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Under the epidemic, where can makeup industry ahead for with halved demand?
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Under the epidemic, the world panicked. Only China, which was the first to suffer from the disaster, now shows the resilience and heritage of a great power. In the minds of the current young generation, China has a strong national strength and a rich culture. The Chinese own brand should be consumed and trusted. With the growth of prosperity and self-confidence, Guochao continues to surge. Good looks are indispensable for daily life of a good life, not only in products, but also everybody. The cosmetics market is developing rapidly and the prospects are vast.
 
As mentioned in the "Qingshan Capital 2020 China FMCG Early Investment Opportunities Report", the cosmetics market is at the 45 billion level, with high growth and large industry space. The category growth rate has been maintained at a relatively high level for several years, with an average annual growth rate of about 12%. Compared with overseas markets, the penetration rate still has a very large space.
Online growth is even faster. In November 2019, the Tmall cosmetics market exceeded 204.9 billion yuan, a year-on-year increase of 35.4%, of which cosmetics increased by 39.4%. On November 11, 2019, beauty once again became one of the hottest categories. Just 84 minutes after Double 11 began, Tmall beauty sales broke the record for the whole day last year. Compared with the previous situation of foreign big-name "dominant" lists, this year's Double 11, the rise of domestic beauty makeup is very obvious. According to data released by Tmall, in the first 10 minutes, Pechoin announced that its turnover exceeded 100 million yuan; 13 minutes, Perfect Diary also broke 100 million yuan... As of 1 o'clock, Tmall double 11 billion-plus brands reached 84, of which beauty brands accounted for 11 , Domestic beauty makeup occupies four. In the final list of beauty brands, the four major domestic beauty brands including Nature Hall, Pechoin, Perfect Diary and Winona all entered the top ten list.
In the global market, make-up has also received increasing attention. Major well-known brands have successively launched makeup lines. In February 2020, the Hermès brand officially entered the cosmetics field. Starting from March 2020, the first lipstick series "Rouge Hermès" will be launched in some Hermès stores and retail stores in 35 countries around the world. In May 2019, the Gucci lipstick series went online, which also heralded the official return of Gucci Beauty. In December 2018, Zara released the first lipstick series Zara Ultimate. The price of this series ranges from 7.95 euros to 19.95 euros, including 12 colors of lipsticks, 8 liquid matte lipsticks and 3 red sets and limited version sets, this also means that Zara officially enters the makeup business.
The following is a map of different types of companies in the makeup track, including start-ups with public information.
 
Company Market Value Revenue PE Brief Introduction
P&G USD 279.6 billion USD 67.7 billion 58 American Daily Chemical Group
Coty Inc. USD 7 billion USD 9.4 billion N/A France Daily Chemical Group
Unilever USD 148.2 billion USD 52 billion 22 Consumer Goods Group
L’OREAL USD 36.1 billion USD 33.4 billion 35 France Cosmetics Group
PROYA USD 17.1 billion USD 2.3 billion 49 China Cosmetics Group
Shanghai Jahwa USD 24.2 billion USD 7.1 billion 30 China Daily Chemical Group
Estee Lauder USD 66 billion USD 14.9 billion 35 American Cosmetics Brand Group
Shiseido 25600 billion JPY 11300 billion JPY 35 Japan Cosmetics Group
Amore Pacific 100000 billion KRW 12000 billion KRW 38 South Korea Cosmetics Group
LVMH 182.9 billion EUR 53.7 billion EUR 26  
Note 1: The data comes from the recent public disclosure of listed companies; the default currency is RMB if the currency is not marked.
Note 2: According to the first letter of the company's Chinese name, the following table is the same.
Non-listed company
Company Establish Brief Introduction
Cheng Xiang Dong Fang 2014 In 2017, the new third board was listed, and its main sub brands included Hanfeishi, Esof, Shimei and Saiji, a professional cosmetics brand.
JIE LI 2001 ODM production and service provider of cosmetics, Kaihui fund has invested hundreds of millions of RMB in 19 years
Carslan 2009 Famous brand of domestic cosmetics
Marie Dalgar 2008 Famous brand of domestic cosmetics
MAOGEPING 2000 Well known domestic cosmetics brand. It won angel investment in 2010.
MISIFU 2011 Listed on the new third board in 2016.
BECCA Cosmetics   American cosmetics brand, acquired by Estee Lauder in 2016 (US $200 million).
