Market updates
1. During the 2021 Double 11 shopping festival, Tmall’s GMV was 540.3 billion yuan while JD’s GMV reached 349.1 billion yuan. It is worth noting that the rise of other e-commerce platforms such as Douyin and Kuaishou has broken the dominance of these traditional e-commerce platforms. More details on ChemLinked.
2. Kuaishou released its 2021Q3 financial report. The financial report shows that Kuaishou’s revenue was 20.5 billion yuan in the third quarter. Online marketing service revenue was 10.9 billion yuan, the largest source of income; live-streaming revenue was 7.7 billion yuan, an increase of 7.4% from the previous quarter. Total e-commerce transactions reached 175.8 billion yuan, a year-on-year increase of 86.1%.
3. Two top influencers, Cherie (Weibo account: 雪梨Cherie) and Sunny (Weibo account: 林珊珊Sunny), were fined a massive amount of money for tax evasion. Cherie and Sunny are both top-tier influencers in China. Their business cover advertising, MCN, live streaming, etc. Media exposed that Cherie was fined 65.5531 million yuan, and Sunny was fined 27.6725 million yuan. Both of them announced later that they would stop their live-streaming business for a time.
Company dynamics
1. Hermès recently launched new beauty products, including nail polish and hand care products.
The Hermès nail polish series has 24 colors. 71% of the ingredients are natural ingredients. The nail polish packaging bottle is decorated with white and shiny metal, designed by Pierre Hardy, a shoe designer for Hermès. All products are made in France.
The hand cream contains 98% natural ingredients, added with white mulberry extract and hyaluronic acid complex, which can help keep hands smooth and moisturized.
2. Plant personal care brand SUPER SEED completed its Pre-A round of financing, securing millions of dollars. This brand’s biggest selling point is “plant extraction” and “clean beauty.” By targeting consumers aged 18 to 25 years old, it has reached 10 million yuan monthly GMV.
Super Seed’s products
3. Chinese domestic makeup brand Heylulu gained about 10 million yuan investment. Founded in 2018, Heylulu became popular because of its ace product, eyebrow pencil. Even though the whole makeup market is going through a hard time recently, this brand’s sales in Double 11 still doubled.
4. On November 9, Chinese high-end beauty group USHOPAL announced investing in British luxury skincare brand ARGENTUM and Japanese male care brand BULK HOMME. Founded in 2015, USHOPAL aims to build a matrix of high-end beauty brands and now has owned more than a dozen foreign brands' exclusive omnichannel agency rights in China. Besides agency business, the group also invested in beauty brands, including the French salon fragrance brand Juliette Has a Gun.
5. Pet care brand Cature gained a new investment of over tens of millions of dollars because of its excellent market performance. In 2021, its monthly sales increased by nearly three times compared to the same period last year. Besides the Chinese market, it has covered over 52 countries and regions, including Canada, Australia, South Korea, Thailand, Singapore, Middle East, etc, and entered over 250,000 offline pet hospitals and overseas supermarkets overseas.
Cature's products
6. Japanese beauty giant Shiseido launched its new oral beauty brand INRYU on China International Import Expo (CIIE). This brand now has three products, Night Ritual+, Advanced Radiance, and Laser Refine. It will officially enter the Chinese market in March 2022.
7. Clean makeup brand DewyLab gained an Angel round of financing. One of the investors is Little Red Book, a popular social media platform in China whose main users are girls and young women. Targeting people with sensitive skin and pregnant women, DewyLab focuses on pure ingredients to develop products. At present, its best-selling product has reached 10,000 units sales.
8. Two oral care brands, CHINGCHI LAB and OhOcean, gained new investment.
In the first 11 months of 2021, 13 investments happened in the oral care sector, implying the oral care sector is popular among investors in 2021.
9. HARMAY acquired a makeup brand, American professional makeup brand Kevyn Aucoin. HARMAY is a fashion cosmetic store brand that quickly rises in China in recent years.
10. Niche perfume brand Penhaligon’s released a digital experience platform. Through this platform, consumers can enter a virtual house to explore different rooms that connect to its Portraits Collection (A popular product collection of Penhalihon’s). By virtually exploring the room, consumers can better understand its products and also place orders.
11. French high-end salon perfume brand L’Artisan Parfumeur opened its first Boutiques in China, which is located in Shanghai. This brand entered China in 2020 through cross-border e-commerce platform, Tmall Global, a cross-border e-commerce platform. After one year, it decided to expand its business offline.
