Recently, South Korean color cosmetics brand BBIA and Japanese color cosmetics brand Cezanne announced their cessation of operations in China. According to incomplete statistics, seven international brands have exited the Chinese market this year alone. Moreover, within China’s color cosmetics market, not only international brands but five domestic Chinese color cosmetics brands have shuttered since the beginning of the year. However, according to data from Bonafide Research, the global color cosmetics market is projected to reach $130 billion by 2028, with the U.S. market accounting for 31.8%, followed by the European market. Why is it that while the global color cosmetics market is booming, the Chinese color cosmetics market seems to be downturn?
The Chinese color cosmetics market is experiencing a downturn
In the rapidly growing cosmetics market in China, international color cosmetics brands are facing some challenges.
According to incomplete statistics from CHAILEEDO, the trend of color cosmetics brands exiting the Chinese market or completely closing down among foreign brands has been noticeable in recent years. Just this year, seven overseas color cosmetics brands have exited the Chinese market.
In January, two color cosmetics brands, Huda Beauty and MIPPO, withdrew from the Chinese market. Huda Beauty, a renowned beauty brand from Dubai founded by the well-known Middle Eastern beauty influencer Huda Kattan, gained popularity through engaging and high-quality beauty videos, along with her cross-cultural personal stories on social media. The brand boasts over 40 million followers on Instagram, ranking first among global beauty accounts. MIPPO, on the other hand, is a niche color cosmetics brand from Japan.
In March, the well-known U.S. color cosmetics brand E.l.f. Beauty, famous for its marketing on TikTok, announced its exit from China. Over the past 11 quarters, E.l.f. Beauty achieved at least a 10% growth in net sales, with the lowest growth rate across four quarters in the entire 23 fiscal years reaching 26%. The net sales surged by an impressive 48% throughout the 23 fiscal years, reaching $579 million. In the same month, Amplitude, a high-end color cosmetics brand under the Japanese POLA Group, also announced its gradual closure within the year.
In June, Naturaglace, a natural organic color cosmetics brand from Japan, also announced its withdrawal from the Chinese market this year. Alongside the recent announcements of South Korean color cosmetics brand BBIA and Japanese cosmetics brand Cezanne exiting China, a total of seven international cosmetics brands have exited China this year.
Chinese color cosmetics brands are also facing challenging times. According to CHAILEEDO’s statistics, as many as five domestic Chinese color cosmetics brands have shut down since the beginning of this year. Among them are some brands that previously achieved strong performance in the market and had a high level of recognition.
In August, emerging domestic color cosmetics brands Fomomy and Colorpediak announced their closures. Fomomy, established in 2018, released influential products like the Wild Horse series and Checkered series, with multiple products ranking high on sales charts on platforms like Tmall and Douyin. Colorpediak was founded in 2016.
In September, the minimalist color cosmetics brand Happiness, founded in 2018, announced the cessation of its flagship store on Tmall. In November, the emerging domestic color cosmetics brand It’s Focus announced store closures.
Throughout 2023 alone, the number of brands announcing their exit reached as many as five. Zooming out to a longer timeframe, the trend of domestic Chinese color cosmetics brands shutting down is indeed lamentable. According to recent incomplete statistics from Qingyanhao, the count of domestic Chinese color cosmetics brands shutting down over the past three years has reached 18.
Confronted with the uncertainties in the macro environment and the transformations within the color cosmetics market, numerous Chinese color cosmetics brands like Fomomy have succumbed to closure, showcasing the downturn in the cosmetics market.
Overseas color cosmetics markets are experiencing rapid growth
Unlike the downturn trend observed in the color cosmetics market in China, the international market, particularly in Europe and America, is experiencing a thriving color cosmetics industry.
According to research firm Bonafide Research, the global color cosmetics market is expected to surpass $130 billion (approximately 9286.28 billion RMB), with a compound annual growth rate of 5.83% from 2023 to 2028.
In terms of specific markets, it is projected that North America will dominate the global market with a 36.11% market share by 2028, followed by Europe. In comparison, China’s color cosmetics market is estimated to reach 111.3 billion RMB by 2028, accounting for only 11.98% of the global market. This seems relatively modest for the world’s second-largest cosmetics market.
Analyzing product categories, facial makeup products are extensively utilized globally. Nail polish and lipstick, particularly in nail and lip color variations, are anticipated to lead the market in 2022, with an expected compound annual growth rate surpassing 5.5% from 2023 to 2028.
Bonafide Research notes that Many color cosmetic items now contain skincare ingredients like hyaluronic acid, antioxidants, and plant extracts, providing skin benefits alongside enhancing its appearance. Foundations now dominate 37.51% of the facial color cosmetic products market in 2022.
Meanwhile, there’s a rising prevalence of water-based formulas, offering lightweight and breathable alternatives to traditional oil or silicone-based products. These water-based foundations, primers, and blushes achieve a natural appearance while moisturizing the skin. There’s an increasing demand for dewy, radiant skin, sheer coverage, a sun-kissed bronzed appearance, customizable foundations, and formulations emphasizing natural and clean ingredients in facial color cosmetics.
Examining specific markets, The North American market for color cosmetics stands out for its diversity, owing to a multicultural population. This diversity shapes consumer preferences, prompting brands to cater to diverse skin tones, ethnicities, and cultural backgrounds. Additionally, North America boasts a lively beauty specialty retail scene, exemplified by stores like Sephora and Ulta Beauty. These retailers offer an extensive array of color cosmetic products from different brands, offering consumers a distinctive shopping experience and access to exclusive items.
