Introduction
This is a case study for two market research I have read. One is the “Organic Skincare Market Size, Share & Trends Analysis Report By Product (Face Cream & Moisturizers, Face Cleanser, Face Serum, Body Wash), By Distribution Channel, By Region, And Segment Forecasts, 2022 – 2030”, and the other one is the “Organic Cosmetics in China: Natural ingredients gaining popularity” which is provided by Daxue Consulting. The first one focused on offering a global picture of the organic cosmetics industry, while the second one concentrated on China’s market. I got a lot of enlightenment from my intervention along with a deeper understanding of the current state of the organic skincare industry from studying this research and I would like to share some of them in this post.
A Global View
Depend on market research provided by “Research and Markets”, the global organic skincare market size was valued at USD 9.83 billion in 2021 and is expected to expand at a (CAGR) compound annual growth rate of 8.9% from 2022 to 2030, which will double the market share to 21.174 billion in 2030. Global consumers show a growing inclination toward chemical-free cosmetic products with the broadening concepts of creams, serums, and moisturizers infused with organic ingredients. The Covid-19 pandemic also raised people’s attention on personal care. In recent years, there is an increasing prevalence of skin issues caused by synthetic ingredients in cosmetics. Synthetic compounds including methylparaben, butylparaben, and propylparaben are toxic chemicals known to cause allergic reactions, acne, blemishes, rashes, and other skin problems. This further accelerated the expansion of the organic cosmetic market. Another boosting factor is raising awareness among younger men on the benefit that skincare provides. Women have always been the major force in consuming cosmetics. But based on a blog published in 2020 by TIEGE HANLEY, a men’s skincare startup, 60% of men aged 18 to 24 use skincare products.
I also learned some insight regarding the product from the figure below. It shows that in the United States, face creams and moisturizers take about 40-50% of the market share, while face cleansers ranked right behind them. The face serum segment shows the fastest growth during the forecasted period of 2022-2030. The report shows that the global market coincides with the United States on the product side.
The last thing I learned from studying this report is about regional insights. The report indicates that Asia Pacific is the fastest-growing market which is expected to have a CAGR of 9.2% from 2022 to 2030. It also takes the largest market share (34%) in 2021.
Among all countries in this region, China is the No.1 player and the market leader. The rising consumer awareness, increasing income (based on the Government Stats 2021, Chinese consumer’s disposable income increased by 8.8% than last year), changing lifestyles, and increasing concern about the environment and health have made China’s organic skincare market very promising.
Conclusion
According to what I have learned from the report, it seems that the organic skincare industry has a bright future. People today indeed spend increasing time and money on skincare. At least most people, men, and women, around me cared about their skin and they spend 1-2 hours a day on skincare. I also believe that people will gradually switch from traditional skincare products to organic skincare products in the future, as it is safer to use. But I do suspect how long this process will take. Organic products are more expensive, and for most consumers, price is probably the most important factor when choosing products. Also, I do not see any clear evidence showing that the pandemic has a positive correlation with the expansion of the organic skincare market. I have seen people start to pay more attention to sanitization and their health conditions due to Covid-19. But I do not see this having any impact on their inclination toward skin care. These are the two aspects that require me to do further research before making any conclusion. On the other hand, the research about the product segment has provided me with a lot of insight into how I could propagandize organic skincare. Given the data shown above, I will concentrate more on popular products such as face creams, moisturizers, and face cleansers at the early stage of propaganda to attract attention. The regional analysis also raised my confidence. It seems that China’s organic skincare market has a promising perspective and that Chinese people are starting to pay more attention to health and environmental issues. This, if true, would make my project meaningful. To get more supportive evidence, I would need to spend more time researching China’s market.
Now I have a basic understanding of the global market for organic skincare, and for this project, the next question to ask is what does China’s market look like?
The China Market
To get a deeper and more detailed understanding of China’s organic skincare market, I studied market research made by Daxue Consulting. There are some enlightening findings that I would like to share. China has the largest cosmetics market in Asia. It passed Japan in 2013, and in 2017 its market share reached 11.5% of the global market, second only to the United States at 18.5%. As people in China start to pay more attention to their image, the demand for cosmetics grows rapidly. China’s cosmetics retail sales increased from 182500 million RMB to 299200 million RMB between 2014 and 2019. This is a 64% increase in 5 years, which indicates a CAGR of 10.39%. Organic cosmetic brands saw this increasing demand and China. has become a new outlet for them to develop and expand. Hence, organic cosmetics in China are also becoming more and more popular.
