Monthly Digest: China Cosmetics Industry Review | October 2021

Market updates

1.       On October 20, multiple e-commerce platforms started presale for the 2021 Double 11 Shopping Festival presale. The most eye-catching campaign was the severe competition between two top live-streamers, Austin Li and Viya. They both had more than 200 million views on that day. Austin’s GMV reached 12.974 billion yuan, Viya’s GMV reaching about 9.073 billion yuan.

2.       In the first week of Double 11 pre-sale, 134 brands’ self-live-streaming reached 10 million yuan GMV. 9 brands’ self-live-streaming’s GMV exceeded 100 million yuan. They are Helena, Lancome, Yaman, Winona, L’Oreal, La Mer, Shiseido, Estee Lauder, and XIAOMI.

Company dynamics

1.       Chinese domestic functional skincare brand PUskinology completed an A-round of financing, securing about 100 million yuan. Founded this year, its GMV reached 5 million yuan in the first month after it entered the market.

Products from PUskinology

2.       Chinese famous technology company Huawei released a patent named Auxiliary Makeup Method, which can identify the contour of makeup area on the face image to help users apply cosmetics in the correct place and provide users with an effective makeup reference.

3.       Chinese domestic personal care brand IS OR ISN’T announced the completion of A-round of financing. This brand’s biggest selling point is “VC whitening,” whose repurchase rate achieved 15%.

4.       On October 12, new consumer brand Indie Pure released the new oral muscle-building product "Nicotinamide Elastin Peptide Drink," co-developed with Bloomage Research Institute. Indie Pure focuses on the “food as beauty” sector. The biggest selling point of its first batch of products is anti-sugar.

Products from Indie Pure

5.       Estee Lauder is gradually closing its Aramis & Designer Fragrances department. The department has Aramis, Tommy Hilfiger, Michael Kors, Donna Karan, DKNY, and Ermenegildo Zegna. Except for the perfume operation of Aramis, the high-end menswear brand, which will be transferred to another division, the perfume operation licenses of other brands will end in 2023.

The Estée Lauder Companies said that after careful consideration, itself and these four fashion companies all decided not to renew the license agreement when they expire by June 2023, which means that the ADF department will be completely cancelled in June 2023.

Other high-end perfume lines currently owned by Estee Lauder include Tom Ford Beauty, Le Labo, Editions de Parfums de Frederic Malle, Jo Malone London Aerin, and Kilian Paris. In addition, the perfume lines of Estee Lauder and Clinique will continue to drive the company's development.

6.       On October 21, the IPO application of Chinese makeup artist brand MAO GE PING was approved by China Securities Regulatory Commission, which meant that it would soon establish an IPO. MAO GE PING, founded by a famous Chinese makeup artist, Mao Geping, is a high-end makeup brand. This brand still shows great sales though the whole makeup market is cooling down recently. More data on ChemLinked.

Products from Mao Ge Ping

7.       Chinese new eye makeup brand WOSADO completed two rounds of financing within half a year, securing nearly 300 million yuan. Founded in 2017, this brand develops fake eyelashes as its ace product and has over 800,000 consumers globally. Unlike other domestic makeup brands that target the Chinese market as their first major market, WOSADO first launched its products in the U.S.. After achieving success in the U.S., it now expands its business to China.

8.       L’Oréal Groupe announced the launch of a brand-new perfume ingredient information platform AU CŒUR DE NOS PRODUITS, allowing consumers to have a clearer understanding of product information and make better shopping choices.

Financial results

L’Oreal   2021Q3

1.       L’Oreal’s sales at 2021Q3 reached 23.19 billion euros, up by 18.0%.

2.       Mainland China has sustained strong quarterly growth over two years, despite a few upheavals in the summer, with third-quarter sales up 42.8%, compared to 2019.

3.       While in-store sales having recovered, e-commerce continued to grow rapidly and accounts for 26.6% of sales.

4.       Active Cosmetics had the highest growth rate of 34.5%, compared to other three divisions, Professional Products, Consumer Products, and L’Oreal Luxe.

