Natural cosmetic products are booming as consumers demand to have better quality, more sustainable products with fewer potentially harmful ingredients.
This trend has been spearheaded by US, Australian and European brands but this is changing. Asian consumer and brands are increasingly interested in Natural cosmetic products.
One area that has held this segment from really taking off in Asia is the long held belief that truly effective skincare can only be achieved through synthetic, quasi medical formulations. There is also an inherent distrust in unknown brands much of Asia that has enabled mega brands to do so well.
But this is all changing! Niche has become trendy, Consumers are doing their own extensive research online about what is right for them and their skin.
So how is this all manifesting itself in the world’s second biggest beauty market China?
China Beauty Market – It’s huge and growing rapidly
China Beauty market is worth over $50BN and Skincare makes up 60% of that and continuing to grow in double digits.
What is driving this growth?
- The emerging middle class are upgrading their skincare purchases. Moving to more premium products and brands.
- Big corporations like L’Oreal and Estee Lauder are still doing very well from their premium lines
- Consumers are increasingly interested in specific products for areas of concern for example eye cream sales increase +34% Q1 2019.
- Online sales have a high penetration in the China market but still only account for 40% of total sales. Of those online sales 70% are being done on Tmall or Taobao.
- There is still much room for growth in the Chinese beauty market as consumers move into the middle classes beauty is one of the first categories they will trade up.
The Consumers – Not just 1st tier cities
Who are the Chinese beauty consumers? In a market of 1.3BN people a lot of people buy beauty products.
- AGE: The key target for beauty brands are post 80s, post 90s and post 95s female. This refers to the year the consumers were born in. Millennial is too broad a category for China so there is a need to break down further by decade – the consumer behaviours are very different.
- LOCATION: The other thing to keep in mind is which tier city is your consumer from? An increasingly interesting segment for Beauty brands are consumers in 3rd tier cities and below. They have a few attractive characteristics for brands:
– Product availability is not as good, they travel less frequently vs 1st/2nd tier cities so this pushes them to buy more online
– Their disposable income is high as cost of living in these cities is not as high as first tier and wages have still increased
– They have more time – often they don’t work such long hours as 1st/2nd tier city counter parts so have more time to browse online and research products
Examples of different tiered cities:
1st tier cities: Beijing, Shanghai, Guangzhou and Shenzhen
2nd tier cities: provincial capitals and sub provincial capitals like Hangzhou, Nanjing, Chengdu, Wuhan, Harbin
3rd tier cities: prefecture capitals like Wenzhou, Guilin, Dongguan
- GENDER: The male beauty market is growing rapidly and whilst still a fraction of the women’s it is definitely something to consider. Especially as recent studies have shown males to be keener to buy niche.
Niche is on the rise
There is no question that niche beauty brands are gaining momentum in China. Many consumers especially post 90s want to buy something different from their parents and peers. A surprisingly large amound of content from western social media especially Instagram makes its way into China (Instagram is banned in China). People access through VPN or some people take the content, translate and re post it.
Also younger consumers believe that smaller more specific brands are more product focused vs. larger brands who rely on marketing to drive sales.
The number of brands entering the market is phenomenal. This has been fueled by an aggressive marketing push by Alibaba’s Tmall who are encouraging brands of all sizes to sign up on their platform. They have a target of over 1000 new beauty brands on the platform this year.
This year we have seen the entry of many brands Drunk Elephant, Fenty Beauty, Suqqu, RMK, Net-a-porter, Coach and coming in Q1 2020 Sephora just to name a few.
Growing interest in Natural Beauty products
There has been interest in Natural products & ingredients for some time in China but the understanding of what that is or means has been quite hazy.
A few key indicators that consumers are getting more savvy and brands are taking notice.
1. Baidu search volumes for natural is on the rise but more significantly is the rise of specific ingredients in their skincare like Manuka honey from New Zealand, desert clay from death valley or edelweiss from Switzerland.
2. Herbal beauty using plants has increased in popularity as the benefits are linked to your overall health not just the skin. Chinese Traditional medicine has become popular with many local brands incorporating it into their formulations. Herborist and Inoherb are the two best known brands incorporating TCM.
3. Growth of specific, specialised influencers who examine ingredients called Cheng fen dang 成分党. These people have expertise in the industry and they go through brand formulations with a fine tooth comb giving a point of view on efficacy and safety.
4. Surge in downloads of an APP called Beauty Evolution 美丽修行 – this APP has a huge ingredient and product database that consumers can search.
There are still some barriers keeping Chinese consumers from adopting natural beauty products on mass, the main one being the perception of natural not being as effective as synthetic chemicals – this is something natural brands need to overcome through product trial and education. The second things is green washing as natural has become sought after by consumers so have brands trying to jump on the bandwagon – these brands may have very small percentage of natural ingredients.
One area we haven’t really seen take off yet is this idea of “Clean Beauty” are select group of consumers are aware that some common ingredients like SLS are potentially harmful but it is still being very linked to natural products. Brands like Drunk elephant may start to change this perception.
So there is a lot of hope for natural and clean beauty brands wanting to expand in China. If you are interested in how you do this without animal testing then check out this post.
Do reach out or comment below with any questions on the natural cosmetic products in China and if you are seriously interested in the market do check out my course on how to launch your products cross border into China.