© Euromonitor International 1 UNLOCKING CHINA’S COLOUR COSMETICS MARKET POTENTIAL 2014 AND BEYOND...

© Euromonitor International

1

UNLOCKING CHINA’S COLOUR COSMETICS MARKET POTENTIAL 2014 AND BEYOND

JUNE 2015, SHANGHAI


2

Overview for colour cosmetics in China

Consumer and players’ trends in colour cosmetics

New digital opportunities

Future outlook


3OVERVIEW FOR COLOUR COSMETICS IN CHINA

BEAUTY INDUSTRY GROWTH SUSTAINED

2008 2009 2010 2011 2012 2013 20140

1

2

3

4

5

6

7

Total / Premium / Mass Growth

Total Beauty Premium Beauty Mass Beauty

% V

alu

e G

row

th

Premium vs Mass Proportion Historic vs Forecast

Premium Beauty Mass Beauty

Note: Inner circle 2009-14, outer circle 2014-19


4OVERVIEW FOR COLOUR COSMETICS IN CHINA

POWER SHIFT TO EMERGING MARKETS CONTINUES DESPITE SLOWDOWN

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019-100,000

0

100,000

200,000

300,000

400,000

500,000

600,000

-1

0

1

2

3

4

5

6

7

41%

51%

Developed vs. Emerging Markets in Total Beauty

Developed Emerging % Growth Developed markets % Growth Emerging Markets

US

$ m

illio

n

% G

row

th


5CHINA AS DRIVING FORCE IN GLOBAL BEAUTY AND PERSONAL CARE

2009

/201

0

2010

/201

1

2011

/201

2

2012

/201

3

2013

/201

40

2

4

6

8

10

12

14

16

18

20

7.69.2

1.6 1.5 1.6

12

17.9

12.310.8

8.1

Beauty and Personal Care Market Growth

World China

RS

P v

alu

e g

row

th,

US

$,

cu

rren

t valu

e

OVERVIEW FOR COLOUR COSMETICS IN CHINA

Beauty and personal care in 2014:

BRIC Markets % Share

China37%

2009 2010 2011 2012 2013 20140.0

10.0

20.0

30.0

40.0

50.0

60.0

26.930.1

35.539.9

44.247.8

China Beauty and Personal Care Market Size

RS

P v

alu

e

size

, U

S$,

bil

lion


6CHINA BEAUTY AND PERSONAL CARE: CATEGORIES’ DYNAMICS

2009

2014

0 5,000 10,000 15,000 20,000 25,000

Skin care, fragrances and colour cosmetics in China, US$ mn, fixed 2014 exchange rate

Skin Care

Fragrances

Colour Cosmetics

2009/2010 2010/2011 2011/2012 2012/2013 2013/20140

5

10

15

20

25

2009-2014 value growth%

Skincare fragrances colour cosmetics

Cu

rren

t va

lue g

row

th %

OVERVIEW FOR COLOUR COSMETICS IN CHINA


7




Future outlook


8KOREAN WAVE IN COLOUR COSMETICS: CUSHION FOUNDATIONCONSUMER AND PLAYERS’ TRENDS IN COLOUR COSMETICS

IOPE

HeraLaneigeSulwhasoo Innisfree


9CONSUMER AND PLAYERS’ TRENDS IN COLOUR COSMETICS

CUSHION IMPACT IN OTHER COLOUR COSMETICS

Etude House Mamonde

Etude House-Eye shadow Hera-Eye shadow Hera-Blush

Mamonde-makeup base



KOREAN WAVE IN CHINA: CUSHION FOUNDATION

Laneige BB Cushion 325 RMB (15g*2) BB cushion Covering skin pores to make

it sleek as baby skin

Mamonde Brightening BB Cushion 269 RMB (15g*2) BB cushion Strengthens the fit between

BB cream and skin Effective moisturizing and

anti-ultraviolet rays

Sulwhasoo Evenfair Perfecting Cushion 346 RMB (15g*2) BB cushion Giving perfect coverage and

long-lasting hydration

Etude House Pearl Brightening Cushion 188 RMB (15g*2) All day long pearl bright skin

Innisfree Long Wear Cushion 188 RMB (15g) All day long wear



FOUNDATION INNOVATION: DROP FORMATS

HR Powercell Foundation

Key innovation

1. Product innovation: Armani firstly brought in ‘drop foundation’ concept in 2013, followed by other key premium brands like Lancôme and HR.

