The market is quite potential, fast-growing and less occupied by domestic brands
The Vietnam cosmetic market is ranked 6th in the ASEAN region in terms of revenue according to Statista data. This year its revenue is estimated to amount to 341 mils. USD in the skincare segment and 102 mils. USD in the make-up segment. In the next 5 years, 2019-2023, these 2 segments are expected to grow annually by 2.9% and 6.1% respectively; predicting make-up segment to become the fastest growing in the region.
Source: Statista, 2019
Main drivers of this market are the rapid economic growth and the emerging of the middle class (who have Purchase Power Parity at least 15 USD per day). According to the World Bank, by 2026 this class will double to reach around 31.2 mil people, which can imply for continuous market growth.
On the brand map there exist a few numbers of Vietnamese maker brands. The most popular ones namely Saigon Cosmetic, Thorakao, and Lan Hao are often recognized to serve for low-end segment. In the meantime, there are more and more cosmetics products being imported into Vietnam. Republic of Korea (22%), Japan (13%), France (12%), Thailand (12%), USA (12%) are the top 5 main importers. In particular, in Vietnam due to their good quality and affordable price. In Vietnamese perception, Korean products are very trendy and strong in make-up while Japanese ones are famous for skin-care.
LG VINA Cosmetics can be considered as the most striking Korean maker in Vietnam with a wide range of both skincare and make-up. It has many brands such as OHUI, Lacvert Essance… Besides, there are diversifying Korean brands distributed in Vietnam, which are known by a lot of Vietnamese, especially among the young. Some telling examples are Innisfree, Nature Republic, Missha, Laneige, The Face Shop,…
As for Japanese brands, now there are only 03 makers namely Rohto-Mentholatum, Kao, and Shiseido having factories in Vietnam. Some popular Japanese brands but not manufactured in Vietnam are Menard, SK-II (P&G) (high-end segment), DHC, Kose, Shu Uemura (middle segment).
HS Code 3304: Make-up and skincare products
Source: UN Comtrade, 2019; B&Company synthe
Vietnamese have simple cosmetics pocket, and now prefer to natural products
In 2019 B&Company conducted a survey on cosmetics usage of Vietnamese women. The result shows that cleanser is a must-have item for skincare purpose and lipstick is a must-have item for make-up purpose. Indeed, both are used by over 90% of surveyed women. Meanwhile, each of other make-up or skincare products is mainly used by only around two-thirds of women. It can be inferred that cosmetics pocket of Vietnamese are quite simple; even many people do not possess full set of products for a basic make-up and skincare regimen.
The top 3 mostly used products are, cleanser (94%), sunscreen (70%), mask (68%), cleansing (68%) for skincare; lipstick (98%), foundation (88%) and eyebrow (71%) for make-up purpose.
Top most used cosmetic product by Vietnamese women (%)
Source: B&Company online survey, 2019
One highlight recent trend is that natural make-up and skincare products are increasingly being interested and used. Those are defined as products have ingredients extracted from essences, vitamins, mineral nutrients available in nature, with little or no use of additives or chemicals. According to B&Company’s mentioned above survey, 66.6% of women are using natural make-up products, 9.6% are not using and 23.8% don’t know whether their current products are natural or not. As for skincare products, 73.2% of women are user, 7.8% are non-user and 19.0% are unclear. It can be said that there are still a certain number of Vietnamese unaware of natural concept.
However, natural products remain to have unsatisfying points to users, of which 03 biggest ones are “low shelf life”, “high price” and “hard to preserve”.
Unsatisfying points when using natural cosmetics (%)
Overall, being on developing stage, the young and dynamic Vietnam cosmetics market can open up many promising business opportunities, especially in the context that the consumers now are quite simple in cosmetic routine and interested in natural products.