Cosmetics market: local producers still hold a modest share
Despite the fierce competition and the high consumer preference for international brands, local businesses have been gradually asserting their position but still hold a modest share, estimated at around 10 per cent of a $2.3 billion market.
Local cosmetics market still sees the dominance of foreign brands, urging local producers to focus on improving quality and promoting marketing strategies to expand market share.
According to data and business intelligence platform Statista, foreign beauty brands are popular.
Brands from the Republic of Korea have established themselves as the leading players in Việt Nam’s cosmetics market. Statistics showed the Republic of Korea was Việt Nam’s largest export partner for cosmetics with export value reaching around US$330 million in 2022.
Apart from South Korean brands, Vietnamese consumers also enjoy using Japanese and European brands.
Despite the fierce competition and the high consumer preference for international brands, local businesses have been gradually asserting their position. Brands such as Cocoon, M.O.I Cosmetics, Lemonade, and more have also been, step by step, gaining popularity among consumers by offering affordable yet high-quality products.
Still, local brands hold a modest share, estimated at around 10 per cent, of a $2.3 billion market.
Việt Nam’s cosmetics market is thriving, thanks to young consumers entering the market and a rising middle class.
Statista pointed out that Việt Nam is among the countries with the highest average salary growth rate in the Asia – Pacific region. “As people have more disposable income, the demand for various consumer goods has been increasing in the country, especially for cosmetics and personal care items.”
With the post-COVID-19 economic recovery underway, international trade has regained momentum. Together with the rise of e-commerce, spending on cosmetic products is increasing, with a surge in revenue for the beauty and personal care market in Việt Nam expected in the coming years, Statista wrote.
The revenue in the beauty and personal care market in Việt Nam is projected to reach $2.66 billion by 2024 with an annual growth rate of 2.97 per cent in 2024-28.
The per-person revenue in Việt Nam is projected to be at $26.77 in 2024.
A report by Nielsen showed Việt Nam’s average per-person spending in cosmetics is still modest but increasing year-on-year, estimated at around VNĐ500,000-700,000 per month.
Go online
According to Statista, thanks to Việt Nam’s digital-savvy population, the use of e-commerce has been expanding rapidly in recent years.
Cosmetics has consistently been among the leading online shopping categories in the country, especially among urban consumers.
“With more and more people comfortable shopping for these items online, brands have been tailoring their customer journey to meet the new demand for online services.”
For instance, virtual try-on services have recently become popular among beauty brands in Việt Nam, providing consumers with an interactive product demonstration using augmented reality technologies.
“New digital innovations employed within the cosmetics market are expected to continuously improve the consumer journey with online shopping, helping e-commerce to overtake physical retail stores as the go-to destination for beauty and personal care products in the near future.”
In addition, social media has played a crucial role in shaping beauty trends in Việt Nam.
Statista estimated that online sales would contribute 20.2 per cent of total revenue in the beauty and personal care market by 2024.
A report by e-commerce data platform Metric showed that revenue of beauty and personal care products on e-commerce platforms reached VNĐ22.2 trillion in the first 10 months of 2023, rising by 74 per cent over 2022.
Tín Lê, founder cum CEO of Adtek, said that as cosmetics brands are all promoting sales via e-commerce platform, local brands should focus on ensuring product quality to attract and keep customers.
In addition, focus should also be on catching beauty trends as Vietnamese consumers are increasingly embracing natural and organic beauty products, together with designing, branding and marketing strategies. — VNS
