Asia’s beauty market started its recovery last year with the reopening of the economy, benefitting from the desire of people to go out again and celebrate after a harrowing two years of pandemic-induced restrictions, according to Kantar.
“In most markets, beauty benefits from the desire of consumers to treat themselves, even in hard times. Often dubbed the ‘lipstick effect’, this means consumers will continue to spend money on small indulgences during economic downturns,” said the data analytics and marketing consultant in a new report on beauty trends in 2022.
But the post-pandemic recovery in most markets coincided with inflationary pressures as a result of the war in Ukraine. The global inflationary pressure on raw commodity materials and some packaging materials had local consequences, forcing prices higher and changing people’s purchasing behavior.
These two trends exerted opposing effects, making the market almost stable across the region. Kantar’s data show a drop of just 0.1% in the total beauty market in the region in the second quarter of 2022 compared to the same period in the preceding year.
The consumer, sandwiched between these contradictory forces, often had to made selective investments in beauty as well as in other products. “Some might want to save money by not spending on luxury products but instead focusing on their basic needs, while others minimise their daily spending in order to buy what they value once in a while,” the paper said.
In the report, actual purchase data from more than 140,000 people across nine Asian markets, covering facial skin care, color cosmetics, hair care and body care subcategories, were analyzed to distill prominent beauty trends last year.
These markets were China, India, Indonesia, Malaysia, Philippines, South Korea, Taiwan, Thailand, and Vietnam.
For some, such as the North Asian markets of China, South Korea, and Taiwan as well as Thailand, inflation was a relatively new phenomenon giving rise to more extreme behaviors,
For instance, in South Korea, a market that had little experience with inflation, consumers sought more economical options across the board. Changes in behavior included choosing more affordable convenience store meals rather than visiting restaurants, using second-hand buying apps and seeking out discount offers.
On the other hand, most Southeast Asian markets were familiar with the experience of rising prices and were more adaptable in their purchase patterns. In Indonesia, for example, inflation was a fact of life, and the impact of the end of the pandemic was a bigger driver with consumers keen to resume travel or celebrations.
In seeking to identify the differing impacts of inflation and the post-pandemic recovery, the nine markets were grouped into three key clusters.
In the first cluster comprised of Malaysia, Philippines, Thailand and Vietnam, “affordable beauty” was the key, as value sales declined between 1% and 5% year-on-year based on the relative levels of inflation.
“Consumers, however, can be won even here where brands are willing to lower trial barriers and make affordable beauty a reality. There remains a desire to try new formats and products,” said the report.
For the second cluster, China and Taiwan, consumption remained strong with selective investment in more expensive products and ranges. The general trend was for consumers to continue moving towards “premium consumption.”
“Brands need to think about how they can be part of the upscale beauty regimes that consumers are now developing,” Kantar said.
“Resilient beauty” is an apt term for the third cluster consisting of Indonesia, South Korea and India. This group proved to be resilient with growth of between 5% and 8%. These were markets that did not experience inflation but benefitted more from the post-pandemic lift. As a result, beauty purchases continued to rise.
“The challenge for brands here is to ask what beauty add-ons will encourage consumers to drive further growth,” said Kantar.
The report advises beauty companies to look at Asia not as a cohesive region but a complex one displaying a wide diversity in consumer profiles and consumption patterns. “Only by understanding the real behaviour on the ground in each market can brands make the right choices to ensure they find growth,” it said.