Politics and premiumization impact sales
Geopolitics and premiumization impacted the value change of a volatile category. After experiencing no change in value a year ago, personal care declined 6 percent in the 2018 BrandZ™ China Top 100 ranking. Two years ago, the category led the ranking in value growth with a rise of 61 percent.
The premiumization and trading-up trends continued to rouse consumer interest in skin care and the makeup, benefiting both Chinese and multinational brands. Consumers not only purchased more expensive, higher-end merchandise, they chose brands that offered elaborate, multi-step skincare systems.
Between 2014 and 2016, China’s market for make-up grew 25 percent and for skin care 29 percent, according to Kantar TNS. Factors driving the growth included an increase in the number of steps in the average beauty regime. Kantar TNS Korea reported that the most affluent Chinese women, age 20 to 39 in Tier 1-to-3 cities, spend an average of $1,350 on cosmetics annually.
Although personal care remained strong in 2017, the rate of growth slowed for the first time in four years, according to Kantar Worldpanel, primarily because of political tensions. After China objected to Korea’s deployment of the defensive THAAD missile system, fewer Chinese consumers purchased South Korean products, including the high-end personal care brands preferred by Chinese.
Great opportunity remains across the personal care category, particularly in makeup, where the penetration level is under 50 percent, compared with penetration levels over 80 percent in Japan and Korea, according to Kantar Worldpanel. In contrast, toothpaste penetration in China is close to 100 percent.
A toothpaste brand dropped out of the BrandZ™ Top 100 this year, which slowed personal care category growth. The two remaining brands are Herborist, a cosmetic known for its natural ingredients, which rose 13 percent, and Dabao, a maker of herbal cosmetics, which rose 9 percent. Both brands were active online, where an increasing proportion of personal care purchases happen.