The beauty market in Southeast Asia: evolving through tradition, innovation and quality
Analysts and financial experts have been focusing on markets in Southeast Asia for some years now: the region, which includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam, is home to a population of over 750 million people. Thanks to the creation of the ASEAN Economic Community (AEC) in 2015 and to free trade agreements between the member states, it has become a point of reference for investors and multinational companies interested in commercial relationships.
The beauty industry is among the categories leading development in Southeast Asia, thanks to a system that pairs the structured local industry with the appeal of luxury and international brands. For these reasons, the Cosmoprof international network undertook a new project in the region in 2019: Cosmoprof CBE Asean, a trade show on the calendar for Bangkok, Thailand. According to studies by Euromonitor International, an international market research company, over the 2016-2019 period average yearly growth was above 6%, and almost all member states were able to resist the economic and social impact of the pandemic, with the total retail sales value of beauty and personal care products in the region reaching $27.7 billion.
In terms of yearly revenue, the top market in Southeast Asia is Indonesia: the country registered an average annual growth of 8% between 2016 and 2019, and Euromonitor forecasts for the 2019-2022 three-year period confirm an average annual growth of 6.3%, with estimates putting the market value in 2022 at $11.2 billion. Mass beauty, skincare and haircare products are among the categories with the best performance, but national consumption of halal cosmetics takes center stage. The Muslim population in Indonesia is expected to grow at a percent rate twice that of the rest of the world by 2050, and the marketing of cosmetics in the country is increasingly tied to the directives of the BPOM, the state authority that regulates the importing and sale of food, pharmaceutical and beauty products. The BPOM plays a strategic role in the development plans of multinational companies who wish to export to Indonesia, and the severe standards that must be met for beauty products to be considered halal often slows the normal flow of commerce.
Thailand closed 2020 with a total market value of $6.8 billion. The country has succeeded in gaining a spot on the international stage through political foresight, with commercial agreements and the development of infrastructure. After suffering a -0.9% loss between 2019 and 2020, due to the pandemic, Thailand is returning to positive figures thanks in large part to the strategic strength of Thai Beauty, with local brands that continue to disseminate treatments and principles connected to Thai culture. The country is a hub for quality and innovation and is one of the main beauty product suppliers in China, Japan, and South Korea. According to Euromonitor, in 2022 the beauty sector in Thailand will be worth $7.3 billion, with an average annual growth of greater than 2% over the next two-year period.
The top 10 powerhouses in Asia for the sector also include the Philippines, Malaysia, and Vietnam, which together account for $8.8 billion of revenue in Southeast Asia. The Philippines suffered a major setback in 2020, with a decline in turnover of 4.1%, but Euromonitor expects growth between 3 and 5.7% in the next two years. Malaysia recorded an average annual growth of over 6% between 2016 and 2019, and after closing 2020 with a slight increase (+ 1.6%) in 2021-2022 it will return to an average annual growth of 6.5%.
The response to the pandemic in the region was mainly driven by the excellent performance of e-commerce and new digital sales channels, particularly in Vietnam, where sales percentages of beauty products reached 9.7% in the 2020. Singapore and Indonesia also recorded an increase in sales on digital channels, with rates exceeding 8% in both countries.
Myanmar, Cambodia, and Laos currently have a total turnover of just over 800 million dollars, but the growth rates recorded over the last few years suggest crucial opportunities. Myanmar recorded an average annual growth of 20% between 2016 and 2019, closing 2020 with a + 9.4%, and in the next two years, the expected growth rate is 11%. Laos recorded a constant growth of 13% until 2019, closing 2020 with an increase of 11.9%. For Laos and Cambodia, Euromonitor expects a 1.8% yearly average for 2021-2022.