Personal Care: Young, Chinese brands shake dynamic category
Multinationals retain appeal as market fragments
The one personal care brand ranked in the BrandZ™ China Top 100, Dabao, increased 8 percent in value, but a personal care brand dropped out of the ranking, resulting in a 33 percent decline in the category. The decline followed a 6 percent drop a year ago. These results do not reflect the overall vitality of the personal care category, however.
The value of personal care sales increased 9.3 percent during the first half of 2018, according to Kantar Worldpanel, which attributed the increase to premiumization, with selling prices up an average of 11.5 percent, which offset a 2 percent decline in sales volume.
The market has fragmented with more brands entering the personal care category as shopping habits in China evolve and Chinese consumers become more discriminating about their purchases. Shopping for hair care, skin care, or beauty products, consumers sometimes trade up to premium brands and other times they trade down, when value-for-money is their priority.
Natural products, healthy ingredients, and cosmeceuticals, particularly in skin care and makeup, drove the premiumization. While the multinational brands retained their appeal, the growth also reflected the growing influence of young, insurgent Chinese brands. These brands gained popularity because their use of natural ingredients.
In addition, the Chinese brands benefit from e-commerce and easy access to consumers throughout China. Rapid local decision making also adds advantage. And Chinese brands excel at communicating on e-commerce and social media sites. Both Chinese and multinational brands rely on important influencers, including online bloggers and beauty sites such as Little Redbook.
Penetration contributed most to the growth of the Chinese personal care brands, in contrast to dependence on premiumization for FMCG brands overall. Kantar Worldpanel found that Chinese brands have impacted the skincare market with the ability to both expand penetration and command a premium.
Over the past five years, Chinese skin care brand Pechoin grew to market leadership, for example. Rather than rely on only on traditional product and price advertising to build awareness, Pechoin introduced brand stories, sponsored of TV reality shows, used celebrity spokespersons, and created local content for social media and video sites. As a privately-owned brand that does not make its financials publicly available, Pechoin does not meet the eligibility criteria for inclusion in the BrandZ™ China Top 100 ranking. Dabao is China’s No. 2 skincare brand.
Although women primarily drive the personal care category in China, male grooming has become a growing sub-category. Brands are using young male celebrities to promote personal care products to men, and also to women. With the aging of China’s population, and the high level of stress in top tier cities, products that slow aging or hair loss are becoming popular.
Health and wellness
draws more brands
The concern with health and wellness opens opportunities for more product introductions. But it is important to act quickly because of the number of brands entering the category. And because of the fragmentation of the market, with so many brands competing for the same customer, it is important to add emotional messaging to the functional benefit that the brand provides. In skin care, for example, the brand that produces healthier skin also can be helping the user improve self-confidence. Engaging sophisticated consumers on social media sites requires a brand to have a clear unique selling point. Being Meaningfully Different is critical.