The Vietnamese cosmetics market is quite young, but it is one of the most dynamic in the region. As the standard of living in Vietnam rises, Vietnamese consumers are increasingly aware of personal care and beauty products in addition to meeting their basic needs. With a market value of up to US$2.3 billion in 2021, Vietnam Briefing analyzes the current situation, opportunities and challenges for companies entering this industry.
Cosmetics are big business in Vietnam. The industry is booming with a large number of Vietnamese consumers investing in personal care and beauty products given the higher standard of living.
Vietnam has moved from a low-income to a middle-income country, with a growing middle-income class spending more of their income on cosmetics. A middle-class woman in Vietnam spends an average of 450,000 VND – 500,000 VND ($19 – $21) per month on makeup and skin care.
Growing disposable income, changing beauty standards, the spread of social media and the Korean wave are contributing to the growing demand for beauty products in Vietnam.
South Korea is renowned for its skincare and makeup regimen. Korean idols and influencers are fueling personal care trends in Vietnam through social media, campaigns, advertisements and beauty blogs. Moreover, greater financial independence of employed women in Vietnam has boosted their demand for beauty care while changing standards of beauty have led men to pay more attention to grooming.
Since 2018, the percentage of women in Vietnam using cosmetics has increased from 76% to 86%. Over the next decade, the Vietnamese cosmetics market is expected to grow by 15-20% per year.
The Vietnam skin care products market size stood at US$850 million in 2019 and is projected to reach US$1.9 billion by 2027, indicating a CAGR of 11.7% during the period 2021-2027.
Presentation of the cosmetics market
Vietnam is a hotspot for foreign cosmetic brands with up to 93% of personal care products imported. South Korea is the main exporter of cosmetics to Vietnam, followed by Europe, Japan, Thailand and the United States.
|Country||Cosmetics import market share|
Source: US Department of Commerce
Other exporters of beauty and personal care products include Singapore and China. Meanwhile, national brands account for less than 10% of total consumption. National brands mainly focus on affordable low-end products that compete on price.
The predominance of foreign players in the market is mainly due to the Vietnamese preference for imported products. Vietnamese consumers perceive foreign brands as being of higher quality and offering a wider variety of products that can meet individual needs.
Vietnamese imports of beauty products amounted to approximately US$950 million in 2019. The largest imports include facial cleansers, facial moisturizers, women’s lipsticks and grooming products / shaving for men.
The opening of various retail chains like Watsons, Guardian and new players like Pharmacity and Matsumoto has increased the reach of imported cosmetics among middle-class and affluent consumers in Vietnam.
Meanwhile, recognizing the potential of Vietnam’s young but nascent market, major foreign high-end cosmetic companies have either opened representative offices or sold through agents and distributors such as:
- Unilever: constituting up to 12% of the market, famous brand: Pond’s
- Beiersdorff Vietnam: Nivea
- LG Vina Cosmetics: Ohui (high-end), The Face Shop
- AmorePacific Vietnam: Laneige, Innisfree
- L’Oreal Vietnam Co Ltd : L’Oreal
Some domestic brands like Thorakao, Saigon Cosmetic, Lana, Sao Thai Duong and a new player Cocoon have gained some reputation.
Vietnam cosmetics market revenue has been steadily increasing for all sectors since 2019, with implications for 2023.
Turnover over the years in US dollars (millions):
Eye and lip products are the two most dominant sectors in the market, generating more than US$100 million per year since 2018. The natural cosmetics sector is less successful, but holds immense potential for growth in the medium term. . Indeed, more and more people are focusing on clean, organic and plant-based ingredients, which are considered both healthy and environmentally friendly compared to chemical-based cosmetics.
To provide investors with a panoramic view of the cosmetics and personal care market in Vietnam, we provide a PEST (political, economic, social and technological) analysis below:
Opportunities and challenges for new and current players
Vietnamese people are increasingly health conscious and pay close attention to the ingredients of beauty products on the market. This has opened up new opportunities for cosmetic companies wishing to expand beyond their current scope or for newcomers wishing to enter the Vietnamese cosmetics and personal care market.
Investors should look to domestic production and distribution of organic beauty products for two main reasons.
First, Vietnam has relatively cheap organic and herbal ingredients that can serve as beauty products. Coconut is one such ingredient that is abundant in the Mekong Delta region of Vietnam and is an essential element in many beauty products.
This is followed by turmeric, green tea and aloe vera, three native ingredients from Vietnam with healing properties for damaged skin. Overall, Vietnam is home to a wide range of organic ingredients – a good base for companies wishing to develop organic products domestically.
Second, the mindset of local consumers is changing, with an exceptional concern for the quality of personal care products, especially for Gen Z. As a result, organic and plant-based products are likely to experience a immense growth in the beauty market. The big players are already making the switch. Market leader L’Oreal has launched its popular Inoa hair dye, which they claim is oil-based and ammonia-free, while Beiersdorf’s Nivea has also launched its natural care range.
Yet challenges remain. A big obstacle is that the cosmetics market in Vietnam is rather young and unstable. One of the main drivers of the high demand for cosmetic products is the Korean Wave. However, Korean trends drastically alternate from time to time, which has made the cosmetics market in Vietnam vulnerable to instability. Additionally, the cosmetics market is also heavily influenced by Korean celebrities. Endorsing one product over another carries weight and influences product sales, adding to a company’s challenges.
Another challenge in the market is that it is very price sensitive. Since a large portion of consumers are low-income youth, they tend to favor low-end products over high-end ones. To be competitive, it is important for cosmetics and personal care companies to set their price range as close as possible to the purchasing power of Vietnamese consumers.
The Vietnamese cosmetics market also presents challenges for Western brands due to consumer stereotypes. Consumers believe that products made in Asia suit their skin type better than products made in Europe due to genetic differences.
However, the problem can be mitigated as long as Western brands show a strong commitment to quality, as Vietnamese consumers are more concerned about quality ingredients.
Take away food
The cosmetics market in Vietnam is still in its infancy, which has both advantages and disadvantages for domestic and foreign players. But as skincare and cosmetics have become a daily ritual for many Vietnamese consumers, the market is only expected to grow in the long run. With abundant supplies of organic ingredients and growing demand, Vietnam is a nascent market for cosmetics and personal care companies.
Vietnam Briefing is produced by Dezan Shira & Associates. The company assists foreign investors throughout Asia from offices around the world, including Hanoi, Ho Chi Minh City and Da Nang. Readers can write to [email protected] for more support on doing business in Vietnam.
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