Dominant Asia in Global Premium Skin Care Scene

In 2016, Asia contributed 56% of the world’s sales value of premium skin care, reaching US＄23 billion. Despite the bleak economy and discouraged consumer confidence in top sales markets Japan and South Korea, the overall region witnessed a healthy growth of 6% year-on-year, thanks to the rising income in developing markets and increasing female spending power derived from women’s extended career life.

Asian consumers’ proactive attitude towards skin care, boosted by the ongoing Korean beauty trends and vibrant online communities, also led to the positive growth of premium skin care.  Their desire for flawless skin and fear for the widespread haze and smog led them to grow as “self-educating” consumers, believing in product efficacy, as well as the time and efforts invested in skin care. This resulted in the skin care routine expansion in the region, with the number of items reaching to as many as 10.

Diversifying Customer Targets

To take advantage of consumers’ such sophisticated taste, Asian brands are expanding their premium line customer targets beyond women at age 30s and above – to young ladies at 20s, particularly in developed Asian markets. Young women in these countries are eager to stay abreast of beauty trends and dare to splurge on discretionary items. To give themselves the best possible treatment they deserve, they are bold to explore a wide range of skin care universe. The growing popularity of anti-ager among 20s is one evidence for such experimental attitude. Anti-ager manufacturers are also responding to such demand by presenting young celebrity endorsers to stay relevant to 20s. This marketing has been well-received in Asia, where celebrity power plays a big role in consumers’ purchase decision.

Customer marketing in other major beauty markets such as Germany and France, however, may need a different approach focused on natural efficacy. According to Euromonitor International’s Beauty Survey, the major purchase drivers for skin care items in these markets are natural ingredients and “free from” claims. Asian brands’ oriental herbal products have a relevant growth potential in this context – as shown in a case of Erborian, a South Korean herbs skin care brand acquired by L’Occitane International SA in 2012. While oriental herbal brands, such as premium Korean players Sulwhasoo and The History of Whoo, achieved strong sales and brand presence in Asia, their current position beyond the region is limited to a niche with a cult following. Active promotion on the exotic oriental ingredients and consumer education on the natural herbs benefits via digital platforms will open up more opportunities for Asian brands to capture a wider consumer base overseas.

Outlook by 2021

By 2021, Asia’s premium skin care is expected to further expand at 4% of compounded annual growth rate (CAGR), reaching US$ 28 billion. China, Japan and South Korea will maintain their position as a top three market in value sales, with regional market shares of 37%, 33% and 13% respectively, thanks to the sheer size of consumer base, dynamic brand offerings and consumers’ maturing taste.

India, Vietnam, Indonesia and China are expected to grow fast in Asia by 2021, at 11%, 10%, 9% and 8% of CAGR respectively. High internet/mobile penetration and rising income in these countries will expose local consumers to a variety of beautifying methods, stimulating their desire to indulge in premium products and international brands. As such, global brand owners will need to increase their investment in distribution channel expansion – in standalone boutiques and luxury department store counters for premium positioning, and in online retailing to outreach the consumers in remote, lower-tier cities.