In China, consumers between 30-35 years old, with their strong purchase power, have been the largest customer groups (40%) of cosmetics. The second largest customer group (36%) is composed of younger customers aged 25-29. These consumers usually care about others’ comments on their appearance and most of them have been deeply affected by the beauty info from Chinese social media such as Weibo, XiaoHongShu, WeChat, and DouYin. Therefore, they are willing to buy more cosmetic products. These two groups took 76% of the entire cosmetics consumer group. Consumers who are under 24 have limited purchase power and awareness, while consumers who are 35 and elder have limited exposure to social media and cared relatively less about others’ comments on their appearance.
The research has shown that in China, 70% of consumers think that the effect of the product is a significant quality that they are looking for. 61% of consumers think that price is an important quality. 54% of consumers think that brand is an important quality. An interesting finding is that only 40% of consumers listed the ingredients of the product as their main concern when looking for a proper product, and only 9% listed the package.
As mentioned in the post “What is Organic Skincare?”, there are currently no regulatory agencies or standards to do organic cosmetics certification in China. This lack of regulation is one of the reasons that Chinese consumers favor foreign brands more, as their products have been tested by a reliable certification system. Based on market research made by Daxue Consulting, among the top 10 cosmetics brands in China in 2017, only 3 are domestic brands.
In China, supermarkets (27%) and e-commerce (23%) occupied 50% of the share of distribution channels for cosmetics in 2017. While the offline channels (supermarket+ specialized stores+ department stores) were still the main sales channel (56%) at that time.
For all cosmetics and personal care brands (international and domestic), social media and e-commerce platforms have been perfect approaches for branding in China. By using social media and e-commerce channels, cosmetics, and personal care brands can effectively build trust and a good reputation among Chinese consumers. E-commerce websites, such as Tmall and JD are the main platform for purchasing cosmetics and getting detailed info on products. Thus, most well-known cosmetics brands have built official stores on those platforms. Purchase-sharing apps like Xiaohongshu and life-sharing social media like Douyin and Bilibili have been good ways for cosmetics/personal care brands to promote their products since those apps are getting extremely popular among Chinese Women. Among all skincare products that have been sold on Tmall, the largest e-commerce platform in China, the facial mask is the most popular one as its sales volume is 8.42 million in 2018, which is 44% more than the sale volume of the second-ranked product-face cream and 300% more than the sale volume of the third-ranked product-facial water.
Conclusion
I think the study on China’s organic skincare market is very meaningful and enlightening. The prospect of China’s organic skincare market is promising and bright. It increased rapidly in recent years, and I am impressed with its huge potential beneath. The data has shown that consumers in China have an increasing inclination toward organic skincare, and this strengthens my confidence in doing my project. It is also very meaningful to see the age distribution of cosmetics consumers in China. In my future interventions, I would probably focus more on people who are between 25 years old and 35 years old as they are the majority group to consume cosmetics in China. And I think that they would also be the vanguard who would most easily accept the concept of organic skincare. I learned that supermarkets, e-commerce platforms, and department stores are the top 3 distribution channels for cosmetics in China. When doing my intervention, if I would like to cooperate with any brand or business, it might be better to choose those that own all three channels, or at least two of them. If I need to conduct any offline event, then a supermarket or department store might be a good place to hold it. Since, at this point, China does not have a certification system for organic skincare products, consumers favor foreign brands that are certified by a reliable system. Therefore, if I need to use specific products to do propaganda, I probably should choose products from certified foreign brands as they are trusted and favored by Chinese consumers. The study about the product segment is also useful, as it indicates what segment of organic skincare products will likely get more attention.
At the same time, the learning also raised some concerns. As I mentioned above, when choosing a skincare product, Chinese consumers do not seem to have many concerns about its ingredients and package, which are two crucial parts when talking about the concept of organic skincare. Thus, I am wondering if Chinese cosmetics consumers cared enough about the idea of organic. It seems that they cared about the effect and price of the product a lot, and organic skincare products are more expensive, and no evidence has shown that they are more effective than traditional skincare products.
Therefore, a natural question to ask is that even if they learned and understood the concept of organic skincare, do they care about it? If it turns out to be that they do not have enough interest in the idea behind organic skincare, then what could I do to improve this situation? To answer these questions, I would need to get in touch with consumers themselves and learn their behaviors and opinions.
Next Step
The next step would be to open an account on Xiaohongshu, a Chinese sharing app, to propagandize the concept of organic skincare. The reason for choosing it is that it is the most popular sharing platform in China and many people share their idea and life on it. Its major users are younger age people (22-34) which coincides with the age range of the major cosmetics consumer group in China. And to better understand the Chinese consumers’ attitude toward organic skincare, it is necessary to hold a survey that focuses on them and study from it.