Revealed: Three markets in APAC to watch for cosmetics growth in 2019

Led by South Korean and Japanese innovation and fuelled by demand from China, the world’s second-largest economy, the beauty and personal care industry in the Asia-Pacific (APAC) region is undeniably exciting for consumers and industry players alike.

“APAC continues to lead the world in trends with Japan and Korea still maintaining their cutting edge positions in new product concepts and performance especially in skin care and colour cosmetics,”​ said Kathleen F. Benditt, global marketing director of Elementis Personal Care.

She added: “We see China as the growth engine for the region next year in absolute terms and we see Chinese consumers shifting their interest and purchases to more local brands in both skin care and colour cosmetics.”​

To further its commitment to the region, Benditt told Cosmetics Design Asia that the company is currently looking for opportunities to expand its labs to Asian countries such as Taiwan and China.

Zooming in on SEA

Within APAC is Southeast Asia (SEA), a dynamic and diverse market with an emerging middle class that wields considerable purchasing power, and their own set of needs and concerns.

“Hectic modern lifestyles, urban pollution and digitalization are the three main sources of stress for urban citizens, with a stronger impact on emerging countries in southern Asia,” ​said Yusuke Saito, regional director, DSM Personal Care & Aromas, Asia-Pacific.

As DSM is aware of the detrimental efforts of stress on both body and mind, DSM plans to leverage its “science-based solutions” to address these concerns in the region.

The company, said Saito will be investing considerable resources into SEA in 2019. “Besides adding new resources to enable DSM Personal Care & Aroma Ingredients to focus on addressing the needs of the region, we will be launching of new products and concepts. 2019 should be an exciting year for DSM especially in our region.”​

1. Indonesia

Among the many exciting emerging markets in SEA is Indonesia. As the fourth most populated country in the world, it is a key market for personal care companies such as Dow.

“Indonesia is one particular market that cosmetics industry should continue to pay attention in 2019 and beyond, noting the strong growth rate that published market reports have been indicating and actual vibrancy observed at trade shows and market as a whole,” ​said Cedric Toh, Regional Marketing Manager of Southeast Asia, Australia & New Zealand for Dow.

He added that Dow sees opportunity to bring more options to the Muslim community in Indonesia. “Although there are Halal products available in the market, we believe more can be done to offer a wider range of skin care solutions.”​

Similarly, Symrise sees the Indonesian market as a dynamic space with new opportunities for Halal cosmetics and fragrances.

According to Euromonitor, the Indonesian beauty and personal care market is expected to be worth $6.03bn in 2019 and grow to $8.46bn in 2022.

Toh revealed that Dow currently has a double-digit growth plan for Indonesia, as the company expects beauty consumption to rise thanks to the “large swathe of the population ascending the socio-economic ladder”.​

“Dow has been focusing on innovation and bringing new products and solutions to the personal care brand owners and formulators in the Indonesia,”​ said Toh. “Channel to the market is also an area Dow has been streamlining, whether it’s through distributors or e-commerce avenues.”​

2. Thailand

For smaller brands like Singaporean beauty start-up alche{me}, the cosmetics market in Thailand is the next natural step after gaining momentum in a testing ground like Singapore.

Constance Mandefield, founder and COO of alche{me}, said Thailand is an attractive market for smaller brands as it is less penetrated by the international brand. Additionally, Mandefield believes the retail landscape of Thailand is quite dynamic with emerging brands entering the market.

“There are local players like Eveandboy that are changing the way beauty brands are distributed in Thailand for a younger, edgy crowd,” ​said Mandefield. “For a brand like us, we think there is a space to play and we believe there is a market there.”​

This year alone, Japanese retailers Matsumoto Kiyoshi and @Cosme opened its first stores in Bangkok.

iStyle Inc, parent company of @cosme said that the company decided to expand to Thailand as its research into the market found that Thailand was the largest consumer of health and beauty products in Thailand in the ASEAN region. The company added that it planned to open another five @cosme stores in Thailand with the next three years.

According to Euromonitor, the Thai beauty and personal care market is expected to be worth $6.5bn in 2019 and grow to $8.04bn in 2022.

As Elementis continuous to look to the East, Benditt reveals that the company is planning to open a personal care technology centre in Thailand.

“Thailand gives Elementis a central point within the APAC region to service our customers. The Thai market has a number of well-established contract manufacturers who work with multinational companies, so we are close to the big and small customers,”​ she said. “It also puts us very close to Indonesia and India, which is a plus.”​

3. Malaysia

As the market for Halal products continue to blossom on a global scale, Malaysia is expected to benefit from the boom given its expertise in Halal cosmetics and stringent Halal standards.

According to data from Malaysia External Trade Development Corporation (MATRADE), Malaysia’s cosmetics and personal care market is currently worth $5bn. The country’s export for Halal cosmetics and personal care products saw a 68% increase from 2012 to 2017 from $433m to $725m.

Mawarni Hassan, CEO of Malaysian personal care company Cosmoderm, and committee member of Malaysian Cosmetics And Toiletries Industry Group (FMM-MCTIG), expects the Halal personal care market in Malaysia to continue to grow in 2019 and beyond thanks to the countries well-established Halal infrastructure.

“Because of our Halal expertise, countries like Japan, Korea are looking at our Halal expertise and how they can benefit from it,” ​said Mawarni. “Like AmorePacific that is opening up their factory here in 2020, because it wants to leverage on our Halal expertise.”​

Additionally, she added that South Korean brands like Talent Cosmetics are being manufactured in Malaysia or seek Halal certification from Jabatan Kemajuan Islam Malaysia (JAKIM).

Despite the strength of Malaysia’s Halal market, Mawarni is still wary of the market competition. “Halal cosmetics is definitely going to grow, and the Malaysian Halal infrastructure is strong. But we have competition from other counties. I see growth, but I see strong competition from Thailand and Indonesia.”​

However, she added that Malaysia has an advantage as they started early. “Certification for Halal cosmetics is [not like food] it’s more technical, more specialised and less straightforward. Malaysia’s strongest advantage in its documentation, standard SOPs and training.”​