has now awaken. The cosmetic market of Japan has maintained an image of authentic, sustainable & eternal due to its rich culture, beauty rituals, and obsession for beauty. Across Japan, the consumers are estimated to have the highest per capita expenditure on cosmetics & skincare products. The domestic beauty industry generated a revenue of over 36 billion U.S. dollars in 2017. Within the Japanese cosmetics market, skincare products are dominating, accounting for a market share of almost 50 percent.

With a growing mature domestic market, products that promote mainly skincare, anti-aging and skin moisturizing properties are expected to continue to be popular. This market segment is showing a preference for low maintenance beauty regimes which in turn translates to high functionality. Skin care has traditionally been more popular in Japan (in comparison to make up in Western countries) and consumers of all demographics are well versed in brands and quality. Expectations of packaging design and quality amongst consumers are exceptionally high.

There is increasing competition in the cosmetics markets from domestic manufacturers from other industries such as pharmaceutical, food, beverage and photographic film industry. Major Japanese companies have in-house R&D capability and utilize technical expertise from their product offerings in their traditional business sectors. Many retailers, including supermarkets, convenience stores and catalogue/ e-commerce companies have launched private label brands, and the contract manufacturers are also creating their own brands and entering the market.

The Indian cosmetics market, valued at nearly $11.16 billion in 2017, is expected to grow at 5.91 per cent (compound annual growth rate) during 2017-25. The annual retail sale of cosmetics and other personal care products is growing in the range of 15-20 per cent... Over the past five years, total demand has grown by 60 per cent.

A significant segment of this demand is for products that suit Indian skin types and hair — a need that largely remained unfulfilled by international brands, providing the perfect opportunity for local companies. Some of the bigger home-grown names include Khadi Essentials Plum, MamaEarth, Kama Ayurveda, Forest Essentials, SoulTree, Dr Sheth’s, Neemli Naturals, Juicy Chemistry and Daughter Earth.

A growing movement away from chemical to natural — and, by association, safer — ingredients has seen these companies tap into the country’s centuries-old repertoire of ayurvedic and other organic remedies for their formulations.

Consumer spending patterns are reflecting the economic downturn caused by the impact of the pandemic, with spending focused on essential items. The lockdown has had a significant effect on the industry as frequent handwashing and use of hand sanitisers has resulted in increased use of hand creams and lotions to moisturise the skin. Numerous cosmetics companies have started manufacturing hand sanitisers. Retailers reported increased sales of haircare products when salons were closed, while sales of nail polish and shaving products also grew.

Unilever South Africa continued to lead beauty and personal care in value terms in 2019, and remained the only player to hold a double-digit value share. It was followed by four other multinationals: Colgate-Palmolive, Avon, L'Oréal and Procter & Gamble.

Trends

Consumer concerns about sustainability and the use of harmful ingredients has led to a growing market for cosmetics formulated with natural ingredients. The number of cosmetics startups has increased, often as a result of black consumer complaints about the lack of products for their skin and hair requirements, leading to the development of new brands. Men are becoming more fashion-conscious, and male-focused grooming products and beauty parlours are increasing. Online sales of products, including cosmetics, have grown significantly since the start of the lockdown.

The South African cosmetic market has displayed consistent growth, with an expected compound annual growth rate (CAGR) of 4.97% between 2023 and 2028 (Statistia). In 2023, revenue in the cosmetics market amounts to US$ 506.90 million, a substantial increase from US$ 409.65 million in 2018. This robust growth is expected to continue in the coming years, driven by rising urbanisation, a burgeoning middle class, and evolving beauty trends. This growth trajectory showcases the market’s resilience and attractiveness for both local and international players.

The market growth is mostly contributed by the following key factors:

Rising Disposable Income: As the South African economy has gradually improved, disposable income levels have increased. This rise in income has enabled consumers to allocate more funds towards personal grooming and beauty products.

Urbanisation and Changing Lifestyles: Urbanization has led to changing lifestyles and an increased focus on personal appearance. Urban dwellers are more exposed to global beauty trends through media and social platforms, driving the demand for a diverse range of cosmetic products.

Beauty Consciousness: There has been a cultural shift towards greater beauty consciousness, with individuals of various age groups and genders now paying more attention to skincare, makeup, and grooming. This shift has resulted in a broader consumer base for cosmetic products.

Social Media Influence: The influence of social media, beauty influencers, and online tutorials has played a significant role in shaping consumer preferences and driving demand for various cosmetic products.

