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Natural Skin Care Growth

Contact Author Nicole Tyrimou, Euromonitor
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  • Natural/organic brands need more than just their natural credentials to attract consumers’ attention.
  • When looking at the number of consumers who revealed that they look for natural/organic benefits in their skin care by country—beyond the usual suspect of Germany— India, Indonesia and China scored the highest.
  • While there is an opportunity for natural/organic players in these emerging markets, pricing remains an issue with international players looking to explore the burgeoning middle class rather than the average consumer.
  • Plant extracts or herbal ingredients are usually favored by Chinese consumers, as they are deemed less hazardous than purely synthetic ingredients.

While natural cosmetics have been growing in popularity, and certain brands are performing well across Western Europe, the vast availability of natural-positioned brands makes it hard for individual brands to gain significant share of the overall market.

This has been the result of not only fierce competition among the increasing number of niche natural brands, but also major multinationals launching natural lines and retailers bringing out natural private label alternatives to their portfolios. For example, Boots in the U.K. and DM in Germany have had natural skin care lines for many years.

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In Euromonitor International’s online survey on personal appearance, more than a third of consumers across 16 markets claimed that natural/organic was a key influencer in their skin care purchasing decisions, while nearly 40% of them chose super-high quality as the most influential reason.

The success of brands, such as Caudalie, which has climbed the ranks in competitive premium skin care in France by combining natural positioning with science and pharmacy credibility, exemplifies this.

As a result, natural/organic brands need more than just their natural credentials to attract consumers’ attention. Many have already launched more sophisticated products, like anti-aging and serums with strong claims.

Consumer Demand in Asia

When looking at the number of consumers who revealed that they look for natural/organic benefits in their skin care by country—beyond the usual suspect of Germany—India, Indonesia and China scored the highest, with more than half of the correspondents seeking natural skin care in some cases. With China and India having a history of local skin care remedies that include medicinal and natural ingredients, it is unsurprising.

As the survey was conducted online, the correspondents from these markets were from the higher respective income groups. In fact, out of the consumers that indicated that natural/organic claims were an important factor when buying skin care products, more than 80% earn more than China’s average disposable income per capita, which was at $4,652 in 2014.

Growth Ahead for India and Indonesia

A similar story was seen in India, which has the lowest average disposable income from the group, and Indonesia. This indicates that, while there is an opportunity for natural/organic players in these emerging markets, pricing remains an issue with international players looking to explore the burgeoning middle class rather than the average consumer.

While all three markets are mass-dominated, Indonesia will be the eighth biggest absolute growth contributor to premium skin care over the 2014–2019 period. India will almost double its size to just over $140 million in 2019.

Despite India and Indonesia remaining niche in premium, their favorable demographics of vast populations and increasing disposable incomes, coupled with a relatively unexplored market, create an attractive environment for lower-end premium players.

China Ascending

China undisputedly holds the strongest opportunities, as it will be the source of more than 60% of premium skin care’s growth to 2019, surpassing Japan to become Asia’s biggest premium market. Plant extracts or herbal ingredients are usually favored by Chinese consumers, as they are deemed less hazardous than purely synthetic ingredients.

Local brands, including Inoherb and Herborist, have benefited from such a consumption trend. Herborist was in the global top 10 fastest-growing brands in 2014, with 17% growth, and has continued its expansion outside China by entering the United Kingdom through feelunique.com, while it is also present in France, Italy and Germany through Douglas and Sephora.

In China, lower-priced premium natural brands, such as L’Occitane, are growing strongly in the market, with this brand doubling its share in skin care since 2009 to reach 18% in 2014. The world’s fastest-growing skin care brand in 2014, Innisfree, grew by an impressive 300% to reach a value of $80 million after just three years of presence in the Chinese market.

The brand’s strong innovation focus, high perceived quality by consumers, Korean brand image, affordability and natural positioning appears to be a winning combination for Chinese consumers. Innisfree is also looking to enter India with its own stores.

While natural credentials remain attractive to consumers around the world, for brands to succeed in both emerging and mature markets, they must be perceived as being of high quality, have a strong image and remain relatively affordable to the average consumer.

In the promising markets of India, Indonesia and China, standalone presence (a strategy adopted in these markets by not only L’Occitane, but Herborist and Innisfree as well) and a wide skin care portfolio are also important in order to compete with both the local/regional players and the internationals.

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