Fantasy Files   American cosmetics and skin care brand, acquired in 2019
Hourglass   A well-known middle and high-end cosmetics brand in the United States, which was acquired in 2017
lllamasqua   British cosmetics brand, acquired in 2017
KIKO MILANO   Italian cosmetic brand, acquired in 2018 (80 million euro)
Laura Geller 1993 American cosmetics brand, acquired in 2016
Laura Mercier   American cosmetics brand, acquired by Shiseido in 2016
LORAC Cosmetics   American cosmetics brand, acquired in 2018
Napoleon perdis   Australian cosmetics brand, acquired in 2019
Pat McGrath Labs   French cosmetics brand, acquired in 2018 (US $60 million)
Retra Holdings   British cosmetics brand, high street retailers produce white label cosmetics, which was acquired in 2017
The body shop 1976 UK skin care retail brand, acquired in 2017 (£ 880m)
Tokiwa 1948 Japanese beauty product manufacturer, was invested by Carlyle strategic in 2019.
Too Faced 1998 American cosmetics brand, acquired by Estee Lauder in 2016 (US $1.45 billion)
Makeup has become the fast-moving consumer category most closely related to the consumption upgrade and lifestyle pursuit of the younger generation. The single-born post-90s generation contributed 35% of the cosmetics market growth. Compared with skin care products that lay a good foundation and make skin better in the long term, make-up is for expressive beauty and emphasizes more personalization. It is an outward offensive output type, with more immediate feedback and shorter consumption decisions and impulses.
Research on the new domestic cosmetics brand found that the core growth comes from the two-wheel drive of content and channels. Looking back on the rapid rise of new domestic brands (Perfect Diary, etc.), it is not difficult to find that there are many commonalities: deep cultivation of content operations, tapping channel value (e-commerce, live broadcast, DOUYIN KUAISHOU, etc., offline chains, sinking markets), media innovation It may be the key breakthrough ideas for beauty brands. This wave of emerging new brands is dominated by online brands, so they are all “explosive” operation ideas.
The new generation of young netizens uses videos instead of pictures and texts for the first time. In social, entertainment, and content consumption behaviors, beautiful static pictures may become history. In addition to beautification on mobile phones, they must also be on their own faces, body.
The cross-border joint name has become the hottest marketing method. In October 2018, Pechoin cooperated with the Forbidden City to launch the royal limited-edition bird-wrapped beauty pieces gift box and the first-of-its-kind revitalizing Yanlaisheng gift box. And then the Forbidden City Cultural and Creative and the Forbidden City Taobao successively sang the "Gong Dou" drama of the Forbidden City lipstick from the United Nations cosmetics brand, which pushed the Forbidden City cosmetics battle to a climax. In April 2019, Perfect Diary and Discovery Channel launched the "Explorer 12 Color Eyeshadow Palette", becoming the first hot product with a pre-sale volume of 100,000+.
From the perspective of different market segments determined by price, high-end cosmetics have more room in the future. The current “domestic products” brands are still mainly concentrated in the low-end and middle-end price markets. They target the mature markets and brand development paths of Japan and South Korea. In the future, Chinese high-end cosmetics has a large room for development, which is likely to be Brand companies with representative local cultures are occupied. Looking back at the history of the head of Asian cosmetics, Japan and South Korea, the high-end brand lines bear a strong imprint of local culture.
Men's make-up has become a rising star. In 2019, the transaction volume of men's make-up on Tmall was 330 million, and the monthly sales of LSphere men's makeup cream were 420,000. However, although the male makeup user group has grown rapidly, the increase is still smaller than that of female users. At the same time, the overall industry base is relatively small. In comparison, the field of male skin care may be more worthy of attention.
However, although the male makeup market is relatively small, based on women's aesthetic needs for the new generation of young male stars and consideration of the cultivation of the male market, the trend of male stars endorsing makeup is becoming more and more obvious. In January 2019, Wang Yibo was announced to become the global brand ambassador of Shu Uemura, and in September of the same year, he became the chief exploration officer of Yuemu Zhiyuan; in May 2019, Zhu Yilong announced to become the brand spokesperson of L’Occitane Greater China; in April 2019, Wang Yuan endorsed Paris L'Oreal makeup line; Perfect Diary signed Zhu Zhengting, Lai Guanlin, and Wu Qingfeng as endorsements for multiple product lines in 2019. In September 2019, Li Xian became the makeup endorser of Estee Lauder Asia Pacific.