Increasing Demand: South African consumers are increasingly prioritising personal grooming and beauty enhancement. The demand for cosmetics, skincare, haircare, and fragrances has witnessed a notable surge. A survey conducted in 2022 revealed that over 70% of urban South Africans allocate a portion of their budget to cosmetics and personal care products. This shift in consumer behaviour indicates a lucrative market for a diverse range of cosmetic offerings.

E-Commerce: The rise of e-commerce and online shopping platforms has opened up new avenues for reaching consumers, driving sales growth and expanding market reach.

Beauty and Wellness Trends: The increasing focus on overall well-being and holistic beauty practices is likely to influence consumer choices, leading to the expansion of niche markets within the cosmetic industry.

The French cosmetic market holds a prominent position globally, renowned for its rich history, innovation, and commitment to quality. France has long been considered a global leader in the beauty and cosmetics industry, with a heritage dating back centuries. The French approach to cosmetics is characterized by a blend of tradition, science, and a strong emphasis on elegance and sophistication.

Heritage and Tradition

France has a deep-rooted cultural appreciation for beauty and aesthetics. The French cosmetic industry draws inspiration from its cultural heritage, incorporating traditional ingredients and techniques that have been passed down through generations. This emphasis on heritage adds a unique and timeless quality to French cosmetic products.

Innovation and Research

Despite its commitment to tradition, the French cosmetic market is also highly innovative. France is home to some of the world's leading cosmetic research and development centers. The industry invests heavily in scientific advancements, resulting in cutting-edge formulations and technologies that address various skincare and beauty concerns.

High-Quality Ingredients

French cosmetics are known for their use of premium, high-quality ingredients. Many French skincare and beauty products feature natural components, botanical extracts, and essential oils. The emphasis on quality extends to rigorous testing and adherence to strict regulatory standards, ensuring the safety and effectiveness of the products.

Luxury and Elegance

The French cosmetic market is synonymous with luxury and elegance. Many French beauty brands are associated with sophistication and a touch of indulgence. The packaging, branding, and overall presentation of products often reflect a commitment to creating a luxurious and pampering experience for consumers.

Global Influence

French beauty standards and trends have a global impact. The country's fashion capital, Paris, plays a significant role in setting beauty trends worldwide. French cosmetics are often seen as the epitome of chic, influencing the preferences and choices of consumers around the globe.

Wellness and Health Focused

The French cosmetic market boasts a diverse range of brands catering to different consumer preferences. From established luxury brands to niche, organic, or eco-friendly options, consumers have a wide array of choices to suit their individual needs and values. In recent years, there has been a growing emphasis on health and wellness in the French cosmetic market. Many brands are incorporating skincare ingredients that promote overall skin health and well-being. This includes products with anti-aging properties, sun protection, and formulations that prioritize skin hydration.

Cruelty-Free and Sustainable Practices

With increasing global awareness of ethical and environmental issues, many French cosmetic brands are adopting cruelty-free and sustainable practices. This reflects a commitment to responsible sourcing, eco-friendly packaging, and animal welfare, aligning with evolving consumer values.

The market size, measured by revenue, of the Cosmetics Retailers industry is £2.4bn in 2022. The market size of the Cosmetics Retailers industry is expected to increase 28.1% in 2022. The market size of the Cosmetics Retailers industry in the UK has grown 3.8% per year on average between 2017 and 2022. The United Kingdom's cosmetic market is a dynamic and influential player in the beauty and personal care industry. While it may not have the same historical roots as the French cosmetic market, the UK market is characterized by a combination of innovation, diversity, and a focus on ethical and sustainable practices. The UK is home to a vibrant and innovative beauty industry that continually adapts to emerging trends and consumer preferences. British cosmetic brands often embrace creativity and experimentation, introducing novel formulations and unique product concepts.

The UK cosmetic market is diverse, catering to a broad range of consumer needs and preferences. There is a notable focus on inclusivity, with many brands offering a wide range of shades and products suitable for various skin tones and types. This diversity reflects the multicultural nature of the UK society. Similar to the French market, the UK places a significant emphasis on high-quality formulations. Many British cosmetic brands use premium ingredients and invest in research and development to ensure the efficacy and safety of their products. Scientific advancements play a crucial role in the development of skincare and beauty solutions.

The UK has seen a surge in the popularity of independent or indie beauty brands. These smaller, often niche, companies are celebrated for their agility, creativity, and ability to respond quickly to changing consumer demands. This trend has brought a fresh and innovative perspective to the market. British consumers are increasingly conscious of ethical and sustainable practices. Many UK cosmetic brands prioritize cruelty-free formulations, environmentally friendly packaging, and transparent sourcing. Ethical considerations, such as fair trade and responsible production, are becoming integral to the identity of several British beauty brands.