Unilever   2021Q3

1.       Turnover in Q3 was 13.5 billion euros, increasing by 4.0%.

2.       Unilever has delivered good growth across its three priority markets of the US, China, and India.

3.       E-commerce grew 38% and is now 12% of total sales.

4.       High-growth new businesses included Prestige Beauty and Functional Nutrition, each growing double-digit.

P&G   2021Q3

1.       Net sales reached 18.1 billion dollars, up by 5%.

2.       Organic sales increased 4% for the quarter. U.S. organic sales were up 7%, Greater China up 22%, Focus Markets up 5%, and Enterprise Markets up 1%.

3.       Most global categories grew organic sales, with Home Care up high teens; Oral Care, Hair Care, and Skin & Personal Care up high single digits; Family Care and Grooming up mid-single digits; and Fabric Care up low single digits.

Johnson&Johnson     2021Q3

1.       Total sales grew by 10.7% to 23.3 billion dollars.

2.       In terms of departments, Consumer Health Worldwide reported sales increased by 5.3%, while Pharmaceutical Worldwide reported sales increasing by 13.8%. Medical Devices Worldwide reported sales increased by 8.0%.

IMERIK   2021Q3

1.       Turnover reached 390 million yuan, with a YoY increase of 75.9%.

2.       From January to September this year, Imerik’s operating income was 1.023 billion yuan, an increase of 120.29% year-on-year; the net profit from January to September was 708 million yuan, an increase of 147.98% year-on-year, which can be attributed to the rise in sales during the year.

Botanee (Parent company of Winona)  2021Q3

1.       Turnover was 701 million yuan, increasing by 47.29%.

2.       In the first nine months of 2021, Botanee’s turnover reached 2.113 billion yuan, increasing by 49.05%.

Data browse

1.       According to the National Bureau of Statistics, in September, China’s total retail sales of consumer goods reached 3.6833 trillion yuan, a YoY increase of 4.4%. Among them, the total retail sales of cosmetics were 31.7 billion yuan, a YoY increase of 3.9%.

2.       October 1 to 7 is called the Golden Week, when Chinese people have a week of holiday to celebrate Chinese National Day. In this year’s golden week, Chinese domestic tourists reached 515 million and domestic tourism income was 389.061 billion yuan, a year-on-year decrease of 4.7% and recovered to 59.9% of the same period before the epidemic.

The duty-free business performed well in the Golden Week. From October 1 to 6, Haikou Customs recorded a total of 1.27 billion yuan of duty-free shopping on outlying islands, with 1.75 million shopping items and 152,000 shoppers, an increase of 82%, 154%, and 66.7% year-on-year, respectively.

3.       In 2021Q3, the whole Chinese cosmetic market was on a downward trend. However, some brands still performed well:

-          DR. Yu’s GMV growth rates exceeded 100% in July and August;

-          DR. ALVA is a new rising star in the skincare market with a focus on the skin microbiome field. Its sales data in Q3 showed that its advanced technology and skincare concept have been attracting consumers.

-          The GMV of Lancome in August and September increased by 197% and 370%, reaching 760 million yuan and 762 million yuan respectively, far exceeding other brands.

More details on ChemLinked.

4.       Mintel recently released a report showing that China's sensitive skincare market has grown significantly. The proportion of products with sensitive skin claims in the facial skin care category rose from 11.8% in May 2017 to 22.9% in April 2021. One of the segment opportunities for the innovation of sensitive skincare products comes from male consumers. 36% of Chinese male consumers tend to buy skin care products designed for men; 64% regard ingredients specifically designed for men as an important purchase factor.

Regulatory compliance

1.       On June 18, 2021, China NMPA issued the draft Supervision and Administration Provisions on Children Cosmetics. On October 8, 2021, China NMPA promulgated the finalized version of Supervision and Administration Provisions on Children Cosmetics (the finalized Provisions). The finalized Provisions includes 22 articles, clarifying children cosmetics’ scope, formula design principles, labeling requirements, registrant/notifier’s main responsibilities, post-market supervision requirements, etc. More details on ChemLinked.

2.       In October 2021, China officially launched a yearlong special rectification campaign to overhaul the online cosmetics market. The key regulatory targets of the campaign are unregistered and unnotified cosmetics, cosmetics with illegal claims, and cosmetics with quality and safety risks. More details on ChemLinked.

3.       On October 18, China NMPA released a science popular article to state that there are no “food-grade” cosmetics and emphasize that edible is not a criterion to judge the safety of cosmetics. After “stem cell,” “acid peel,” and “enhance eyelash growth,” “food-grade” and “edible” will be another two cosmetic claims banned in the market.