Financial results
Estee Lauder 2022Q1
Estee Lauder reported sales of $4.39 billion for its first quarter of its Fiscal Year 2022 ended September 30, 2021, an increase of 23%.
Skincare net sales grew across every region, primarily led by La Mer and Clinique. Strong double-digit growth from La Mer reflected the brand’s significant strength supported by Chinese consumers.
In mainland China, net sales grew double-digits led by skincare and fragrance. Sales also increased by double-digits in nearly every channel.
Shiseido 2021Q3
Net sales in the first nine months of 2021 ended on September 30, 2021, was 745.4 billion yen, increasing by 14% year-on-year.
In China, Shiseido’s online business continued to show strong growth, driven by Prestige and Skincare. The prestige department showed a high 20% growth rate. However, the offline business was hit by unprecedented torrential rains and COVID-19 resurgence.
KAO 2021Q3
Net sales in the first nine months of 2021 ended September 30, 2021, was 1,020 billion yen, increasing by 1.6%.
The cosmetic business sales increased 3.5% to 165.9 billion yen. In Asia, sales increased substantially with continuing strong sales in China, mainly through the e-commerce channel, of freeplus, which is hypoallergenic and contains Japanese and Chinese botanical extracts, and Curél, a derma care brand.
Coty 2022Q1
Net revenue was 1,3717 billion dollars, with a year-on-year growth rate of 22%.
Prestige department reached 870.7 million dollars revenue, accounting for 63% of the total revenue. The proportion increased by 35.1% over the previous year.
Almost all of Coty's high-end perfume brands’ sales have experienced strong growth, among which Gucci, Burberry, Hugo Boss, Marc Jacobs, Calvin Klein, and Chloe performed particularly strongly. In addtion, driven by Gucci makeup and Kylie Cosmetics, Coty's high-end cosmetics sales more than doubled year on year.
Yatsen Global (Parent company of Perfect Diary) 2021Q3
Total net revenues for the third quarter of 2021 increased by 6.0% to RMB1.34 billion (US$208.4 million) from RMB1.27 billion in the prior-year period.
Gross profit for the third quarter of 2021 increased by 9.6% to RMB911.8 million (US$141.5million).
In the third quarter, the growth rate of the company’s color cosmetics’ sales on Tmall sharply narrowed to 1.7% from 24.2% in the second quarter. However, the overall revenue of the company's skincare segment increased by more than 250% year on year.
Data browse
1. According to the National Bureau of Statistics, in October, China’s total retail sales of consumer goods reached 4.0454 trillion yuan, a YoY increase of 4.9%. Among them, the total retail sales of cosmetics were 31 billion yuan, a YoY increase of 7.2%.
2. Up to October 31, the "cosmetics smart application review system" received a total of 18 new ingredients for filing. After review, 5 needed to be corrected and 9 were rejected, meaning that the pass rate of cosmetic ingredients is only 22%.
Main reasons for rejection are as follows:
• the actual function is beyond the scope of cosmetics;
• registration instead of filing is needed as per its actual function;
• it has been included in the "List of Used Cosmetic Ingredients (2021 Edition)";
• it is prohibited ingredient.
Regulatory compliance
1. On August 27, 2021, the State Administration for Market Regulation (SAMR) released guidelines categorizing medical beauty advertising as medical advertising. Because of this, beauty advertisers will be required to acquire special licensing before placing adverts, which was previously reserved for medical advertisers. Amid a rise in public complaints and embellished adverts, this move was anticipated. More details on ChemLinked.
2. On November 12, 2021, China National Institutes for Food and Drug Control (NIFDC) opened a public consultation on five draft testing standards for cosmetic products and ingredients. More details on ChemLinked.
3. On November 8, 2021, The Oriental Beauty Valley International Cosmetics Conference was held in Shanghai. The conference revealed:
• Future supervision focus of NMPA;
• Cosmetic regulation to be amended;
• NMPA’s attitude towards joint R&D between companies and medical institutions;
• NMPA’s attitude towards application of plant extracts in cosmetics;
• Common problems found in the risk monitoring in Shanghai.
More details on ChemLinked.
4. In November, cosmetic industry insiders revealed that China National Medical Products Administration (NMPA) is organizing spot check of the notification information on the new notification platform, with the focus placed on general cosmetics that contain whitening ingredients such as phenethyl resorcinol (commonly known as SymWhite 377 in the industry). More details on ChemLinked.
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