K-Beauty from South Korea and J-Beauty from Japan have exerted a considerable influence on the global beauty sector. These trends prioritize skincare, inventive formulations, and a fresh, youthful appearance. In various Asian nations, there’s a cultural inclination towards lighter and brighter skin tones. Consequently, there’s a notable market demand in the Asia-Pacific region for products that enhance skin brightness and whiteness, including BB creams and color correctors.
Furthermore, some men’s makeup brands such as War Paint for Men, MMUK MAN, Menaji, Stryx, Altr for Men, and Himsetc have gained considerable attention.
In terms of representative companies, U.S.-based E.l.f. Beauty has witnessed continuous revenue growth for 19 consecutive quarters, starting from the fourth quarter of the fiscal year 2019 up to the second quarter of the fiscal year 2024. It has sustained revenue growth exceeding 25% for six consecutive quarters. However, despite being a popular brand among Generation Z in the United States, it opted to exit the Chinese market.
War Paint for Men, a men’s makeup brand under its parent company Warpaint London, achieved a remarkable 46% year-on-year increase in group sales, reaching £36.7 million in the first half of 2023. This UK-based brand has garnered significant attention in the European color cosmetics market.
Overall, the global color cosmetics market is expected to continue its growth trajectory, with North America holding a dominant position. However, the Chinese market’s growth is relatively sluggish, accounting for only a small fraction of the global market share. Facial makeup products remain popular, and makeup containing skincare ingredients is in high demand. North America stands out for its diversity and professional retail landscape, while Asia is influenced by Korean and Japanese beauty trends, emphasizing skincare and natural beauty.
Why are the Chinese and international color cosmetics markets so different?
China, as the world’s second-largest color cosmetics market, has always been a crucial battleground for international beauty giants. Performance in China for industry leaders like L’Oréal, Estée Lauder, and Shiseido often serves as a barometer for their overall success. However, despite rapid growth in other categories, the growth rate of the color cosmetics market in China has been relatively slow, especially compared to Europe and America. This discrepancy has led to international cosmetic brands facing setbacks in the Chinese market and continuous exits of Chinese brands.
Several factors contribute to the slower growth pace of the color cosmetics market in China compared to regions like Europe and America. Over a period, the development of the Chinese color cosmetics market has seemed slower in comparison to the skincare market, influenced by cultural perceptions, consumer preferences, and marketing strategies.
Firstly, cultural perceptions and consumer preferences play a pivotal role in shaping the development of the color cosmetics market. Traditional Chinese culture emphasizes skincare and fairness, prioritizing skin health over mere decoration and makeup effects. In contrast, Western culture tends to view makeup as a means of self-expression and personal style, making it more popular in those regions. Japan and Korea, with earlier Western cultural influences, align their makeup consumption habits more closely with those of Europe and America. While there’s a growing trend among the younger generation in China towards individuality and innovation, overall, consumers lean towards skincare products, directing funds and attention towards long-term skin care rather than short-term makeup effects.
Cultural consumption concepts indeed wield significant influence in the color cosmetics market. For instance, during interviews conducted by CHAILEEDO with cosmetic leaders from Southeast Asian countries at the end of November, it was noted that body care and skincare products dominate, while there is less consumption of perfumes and makeup in these regions.
In tropical regions, the climate is often humid and hot, leading to increased perspiration. Such weather conditions can compromise the stability of makeup on the skin and reduce the longevity of perfumes due to higher temperatures. Consequently, some individuals opt to reduce or avoid using makeup and perfume to maintain comfort and ensure the longevity of their cosmetic products. Hence, there’s a higher demand for body care-related products in these areas.
Moreover, brand positioning and marketing strategies significantly influence the color cosmetics market. Western color cosmetics brands prioritize personalization, innovation, and trends in their marketing and brand positioning. They excel in utilizing social media, and celebrity endorsements, and constantly introducing new products and technologies to meet evolving consumer demands. In contrast, some Chinese cosmetics brands may focus less on innovation and personalization, lacking the ability to lead trends in the market.
E.l.f. Beauty, as mentioned earlier, is a prime example. In 2019, E.l.f. Beauty shifted its marketing focus to TikTok. Although TikTok is now a powerful platform within Generation Z and the beauty industry, few brands were involved back then. E.l.f.’s Chief Marketing Officer, Kory Marchisotto, initiated the #Eyeslipsface challenge on TikTok. They even crafted a customized brand song to accompany the challenge, which gained immense popularity, even making it to the Billboard charts. This move significantly boosted E.l.f. Beauty’s brand and product visibility, quickly appeal to Generation Z consumers. This was the first instance of a brand creating its song and participating in a TikTok challenge. E.l.f. Beauty stood out for swiftly embracing new social media platforms compared to other brands.
In contrast, while platforms like Douyin (TikTok) and Kuaishou are currently thriving in China, along with the popularity of live streaming and e-commerce, the influencers on these platforms mainly leverage their influence to sell brands’ products. Brands utilize these live streams primarily as a sales tool rather than a marketing strategy.
Simultaneously, the development of celebrity-launched brands in the West, like Fenty Beauty introduced by Rihanna, has been a significant driving force. Fenty Beauty raked in $100 million in sales within 40 days of its launch and was named one of TIME Magazine’s best inventions of 2017. By 2018, its revenue surged to $570 million, all within less than 17 months since its inception. Such celebrity-launched color cosmetics brands have played a crucial role in diversifying the color cosmetics market in Europe and America, but this trend of celebrity-driven cosmetic brands is nearly non-existent in China.
Consumer behavior and cultural perceptions require consumer education from brands, while outdated marketing strategies necessitate brand transformation. Both aspects are relatively lagging in the Chinese color cosmetics market, indicating a long and challenging path ahead for its development.
