In the first half of the year, China’s listed beauty companies generated revenue of 14.187 billion yuan(about $2.06 billion), up 7.4% from 13.206 billion yuan(about $1.9 billion) in the same period last year.
This year, the general environment is more challenging than last year, though half of the companies’ growth momentum remains strong. From the brand side, more billion-yuan players such as QuadHA and Dr. Alva are about to make their appearance, ushering in a golden development period for the efficacy cosmetics market.
Total 14.2 billion and the ranking of companies has changed
CHAILEEDO sorted through the first half-year financial data of seven major Chinese beauty listed companies, including Shanghai Jahwa, YSG, PROYA, Botanee Group, Marubi, Bloomage Biotech (functional skincare products) and Lushang Development (cosmetics business). We found that the cosmetics revenue of the seven companies totaled about 14.187 billion yuan(about $2.06 billion), up 7.4 percentage points from 13.206 billion yuan in the same period last year.
Specifically, the 2 companies, Bloomage Biotech and Lushang Development, had the highest growth rate of revenue in the first half of the year, up 77.17% and 62.31% respectively. PROYA and Botanee Group also both had revenue growth rates of over 30%. The performance of YSG, Shanghai Jahwa and Marubi declined.
By revenue scale, in the first half of this year, Shanghai Jahwa (3.715 billion yuan, about $538 million), PROYA (2.626 billion yuan, about $381 million), Bloomage Biotech (2.127 billion yuan, about $308 million) ranked the top three. Botanee Group, YSG, Lushang Development, and Marubi ranked 4 to 7 in that order.
With continued high revenue growth, Bloomage Biotech has ranked third, up two places from last year’s ranking. Moreover, in the first half of this year, PROYA also recorded the highest revenue in the past five years and ranked second.
From the point of view of net profit, in addition to YSG, the other six companies are profitable, of which Botanee Group’s net profit value (395 million yuan, about $57.2 million) and growth rate (49.06%) are the highest among the seven companies.
As for the brands the companies own, the brand PROYA will step into the 4-billion-yuan club this year following Winona exceeded 4 billion yuan(about $580 million) last year. In the first half of this year, the revenue of the two brands, Winona and PROYA, achieved more than 2 billion(about $290 million). Meanwhile, according to the current development speed, more 1-billion-yuan players such as QuadHA and Dr. ALVA will be unveiled.
Star single product is the key to growth
It is not difficult to quickly create explosive products with the huge traffic method. What is difficult is the sustainable user stickiness, and repurchase, which is often mentioned in the industry “star single product”. Whether it is Coca-Cola in FMCG, or the beauty field Estee Lauder, Lancome, Shiseido, etc., the star single product has helped the brand to establish a position in the minds of consumers.
Chinese beauty brands are becoming more and more skilled in this strategy. In the annual report, the companies also named praise for the role of star single product to promote the company’s performance.
The revenue of PROYA’s star single product accounted for more than 35% of the revenue of the brand continuing to deepen the star single product strategy in the first half of this year. Its star product was equivalent to the sale of 745 million yuan(about $108 million). The revenue of its star products has accounted for more than 65% of the total revenue of the brands on the Chinese e-commerce platform Tmall and more than 50% on the TikTok China platform. The star single product of PROYA contains 11 products such as Proya Deep Ocean Energy Serum, Proya Elastic Brightening Youth Essence, Proya Advanced Original Repair Concentrating Essence and Proya Ultimate Repairing.
Similarly, four major functional skincare brands from Bloomage Biotech also benefit from the star single product strategy, resulting in performance growth. The financial report shows that the four major brands enjoy 6 single products achieving 100 million yuan(about $14.5 million) in sales revenue including Bio-MESO Saccharomyces Rice Radiant Essential Toner, QuadHA Superior Antioxidant Concentrate Essence, QuadHA Single Use Salicylic Acid Anti-acne Essence, QuadHA Refreshing Multi-Recovery Soothing Oil Essence, Biohyalux HA Aqua Single Use Essence, Biohyalux HA Barrier Conditioning Single Use Stoste in the first half of the year. Bloomage Biotech said, “the company in recent years plans to the extent to star single product for increasing revenue.”
In the transformation of YSG, its efficacious skincare brands DR.WU Daily Renewal Serum and DR.WU Triple Action Repair Serum also made important contributions to the performance with the former reigning as NO.1 on the list of removing-acne essence on Tmall and the latter winning NO.1 on the pop-up list of repair essence on TikTok China. With the excellent performance of several efficacious skincare brands, YSG’s skincare business grew by 56% over the same period in the first half of last year.
Marubi said in its earnings report that the company set up a joint team to promote unified pop-up plans online with Marubi Single Use Essence, Marubi Retinol Firm Desalt-wrinkle Eye Cream, Marubi Multiple Peptide Anti-wrinkles Eye Cream and Marubi Multiple Peptide Firm Anti-wrinkles Eye Mask respectively.
Star single product often carries a higher repurchase and higher gross margin and Chinese brands have gradually realized the importance of star single product for the brand. They gradually embarked on the “era of star single product”. This has achieved double growth in performance and word of mouth.
What to fight in the second half of the year? Efficacy!
In today’s industry background of “Skincare Must Involves Efficacy”, many companies applied the approach that penetrates its targeted category by promoting strong efficacy, which is a trend in the Chinese beauty market.
For example, when mentioning sensitive skincare, people will think of Winona. It continuously educates consumers and iterates the product. Winona’s parent company became the “first stock of effective skincare” and after the listing, it still maintained the performance of consecutive years of growth.
Not only Winona, but also major brands are building the perception of professional efficacious skincare brands in various ways to maintain their voice in areas such as anti-wrinkle, oil control, and acne.
For consumers, the purpose of skincare is to maintain healthy and youthful skin. As consumers become more aware of skincare, the market outlook for efficacious cosmetics is also favored. Therefore, in the second half of this year, the above-mentioned companies also said that they will continue to make efforts in the efficacy of skincare. In addition, the building of multi-brand matrix is also an essential part of the Chinese enterprises to take the group and find growth points.
For example, the recent launch of the new Bio-MESO Saccharomyces Rice Radiant Softening Cream is intended to further expand the brand’s market share in the efficacy of skincare. PROYA also said it hoped to launch anti-aging products and brands for larger age groups in 5-10 years to further expand its brand matrix.
Winona also said that the company will take the “Winona” brand as the core and gradually develop the “Sensitive Skin PLUS” product line to sunscreen, whitening, anti-aging, and effective primer for sensitive skin, etc. Winona is aim to provide consumers with more refined product choices with multi-brand concentration. It is worth mentioning that in June this year, Botanee Group also invested in the Chinese foundation brand “FUNNYELVES”.
In short, successful efficacy will win the future. driven by the new regulations, Chinese beauty brands develop high-quality brands. It will deepen the effectiveness, and open the development trend of star single product strategy. It will also set up a new chapter of industry competition.