The growth of domestic cosmetics surpasses skin care
Recently, another beauty group declared bankruptcy.
The Body Shop, a former beauty giant and a global large-scale British skin care and beauty brand with a history of nearly 50 years, was only resold to Natura for three months, and it was embarrassing to announce that it could not continue to support it.
This is not an isolated case. In the past three years, we have witnessed the tragicomedy of the make-up industry: a number of make-up brands, from clearance sales to the reduction and closure of the number of physical stores, have not been spared by the downward tide of the industry boom, whether it is the American cheap make-up brand e.l.f, the make-up brand of luxury LVMH, Bei Lingfei or the domestic high-profile new make-up brand Floating Fomomy.
However, in the face of adversity, there are also a number of new domestic cosmetics brands, such as Tangduo, INTO YOU and Caitang, which have gone against the current and expanded rapidly, becoming a new bright spot in the industry. Among them, Tangyi disclosed that its GMV exceeded 3 billion in 2023, and its volume is similar to that of some listed companies.
(In 2022, the only companies with revenues of more than 3 billion were shanghai jahwa, Polaiya, Huaxi Bio, Betani and Yixian E-commerce. See the self-made map of Zhizhi Research.)
Why is the beauty market burning at the same time? Where does the growth of the "new heads" who grew up against the trend come from?
In the past ten years, China’s beauty industry has undergone a major reshuffle.
In addition to traditional e-commerce, emerging e-commerce companies such as Tik Tok, Xiaohongshu, Vipshop, and Pinduoduo Private Domain, as well as new channels such as live e-commerce have emerged one after another. The diversification of channels and the decentralization of traffic jointly promote the penetration rate of cosmetics. According to Toubao Research Institute, from 2017 to 2022, the market scale of China cosmetics industry will increase from about 44.29 billion yuan to 71.43 billion yuan, and it is estimated that the total scale of China cosmetics industry will reach 114 billion yuan in 2027.
This trend has also spawned a number of domestic brands that know more about online operations and traffic.Huaxizi, which takes oriental culture as its selling point, has become a leading brand of cosmetics in China in just five years. Although it later encountered negative public opinion of excessive bundling and unrealistic prices, it is undeniable that in the fastest development stage, its GMV soared from 1 billion yuan in 2019 to 5.4 billion yuan in 2021, achieving an order of magnitude leap.
On the contrary, limited by price factors and marketing acumen, the power of foreign brands is weakening. The latest data of the 38th Beauty Festival shows that whether in Tmall or Tik Tok channels,The sales performance of domestic brands is better than that of international brands.
From the historical rotation of one advance and one retreat, we can also see.The iron law of makeup industry: update iteration is faster.
According to some experts in the beauty industry,Cosmetic products change faster than skin care products.Because skin care emphasizes efficacy, its research and development ability will determine the level of barriers and easily precipitate users. However, due to the low threshold of cosmetics and the emphasis on color trends, the loyalty of consumer groups is not high.
Therefore, in order to establish a brand moat, make-up brands should focus on constantly bringing forth the new and constantly poking the pain points of consumers, meeting market changes and consumer demand, and keeping the freshness and uniqueness of product lines.
Tangduo is a breakthrough case.
When Huaxizi, Mao Geping and Marumi all chose to focus on the popular category of makeup, and successively created explosive products such as Huaxizi loose powder and liquid foundation invisible to fire, Tangduo chose to avoid the popular route and take an innovative route.Cut into the track with low repurchase rate and few competitors, such as eye shadow and capacity repair, and successfully create large-scale products and squeeze into the head echelon.
(GMV growth rate of some domestic cosmetics brands in 2023, source: Jiu Qian, China Merchants Securities)
Tangyi told Jianzhi Research that the company launched 250 new products in 2023, but the eye shadow disc "Fun Seven-Color Disc", which has been on the market for more than five years, still ranks first in all Amoy and Tik Tok platforms, and monochrome blush and high-gloss cosmetic discs continue to sell well in all channels.
Behind the prolonged life cycle are more than 3,000 powder formulas and more than 2,000 powder colors. Through continuous combination and iteration, the products can be continuously adapted to the trends of different consumers and new makeup, so as to maintain vigorous vitality.
"At that time, most of the high-repair discs on the market were mainly divided into 2-3 functional zones, but we found that consumers have more subdivided needs for matte highlights, water highlights, nose shadows and silhouette, so we launched four functional zones of high-gloss repair discs."
Opportunities are hidden in places that others have not discovered.
However, to be large-scale, we must expand brands and categories. Leading overseas beauty companies all have a complete brand matrix and obvious scale advantages.For example, there are five L ‘Oré al brands that have entered the top 20 cosmetics market, including L ‘Oré al Paris, Saint Laurent, Lancome, Giorgio Armani and Uemura Xiu, covering low, medium and high-end markets, with a total market share of 20.1%.
In contrast, the brand matrix of domestic cosmetics companies is relatively thin.
butWhen the group develops to a certain scale, it has to consider expanding categories and brands to seek more breakthroughs.For example, in 21 years, Polaiya’s revenue exceeded 4 billion yuan and reached the top of the domestic beauty list. In the same year, Polaiya acquired the Japanese care brand Off&Relax to enter the blank head care track; After the revenue of Citrus Blossom broke through 3 billion yuan, it also merged with the French brand Fulu Deya at the end of last year, aiming at the head care track with high proportion of foreign brands and few participants, and stepping into a merger and acquisition road similar to L ‘Oré al, Proya and other beauty giants.
The balanced development of multi-brand and multi-product lines also puts forward higher requirements for supply chain capabilities.
Although consumers have always had a view of "emphasizing marketing and neglecting research and development" in the beauty industry, especially after Hua Xizi’s "rollover", this concept has become more deeply rooted in the hearts of the people. In fact,When the brand reaches a certain scale, it is consciously raising its own barriers by investing in self-built factories, developing exclusive raw materials and optimizing production processes, and the cost is on the rise.
(From 2019 to 2022, the R&D expenditure trend of five key beauty companies, and four companies showed an upward trend)
In the field of beauty,Establishing close cooperation with suppliers can not only realize the optimization of raw materials, production efficiency and logistics costs, but also cooperate more closely with factories, and ensure that the rapid changes in the beauty market and the diversified needs of consumers can land on products more quickly.
For example, the design capacity of Huzhou Cosmetic Factory under Polaiya has reached 40 million, and the capacity utilization rate is about 25.1%; In August 2023, Yixian Biotechnology, the first factory of Yixian E-commerce, officially opened, and the estimated annual output value will exceed 1.5 billion yuan.
"Beauty is a category of a long industrial chain. Through this integration, we can be a little more efficient than competing products in every link of the industrial chain. In the end, all links are superimposed and the compound interest is very high." Tangyi said to Jianzhi Research.
Nowadays, the makeup market is gradually recovering, and some industry analysts even think that its growth rate will continue to exceed the skin care field. Under this trend, head domestic beauty brands are grabbing the share of some overseas brands with the advantages of cost performance and flexible marketing.
Those brands that have successfully grasped the pain points of users and created differentiation have become "new heads". Next, these new heads still face the challenge of continuous growth or falling behind.
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