In 2022, the main tone of the beauty industry is “alive”. But alive, itself is a continuous pursuit of the future process. And to win in the future, it must win in efficacy.
On September 22, the 5th Conference on China’s Cosmetics Trends, hosted by CHAILEEDO, was held in Hangzhou with the theme of “Winning in Efficacy”. There are the world’s top 500 companies, leading OEM/ODM factories in China, leading recombinant collagen companies, emerging brands with GMV exceeding 1 billion yuan in 3 years, etc. attending the conference
Chinese cosmetics is still a sunrise industry
CHAILEEDO founding partner Cai Chaoyang delivered a speech, saying that the development of a company depends mainly on the scale of its market and the professionalism of the company.
UN data predicts that the number of young Chinese beauty consumers (20-45 years old) will decrease by nearly 100 million in the next 30 years, including 45 million fewer young female consumers.
But even so, Chinese cosmetics is still a sunrise industry.
In terms of data, comparing January-August 2021 with that of 2022: the number of financing decreased by 73.4% YoY, sales in the CS channel declined by 11% YoY, total retail sales fell by 2.7% YoY, and the market capitalization of 8 top listed companies decreased by 39% YoY …… In the first half of this year, the number of imported cosmetic pieces dropped 58.5% YoY, and the number of Chinese filings declined 25.5% YoY.
On the other hand, in the first 8 months of this year, sales of TikTok China grew 79%, efficacy skincare increased 33.4% YoY, total beauty financing surged 68.47%, total sales of 8 top listed companies climbed 3.5% YoY, and R&D investment grew 33.6% YoY.
Comparing these figures, it can be seen that the vast majority of the decline is due to objective reasons such as poor market conditions, while the rise is partly based on subjective reasons related to operational capabilities.
Observing the cosmetics industry as a whole, safety has been the theme of the cosmetics industry for the past 20 years. After the new regulations, it has come the era of efficacy. But Cai believes that the window period of efficacy lasts at most 5 years, and now there are still 3 years to go. In the next phase, the market will enter into the era of brand competition, to fight with their brand culture, brand story, etc.
In the future, Cai expressed that the beauty industry will become a dumbbell-shaped structure. The concentration increases again for top companies, and the newcomers rely on innovation to meet different segmentation requirements. Finally, the middle part of the group has the largest number and is very tough to run, and needs to create differentiation.
This year, CHAILEEDO is concerned about three characteristics of the cosmetic industry. The first is to focus on the main business and eliminate the unprofitable items, the second is to wait for opportunities, and the third is to stay alive, which is the basic element of long-termism. CHAILEEDO predicts that by 2024, China’s beauty market will reach trillions of yuan.
Enter the era of efficacy after the new regulation
In 2022, with the efficacy claim evaluation coming online, China’s cosmetic industry officially enters a new year of efficacy.
Zhu Hong, General Manager of Zhongtong Biochemical, said that in the future, for each efficacy product, the net development cost will be more than 100,000 yuan. This is the most important change of the new regulations for the products.
Giant Biogene is the first to use synthetic biology technology to develop and mass produces recombinant collagen, which can be used in many fields such as biomedical materials, dermatology, and cosmetology. According to Duan Zhiguang, Senior Vice President of Giant Biogene, there is still a high technical barrier in this field. However, as more and more companies enter the recombinant collagen area, the cost of recombinant collagen will become lower and lower.
It is worth noting that Lao Shuquan, Director of Symrise’s cosmetic ingredients department in China, mentioned that the abuse of efficacy ingredients can lead to safety problems. Efficacy is necessarily related to regulation, otherwise, it will lead to the illegal addition of ingredients. Therefore, safety is the biggest efficacy. At the same time, he also said that sustainable, biofermentation technology, human homologous sources, skin microecology, synthetic biology, and precise target regulation will be the future direction of efficacy ingredient development.
Moreover, Ashland personal care functional ingredients Asia Pacific Business Development Director Ling Feng also stressed that the promotion and application of efficacy raw materials need real scientific research data as a scientific endorsement, but also need to do scientific communication with consumers.
Zou Yue, General manager of JALA Group’s R & D center, agreed with this. He believes that the current success of some efficacy of skincare brands lies in transforming the scientific content of the professional end into the communication content of the To Customer end. For example, the dermatologist recommended products for patients, which were turned to the public end.
Meanwhile, Zou also shared the key to telling a good core ingredient story which needs to return to content shaping and consumer psychology. Except for pleasing people after use, cosmetics are more important than pleasing themselves, so the texture, skin feel, and fragrance of the formula are very important.
Dr. Jeff, a dermatologist at the First Affiliated Hospital, College of Medicine, Zhejiang University, also added that in terms of scientific communication, it is important to be clear who you are talking to. There are a lot of sensitive skin brands emerging in China, and repair and moisturizing are a big part of the Chinese skin care system. In addition, China and the United States have different concerns about whitening and sun protection, and because of the different skin characteristics, highly concentrated products from overseas brands are not necessarily suitable for Chinese people.
The market share of high-grade efficacy cosmetics has exceeded 50%
At the conference, Ding Lan, the Intelligence Director of CHAILEEDO, said that “efficacy cosmetics” are in a golden stage of development. Research shows that by 2027, China’s efficacy skincare market will reach 211.8 billion yuan ($29.856 billion), which is closely related to China’s huge population base, increasingly mature consumers, favorable policies, and improved R&D strength of Chinese local brands.
With the TikTok China platform as the main research direction, what is the market situation of efficacy cosmetics? CHAILEEDO investigated and found that its market share of high-grade efficacy cosmetics exceeds 50%, with anti-aging, whitening and spot removal, soothing and repairing, and acne removal as the main demands.
Currently, compound efficacy and high-priced products are more popular among consumers. Offline, the price of efficacy cosmetics continues to rise, and imported products and repairing efficacy cosmetics are more popular among offline consumers.
In consumer research, product efficacy, safety, ingredients, and technology are critical factors that influence consumers’ purchases. In the past year, consumers’ attention to product ingredients and technology has increased significantly. When efficacy skincare products have the strong technological power, consumers are willing to pay high prices for them.
Nowadays, Chinese ingredients have become the hot ingredients in the efficacy market. Compounding multiple ingredients to satisfy multiple skincare demands is also more likely to meet consumer needs. Furthermore, a single product strategy, online and offline combination of multiple marketing, such as content recommendation, professional endorsement, IP co-branding, etc., is also a major trend in the development of the efficacy skincare market.