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Considering Asia’s Beauty Markets

By: PCHi
Posted: September 21, 2012

According to international research agency Datamonitor, that beauty industry has been able to maintain growth in spite of general economic downturns due, in part, to the fact that grooming and well-being are important to consumers globally, regardless of other financial pressures. A majority of global consumers place great importance on looking their best in day-to-day life, believing that personal care is a basic necessity that cannot be ignored. These perceptions, global market research firm Euromonitor says, go on to drive behavior. In Asia, this is reflected in a general increase of sales across beauty product types. The heightened demand for personal care products in the region subsequently attracted many ingredient manufacturers to Asia.

In a preview of the topics of focus at PCHi 2013 (held in Guangzhou March 13–15, 2013), Cosmetic Valley, Gattefossé and Northstar Lipids discuss business opportunities and challenges in Asia, and share their outlook on the market.

Building Opportunities

Not surprisingly, Asia’s importance to businesses lies in its size and potential for growth. Since entering the region’s personal care market in the mid-90s, Gattefossé has seen growth in demand for high quality skin care products, for which the company produces active ingredients and excipients, such as dispersers, emollients, emulsifiers and solubilizers.

“Asia is a huge market that is growing,” said Ségolène Moyrand-Gros, group communication manager, Gattefossé. “Our business has increased steadily over the years. Right now, approximately 15% of our revenue is from sales to Asia’s pharmaceutical and personal care industries.”

Northstar Lipids, a UK-based specialist supplier of plant-derived nutritional oils, also recognized the need and opportunity to establish a physical presence in Asia.

“Setting up an office in Asia is important, as it’s vital to keep a close eye on the business here,” said Chris Houghton, managing director, Northstar Lipids. “Asia is a major part of our entire business. We saw a 100% increase in revenue from the cosmetics and toiletries market here from 2010 to 2011, which is why we chose to set up a Guangzhou office in 2011.”

As one of the fastest growing markets for beauty, Asia is now a choice location for brand owners looking to expand their operations. In fact, Procter & Gamble recently announced its decision to move its headquarters for skin care, cosmetics and personal care to Singapore.

Commenting on the shift, Moyrand-Gros said, “Being in Asia allows companies to be closer to their customers’ needs. To have locals working for the company also gives management a better view of the market.” With application laboratories in Shanghai and Mumbai, as well as a production facility in Singapore, Gattefossé put the rationale behind this business decision into practice.

Apart from the sheer size of the market, changes in consumer perceptions, desires and behavior have also created new business opportunities. “The Asian market has become more mature over the years," said Franckie Venet, communication and export manager, Cosmetic Valley, a resource center for  France’s beauty industry. "Consumers seek out products of high quality and efficacy, which have accounted for the French personal care sector’s higher export figures to Asia in the recent years. This may be due to consumers having higher levels of education, greater access to information and better purchasing power than ever before.”

Not a Bed of Roses

Choosing to enter the Asian market may not be as straightforward as it seems. Each market has its specific needs, and custom changes must be applied to address each challenge. “Consumer demands vary across different regions, so manufacturers must create products according to these preferences,” said Venet.

At times, such modifications to products or ingredients may involve more extensive R&D work. “The preference for traditional Chinese medicine and certain skin care needs such as whitening are specific to Asia,” said Moyrand-Gros. “In these instances, our R&D department is looking into ways to answer these special needs for active ingredients.”

And at other times, meeting Asian needs is about understanding trends in consumer demands. “We’ve noticed an increased interest in ‘Western style’ formulations and products in the China market,” said Houghton. “These trends took some time to pick up in Asia, so we track them and cater to needs within the region accordingly. For instance, while organic is still popular in Asia, it appears to be on the decline in Europe.”