The personal care sector is witnessing the rising influence of Asian brands on beauty concepts, treatments, cosmetics and skin care products. What is behind the rising success for homegrown brands’ growth in the Asian personal care market?
The Asian market for personal care products is expected to increase with a compound annual growth rate (CAGR) of 5.2 percent over the next five years. Local Asian personal care brands currently make up 36 percent of the Asian market, with a year-on-year growth in market share of four percent. We attribute their regional success to four reasons:
As mentioned in an article on the success of local snack food brands in Asia, the biggest advantage for Asian brands is being Asian.
According to Nielsen, almost three in five South East Asian consumers believe local brands are most attuned to their personal needs and tastes. They have direct access to their consumers and can obtain their immediate feedback. From brightening creams, dark spot correctors to face masks and anti-aging serums, these products are made for the unique climate and skin types of local consumers. Besides that, these products certainly have become comparable to Western brands in terms of quality.
Asian brands are less affected by prices than western multinational brands. Because the Asian products are closer to the markets they serve, these products have a smaller elasticity than multinationals brands. This means that a change in price has a larger effect on the demand of personal care products of the multinational brands than in the demand for Asian brands.
Prices in the Asian personal care sector have been declining. This poses a threat to western multinationals, making them concerned about their competitiveness as price decreases will hit them the hardest.
Asian brands have a faster product manufacturing cycle process as compared to that of global companies. With their factories right on the backyard, based on consumer feedback, they can customize and fine-tune their products very quickly.
A good example are the personal care products of the Asian manufacturer Cleo Singapore Pte. Ltd. Whereas it takes two years before Western multinationals can launch a completely new product, Cleo can bring a totally new product into the market within four months; from idea phase right up to shipping.
Western multinationals typically try to convince the consumer via advertising and promotions. The better-informed Asian consumer is becoming more skeptical regarding the claims made by manufacturers in advertising, packaging, etc. More importantly, many Asian brands take a product portfolio perspective instead of a brand perspective. The brand follows the products, not the product then the brand.
Take Namu Life Plus, a skin care product manufacturer from Thailand. The company quickly jumped on the whitening trend by launching its Snail White products, before carefully developing a brand, which followed later. Word-of-mouth and smart, cost-effective promotions made it hugely popular very quickly. Because of its pragmatism, Snail White has now become one of Asia’s most popular range of whitening products.
Other factors fueling the growth
According to Grand View Research, the global halal cosmetics market is expected to increase with a Compound Annual Growth Rate (CAGR) of 15 percent to USD 52 billion by 2025, thereby taking a larger market share in the future. Local players are doing very well in this sector because they have a better understanding of the Muslim consumers in their respective markets.
As Asia’s rising middle class will continue to drive growth for personal care products, homegrown companies will continue to take a bigger piece of the Asian pie. Whether it is through a more pragmatic approach, their in-depth knowledge or by cheaper and fast productions, we will see more masks, makeup, lipsticks, creams and serums on display counters with Asian brand names on them.