The breakthrough of start-up brands should pay more attention to differentiated creation in the future. Compared with the cosmetic brands that have emerged in Europe and the United States in recent years, domestic brands are more "safe" and product homogeneity is more serious. The way to show selling points through various platforms has begun to fatigue. Brands should pay more attention to R&D and innovation. Since most new brands are sold through online channels, innovative products are more important to the carriage that drives makeup consumption. There are two growth methods for online sales, one is to keep up with new ones, and the other is to create a few explosive models that can stand the test.
Industry view
"As an incremental market, beauty makeup has the characteristics of high growth rate, high repurchase, and weak branding. With the rise of domestic cosmetics and the introduction of more foreign brands, there are channels with strong new capabilities and non-standard capabilities. The entire cosmetics industry chain has the ability to help the industry develop."
——Liu Bo of Qingliu Capital
"At present, the marketing channels of Chinese cosmetics have been dispersed from the previous CCTV advertisements and fashion magazines to the official accounts, Weibo, Xiaohongshu, Douyin, and B stations operated by the complete industry chain; the sales channels have Tmall with sound infrastructure. E-commerce platforms such as, Taobao, and live broadcast will undertake the traffic converted from marketing."
——Dong Zhanbin of Qingsong Fund
"With the transformation and upgrading of Chinese branded products and the change of national consumption concepts, consumers have more and more awareness of domestic brands and the scope of purchase categories. At this turning point, each category is worth repeating. Oriental Aesthetics’ IP is extremely innovative and unique, and there is a lot of room for growth in the future."
——Meihua Venture Capital Wu Shichun
"We are very optimistic about the development prospects of fast fashion beauty collection stores. Beauty is a format that emphasizes experience. The number of beauty shops in shopping malls has been increasing in recent years. At the same time, the new shopping needs of young people have stimulated new Beauty market opportunity."
——Zhen Fund Li Qi
"Whoever knows how to play traffic will be the best at this stage. Whoever digs traffic will stand out. Of course, the premise is that your product is okay. Makeup is really addictive. After users learn to make up, they will usually continue to make up and buy makeup products for a long time. However, the domestic makeup market has the characteristics of low brand concentration and insufficient consumer loyalty. Perhaps in the future, makeup brands will have other ways to play, by then, they will have unlimited possibilities. "
——Zhonghai Investment Zhang Yeqiu
Note: Views come from the targeted invitation of Tsingshan Capital and public media reports
Impact of the epidemic
Under the epidemic, the overall cosmetics category has declined significantly, and facial, lip, and eye cosmetics have basically shown a downward trend. Among them, the average negative growth rate of facial cosmetics transactions was about 50%, and the decline in transactions of products such as lips and eyes was also reduced by about 50%. Logistics efficiency has a greater impact on the decline in transactions. Based on the status quo of the resumption of work in all walks of life, the implementation of makeup transactions has a great impact.
From the perspective of demand, during the epidemic, most people spend most of their time at home, and basically have no need to go out. Going out is also mainly motivated by necessary work. There are fewer casual gatherings and relaxing entertainment. Therefore, the overall demand for makeup has been greatly suppressed in the short term. The pause button was pressed.
But from the experience of SARS, although the beauty industry has suppressed demand in the short term, the growth trend will continue in the long term. The underlying logical support of demand and consumption habits remains unchanged, and the long-term development remains high. In the short term after the end of the epidemic, the phenomenon of "retaliatory makeup" will appear. This concept has recently been mentioned more than the retaliatory consumption of catering, shopping, and shopping. In the process of the gradual recovery of the overall consumer market, large-scale gatherings may not rebound as quickly and intensity as expected. On the contrary, small-scale outings and tidying up of personal appearance will see stronger retaliatory consumption. phenomenon.
Quick Comment on Zhang Ye from Tsingshan Capital
1. Beauty cosmetics is one of the fastest growing categories of consumer products, but the overall market size is still small, and it is still a small and medium-sized market with fierce competition.
2. Beauty has a natural fit with pictures, videos, and live broadcasts, and is in a period of obvious marketing dividends at this stage.
3. To start a business in the beauty category, pay particular attention to building user loyalty.
Source: Qingshan Capital