Armani Mastro Fushion makeup

Lancôme Absolute Essence Foundation



LIP PRODUCTS: MOST DYNAMIC IN 2014/2015

Maybelline bitten lips

Carslan berry girl lips

1. Product innovation: Maybelline NY launched bitten lips following latest Korean wave trend in lip products. Carslan introduced berrygirl lip product, looks a lot similar to Clinique’s Chubby Stick (introduced in 2012), but priced much lower (RMB89 compared to Clinique’s RMB160 per unit, according to their Tmall stores).

2. Celebrity endorsement: Maybelline NY invited Ziqi Deng to be the spoken person for its latest new product.

Growth Driving Factors

Clinique chubby stick



Shiseido

L'Oréal

Mary Kay

Christian Dior

Chanel

LVMH

Estée Lauder

Shanghai Feiyang (Mariedalgar)

AmorePacific

Carslan

-2 -1 0 1 2 3 4

China: Share Growth in Selected Colour Cosmetics Companies 2009-2014

Market value share growth (percentage points)

LOCAL PLAYERS ON THE RISE


14




Future outlook


15THE CHANGING RETAILING LANDSCAPE OF COLOUR COSMETICS

2009 20140%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

OTHERS

Internet Retailing

Direct Selling

Department Stores

Health and Beauty Retailers

Modern Grocery Retailers

% s

har

e NEW DIGITAL OPPORTUNITIES

1.0 19.4


16CHANGES IN COLOUR COSMETICS MARKETING AND ADVERTISINGNEW DIGITAL OPPORTUNITIES

Internet boom

connected consumers

Shift away from traditional media

Beauty blogging

Video posting

649 MILLION

Chinese Internet users in 2014

>700 MILLION

Chinese Internet users in 2020

47.9% Internet penetration

among Chinese households in 2014


17POPULARITY OF BEAUTY BLOGGINGNEW DIGITAL OPPORTUNITIES

557 MILLION

Mobile phone subscribers having m-commerce experience in 2014


18

Overview for beauty and personal care in China

Consumer trends and manufacturers responses


Future outlook


19FORECAST OF COLOUR COSMETICS

FUTURE OUTLOOK


202014 AND BEYOND

FUTURE OUTLOOK

2014 2015 2016 2017 2018 20190.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

9.0

9.5

10.0

10.5

11.0

11.5

12.0

12.5

Colour Cosmetics value US$ bnGrowth rates y-o-y %

US

$ b

illio

n

% g

row

th y

-o-y

, cu

rre

nt

pri

ce

te

rms

China Colour Cosmetics: Retail Value, 2014-2019

5.9billion

US$ value sales from China colour cosmetics in 2019

74%Retail value growth Over

2014/2019


21CHANNEL FORECAST: INTERNET RETAILING

FUTURE OUTLOOK

26%Value sales from internet retailing in 2019, up

from 19% in 2014


22OUTLOOK FOCUS

FUTURE OUTLOOK

Korean Wave• Colour cosmetics put

Korean brands at competitive advantages, as key players oriented from Korea is keen to bring in latest innovative products from Korea, for example, cushion foundation and bitten lipsticks during the review period and probably cushion blush in the forecast period.

• Key innovation ensure that they are appeal to consumers, particularly young workforce and students who will grow to be consumer mainstream in next five to ten years.

Distribution• Health and beauty

specialist retailers to expand into lower tier cities, through either standalone or chained format.

• Internet retailing continue to be the most dynamic . In addition to B2C internet retailers like Tmall.com , Jumei and UCO, emerging e-channel like Wechat will be another option for internet retailers.

Competition• International player

continue to focus on mainland China market.

• Local players will join the battle, with increasing intensified competition between international and domestic players.

As always brands that are able to understand consumers and their motivation for buying colour cosmetics will perform best


23

THANKS FOR LISTENING

Michelle Mai

Business Development Account Manager [email protected]


© Euromonitor International 1 UNLOCKING CHINA’S COLOUR COSMETICS MARKET POTENTIAL 2014 AND BEYOND...

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