SKINCARE: OPPORTUNITIES AND OUTLOOK TO

2020
JOANNA CHAN
ANALYST, BEAUTY & FASHION

IN-COSMETICS ASIA, NOVEMBER 2016

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INDUSTRY SNAPSHOT
INDUSTRY CHANGERS
CONVERGENCE OF HEALTH & BEAUTY
KOREAN BEAUTY
ETHICAL LABELS
CONCLUSION: KEY TAKEAWAYS
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Research coverage

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Research Expertise
Consumer Products
Alcoholic Drinks Nutrition Supply

Apparel Ingredients
Packaged Food
Automotive Personal Accessories Packaging

Beauty and Personal Care Pet Care Economies

Consumer Appliances Business Dynamics
Soft Drinks
Consumer Electronics Cities
Tissue and Hygiene
Consumer Health Economy, Finance and Trade
Tobacco
Eyewear Industrial
Toys and Games
Fresh Food
Services Consumers
Health and Wellness Digital Consumer
Consumer Finance
Home and Garden Households
Consumer Foodservice
Home Care Income and Expenditure
Institutional Channels
Hot Drinks Lifestyles
Retailing
Luxury Goods
Population
Ethical Labels Travel
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INDUSTRY SNAPSHOT
INDUSTRY CHANGERS
CONVERGENCE OF HEALTH & BEAUTY
KOREAN BEAUTY
ETHICAL LABELS
CONCLUSION: FUTURE OF SKINCARE
 INDUSTRY SNAPSHOT 6

Global vs. Premium vs. Mass

Skincare Value Sales Growth
6.0
US$110bn
Global skin care
value sales in 2015
% Value Growth

5.0

69%
of sales derived from
4.0 Mass brands

31%
3.0 of sales derived from
2010 2011 2012 2013 2014 2015 Premium brands
Total Skincare Mass Skincare Premium Skincare

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 INDUSTRY SNAPSHOT 7

Skincare by category
Skincare Categories Value Sales
35 9.0
30 8.0
7.0
25
6.0
US$ billion

% Growth
20 5.0
15 4.0
3.0
10
2.0
5 1.0
0 0.0

2015 Value Sales

2016-2020 CAGR

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INDUSTRY SNAPSHOT 8

Skincare by country
Countries by Forecast CAGR (2015-2020)

Morocco China
8.6% 7.7%

Vietnam
Saudi Arabia
8.3%
7.4% India
Cameroon 8.5%
6.6% Pakistan
7.2% Indonesia
10.5%

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INDUSTRY SNAPSHOT
INDUSTRY CHANGERS
CONVERGENCE OF HEALTH & BEAUTY
KOREAN BEAUTY
ETHICAL LABELS
CONCLUSION: FUTURE OF SKINCARE
CONVERGENCE OF HEALTH & BEAUTY 10

Keeping Fit

Quest for Eating

Prevention Clean
Convergence
of Health &
Beauty

Awareness
Scrutiny of
of pollution
Ingredients
& UV

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CONVERGENCE OF HEALTH & BEAUTY 11

Skincare Implications

Increasing Preference for Natural

scrutiny of Rise of Dermocosmetic brands
ingredients
Sulfates and parabens deemed harmful

Awareness Anti-pollution features

of pollution
& UV Sun protection typical regime

Quest for Anti-ageing targeted at young consumers

prevention
Acne prevention

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 CONVERGENCE OF HEALTH & BEAUTY 12

Euromonitor Beauty Survey n=10,281

What types of features/functionality are you looking for

in skin care products?

Moisturising/Hydrating
Sun-protectant, SPF
Contains added vitamins
Suitable for sensitive skin
Anti-ageing
Skin luminosity/Radiance
Pore refining
Lightening/Whitening

0 20 40 60 80
% of participants selected

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CONVERGENCE OF HEALTH & BEAUTY 13

Preference for Natural

Localised Traditional Fermented

Ingredients Chinese Skincare &
Medicine Probiotics

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Source (from left to right)jamusukoharjo, cosmetics business, viaseoul

CONVERGENCE OF HEALTH & BEAUTY 14

Preference for Natural

Growth of Natural Brands in Asia

Company Brand % CAGR 2010-2015

Shanghai Kans Cosmetics Co Ltd KanS 85%

AmorePacific Corp Innisfree 56%

Nature Republic Co Ltd Nature Republic 40%

Shanghai Jahwa United Co Ltd Herborist 27%

L'Occitane International SA L’Occitane 7%

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CONVERGENCE OF HEALTH & BEAUTY 15

Rise of Dermocosmetic Brands

Top Premium Skincare Markets

Premium brands
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 CONVERGENCE OF HEALTH & BEAUTY 16

