Unlocking Diverse Opportunities in Beauty in Asia Pacific

Strategy Briefing

About This Report

Dec 2014

The Asia Pacific region encompasses countries with diverse economies. While China remains a global growth engine, Japan’s beauty market continues to contract. However, opportunity areas are clearly showing demand for product customisation, mass beauty and the growing sophistication in men’s grooming. The most dynamic markets in the region will remain Indonesia and Vietnam. Brands are aiming to remain relevant and accessible to the young and increasingly affluent Asian consumer base.

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Unlocking Diverse Opportunities in Beauty in Asia Pacific

Growth momentum sustained in most dynamic beauty markets

Indonesia and Vietnam will remain the most dynamic markets in the region. The combination of the expanding middle class and the newly emerging wide consumer base at the lowest price platforms sustains steady growth.

Skin care the strongest contributor to Asia Pacific BPC market value growth

Skin care will generate some 46% of the region’s BPC market value growth over 2013-2018. The category is becoming hugely diverse in terms of functions, formats and price tiers.

Product customisation in high demand in Asia Pacific

Product customisation is a growing trend globally and consumer demand for tailored solutions varies across regions. Natural products with safe ingredients to achieve brightening results and to offer sun protection are the core requirements for beauty products in the region.

Mass domination in Asian markets

Mass products dominate BPC markets in Asia Pacific, accounting for 70% of total regional sales in 2013 and this ratio is expected to increase further by 2018. Interestingly, the expansion of mass value sales is largely originating from developed Asian countries, especially Japan and South Korea.

Men’s grooming benefits from social and cultural changes in Asia

Male grooming routines are expanding into multistep regimes; demand for male-specific cleansers, toners and moisturisers is growing and men’s toiletries subcategories are becoming more sophisticated.

Young Asian population shows strong interest in beauty innovations

Young, affluent Asian consumers are becoming increasingly urbane and willing to experiment with novelty. Brands are aiming to remain relevant and accessible to these enthusiastically modern consumers.

Urbanisation drives changes in beauty routines

Where consumers live, the social values in urban versus rural areas, cultural diversity and economic status of a particular region shape cosmetics shoppers’ preferences.

Introduction

Scope
Key findings

Diverse Market Conditions in Asia

Asia Pacific becomes the largest BPC market by 2018
Asia Pacific encompasses diverse beauty market performances
Growth momentum remains in most dynamic BPC markets
Rising sophistication benefits beauty in Southeast Asia
Skin care the strongest contributor to Asian market value growth
Category developments driven by social and cultural changes
High income not a prerequisite for high spending on beauty
Developed Asian markets show signs of saturation and slow growth
Beauty products’ unit prices rising faster in core growth markets
Asia still stronghold of international brands…
…but local players intensify competition in China
Korean exports reach new high thanks to China sales
International companies’ expansion strategies in Asia

Key Opportunity Areas: Product Customisation

Opportunity areas to exploit in Asia
Product customisation in high demand in Asia Pacific
Heightened demand for natural, skin-friendly ingredients in Asia
Products with TCM credentials benefit from natural trend
Developments address product safety concerns
W hitening claims remain a grey issue
Skin care sophistication fuels whitening products penetration
Enhanced consumer awareness about sun protection
Demand for halal certified beauty products favours local players
Scented products grow in popularity in Asian markets
Air pollution concerns open new niche in skin care

Key Opportunity Areas: Mass Beauty

Mass domination in Asian markets
Growth driving factors for mass beauty in developed Asian markets
Mass skin care driven by natural and skin whitening trends
Mass BPC brands’ performance remains steady
Premium potential in select markets expands from a low base
New product launches focused on premium skin care in China

Key Opportunity Areas: Men’s Grooming

Men’s grooming benefits from social and cultural changes in Asia
Small but dynamic men’s grooming category prospects
Brands with strong exposure to skin care benefit the most
Growing demand for men’s grooming products in Asia

Future Impacts

Key growth drivers in Asian BPC markets
Only China shows a moderate slowdown in economic growth
Young Asian populations show strong interest in beauty innovations
Urbanisation drives changes in beauty routines
Beauty trends more consumer driven through digital engagement
Shift in retail towards self-service and internet retailing
Premium vs mass opportunities to shape growth in Asian beauty