Cosmetic Compliance
Intelligence & Solutions
Home / News / Details

China’s High-End Cosmetics Segments

High-end cosmetics in China is a lucrative market that has huge potential for international stakeholders. High-end cosmetics are now within reach of a much wide range of consumers, including China's middle class, gen Z, and urban white-collar workers.

Recently, Beiersdorf Group released its 2019 financial report. The report shows that its sales of consumer goods were 6.274 billion euros, representing a 4.8% increase year on year. The group's high-end cosmetic brand, La Prairie's, increased by 20%, compared to Nivea (3%) and Eucerin (7.5%) [1]

Since 2017, La Prairie's quarterly growth rate has been in the double digits, with an annual increase of 11.50%. The brand suddenly accelerated in 2018, soaring 55% in the first half of the year. Its annual growth rate was 38.50%. In 2019, La Prairie's quarterly growth rate was steady at more than 20%. La Prairie has achieved double-digit growth for 12 consecutive quarters, with an average surge of nearly 30% in the past two years [1].

The consumer goods giant P&G has recorded similarly impressive growth. In the past three years, its beauty department led by the high-end skincare brand SK-II has been the group's growth engine. SK-II has recorded double-digit growth for more than 20 consecutive quarters. 

These surprising growth rates are indicative of the strong demand for high-end products. This trend is also driving product innovation and development. At the end of 2019, L'Oréal's high-end skincare brand Helena Rubinstein (HR), officially announced Faye Wong as a global spokesperson, a bold move that pointed to the high priority brands are placing on gaining traction in the high-end segment. 

Also, other luxury brands, such as Dior, Giorgio Armani, have started to set up in this sector. After launching lipsticks recently, Hermes is also planning to launch skincare products.

image001.jpg

Why are they fighting for this market?

The common cosmetic market is almost saturated, however, the high-end cosmetic market has just taken off, and there is much room for growth. According to a report of Allied Market Research, the high-end cosmetics market was valued at $52,748.4 million in 2018 and is expected to summit $81,247.6 million by 2026, and register a CAGR of 5.6% from 2019 to 2026. By region, Europe was the largest luxury cosmetics market in 2018, especially in the skincare segment. However, the Asia-Pacific region is expected to grow speedily with a CAGR of 7.9% during the forecast period [2]

Competition for emerging consumer power is fierce. As china’s economy grows, new consumer segments, including Middle Class, Generation Z, Small Town Youth, and Urban White-collar Female Workers, have emerged. Their demand for high-end cosmetics is also increasing. Therefore, developing high-end cosmetics is a strategic method to win the hearts of these groups of consumers.

Premiumization trends are almost an inevitable part of a successful economy and could be expected to track well with GDP growth. Consumption is growing, particularly in China. As the cosmetic market is becoming more mature, consumers inevitably grow tired of generic FMCG products, so they turn to niche and high-end products. High-end brands have moved from unobtainable luxury items only purchased by the ultra-wealthy and are now on the shopping lists of most middle-class consumers.

image003.jpg

One last thing to notice

Although there is strong evidence that growth in the high-end cosmetic sector will continue, we still need to respect that this sector is easily affected by various factors, like economic recession. Recently, according to data released by management consulting company Bain in conjunction with Alibaba Tmall, comparing the data in the 2019 and 2020 Spring Festival (January 25-February 6), online sales of beauty products as a whole this year fell by 30% . High-end beauty products were more affected, with a drop of 40%[3].

Also, according to the Tmall sales data compiled by ECdataway, the sales of high-end beauty brands generally fell on Valentine's Day and the week before the holiday (February 8-February 14). Lancome sales fell 12.8% year-on-year, Estee Lauder sales fell 60.2% year-on-year, CPB sales fell 44.3% year-on-year, and SK-II sales fell 2.3% year-on-year [3]. Online sales of competitively priced brands from January 25th to February 28th, remained relatively stable. Both Perfect Diary and Huaxizi etc. recorded flat sales.

High-end cosmetics are luxury products. As expected during a global crisis, people are afraid and tightening their purse strings. The high-end cosmetics market in China is a potential but sensitive market. If you want to play in this sector, play it carefully.


We provide full-scale global cosmetic market entry services (including cosmetic registering & filing, regulatory consultation, customized training, market research, branding strategy). Please contact us to discuss how we can help you by cosmetic@chemlinked.com
Copyright: unless otherwise stated all contents of this website are ©2024 - REACH24H Consulting Group - All Rights Reserved - For permission to use any content on this site, please contact cleditor@chemlinked.com