Rise of Dermocosmetic Brands

Thailand
• Sensitive skin

• Repair of skin barrier a growing concept

• Dermatology clinics launch own brands

• Positioned as skin care experts

 Eucerin’s online consultation Source: Pruksa Source: Provamed

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CONVERGENCE OF HEALTH & BEAUTY 17

Rise of Dermocosmetic Brands

Taiwan Korea

• Prevalence of dermatology • Hydration/Moisturisation

clinics
• Local brands generate higher
• Slower economy drives value sales than international
for money products brands

• Social media reviews • Applicable for all consumer

segments

Source: Sephora
Source: Womanna

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CONVERGENCE OF HEALTH & BEAUTY 18

Future developments

Dermocosmetics &
Potential backlash
educating
of the term ‘Natural’
consumers

Convergence of
Health & Beauty

Ingredient Luxury branding

Innovation alone is insufficient

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INDUSTRY SNAPSHOT
INDUSTRY CHANGERS
CONVERGENCE OF HEALTH & BEAUTY
KOREAN BEAUTY
ETHICAL LABELS
CONCLUSION: FUTURE OF SKINCARE
KOREAN BEAUTY 20

Korean beauty brands’ winning strategies

Western
Asia Pacific
Markets
Hallyu Wave Beauty bloggers

Masstige Masstige

Standalone Digital
Boutiques Specialist Retailers

Suited for Asian Efficacy &

Skin Innovation

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 KOREAN BEAUTY 21

Investments in Korean beauty brands

Source: Cosmetics Design

Source: Goldman Sachs Source: Bain Capital

Source: Cosmetics Design

Source: Clio
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KOREAN BEAUTY 22

Korean beauty concentrated in Asia

Korean Beauty Exports by country in 2015

Rest of the World Mounting political

20% tension between
USA
Korea & China
Malaysia

Vietnam
40% Slower economic
Thailand growth in China
Taiwan

Japan
Competition from
HongKong 40% domestic Chinese
brands
China
© Euromonitor International
KOREAN BEAUTY 23

Future Developments
Agenda for Korean companies – Market Diversification

MIDDLE
U.S.A SOUTHEAST
EAST
ASIA

Hallyu wave in
High growth
Substantial Asian Thailand, Vietnam
region
community & Singapore
Infancy stage
Exports to USA Indonesia?
grew by 60% in
Need for Halal
2015 Korea-Malaysia
certification
collaboration for
Halal brands
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INDUSTRY SNAPSHOT
INDUSTRY CHANGERS
CONVERGENCE OF HEALTH & BEAUTY
KOREAN BEAUTY
ETHICAL LABELS
CONCLUSION: FUTURE OF SKINCARE
 ETHICAL LABELS 25

Consumers are increasingly environmentally & ethically conscious

Global Consumer Trends Survey n=7377

How much more would you be willing to pay for a product which is
environmentally/ethically conscious?
Age of participant
60+ More than double
(100% more)
A lot more
45-59
Somewhat more
(50% more)
30-44 A little more

No extra (0%)
15-29

© Euromonitor International
ETHICAL LABELS 26

Government & corporate bodies step up efforts in ethics

US & UK ban plastic microbeads Water Efficiency – Less Rinse off

Source: Takaski
Source: Health Aim

Waterless Skincare Waste-free Packaging

Source: Viva Woman Source: Make Up and Beauty

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ETHICAL LABELS 27

Ethical labels cross over from food to beauty & personal care

Source: Dr Bronner’s

People Environmental Animal

& Values Sustainability Welfare
Free from claims Recycling labels Not animal tested

Religious labels Sustainable Trade Vegan/Vegetarian

Clean labels Responsible Forestry

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INDUSTRY SNAPSHOT
INDUSTRY CHANGERS
CONVERGENCE OF HEALTH & BEAUTY
KOREAN BEAUTY
ETHICAL LABELS
CONCLUSION: KEY TAKEAWAYS
 CONCLUSION: KEY TAKEAWAYS 29

Skincare Outlook

Global Retail Value Sales, Real US$bn, 2013-2020

2015 Constant Prices, 2015 Fixed Year Exchange Rate
135

130

125

120

115

110

105

100
2013 2014 2015 2016 2017 2018 2019 2020
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CONCLUSION: KEY TAKEAWAYS 30

In a nutshell

Convergence • Natural brands

of Health & • Dermocosmetics
Beauty

Korean • Winning strategies

Beauty • Market diversification

• People/Values
Ethical Labels • Environmental sustainability
• Animal welfare

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THANK YOU FOR LISTENING
Joanna Chan
Research Analyst
Joanna.chan@euromonitor.com

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