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Thailand's Cosmetics and Beauty Products Industry

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Thailand's Cosmetics and Beauty Products Industry Thailand’s Cosmetics and Beauty Products Industry Opportunities for International Business January 2017 World Business Advisory Center World Business Division 1 Executive Summary Thailand is the largest market for cosmetics in the ASEAN’s manufacturing base for ASEAN with USD 4 billion market value. cosmetics with USD 400 million export value. among the fastest growing market in the blessed with local herbs could be turned world with 8% to 10% annual growth rate. into more than 200,000 cosmetic ingredients. Thailand’s Cosmetics and Beauty Products Industry – Business Opportunities Market Opportunities: Investment Opportunities: • Engage in trading activities • Engage in cosmetic manufacturing • Engage in retail and marketing activities • Co-develop products with local firms • Collaborate with local distributors/ • Use Thailand as OEM hub retailers • Source raw materials locally • Expand into ASEAN market 2 Table of Content Thailand’s Cosmetics and Beauty Products Industry - Overview Market Opportunities Investment Opportunities KASIKORNBANK’s Support 3 Table of Content Thailand’s Cosmetics and Beauty Products Industry - Overview 4 Thailand’s Cosmetics and Beauty Products Industry - Overview With rapidly growing market, Thailand has become ASEAN’s beauty hub with tremendous business potential throughout the value chain, ranging from manufacturing, importing, distribution to retail business. Thailand’s Cosmetics and Beauty Products Industry – Value Chain 1 3 Retailing 4 End Users Department Store Thai Cosmetics Manufacturers Specialty Store Customers in Thailand Supermarket Foreign 2 Hypermarket Tourists Convenience store Importers of Cosmetics Distributors Spa & Salon and Beauty products 2 E-commerce 5 (1) Cosmetics and Beauty Product Manufacturers in Thailand Thailand has been manufacturing base for international brands for over 40 years; Considerable market size and availability of raw materials have contributed to formation of a robust supply chain with established local brands and a wide spectrum OEM manufacturers. 3 Types of Manufacturers in Thailand Global Manufacturers in 1 Thailand 2 Local Brand Manufacturers 3 Local OEM Manufacturers Several local brand manufacturers are There are approximately 2,000 cosmetic OEM Many global manufacturers also have set up successful launching cosmetics in not only manufacturers in Thailand. Most of them are their subsidiaries in Thailand such as Thailand but also many ASEAN countries e.g. SMEs, eager to grow locally and in regional Beiersdorf (Nivea and Eucerin), Kao (Biore). Cambodia, Laos, Indonesia. market. 6 (2) Importers and Distributors of Cosmetics and Beauty Products Usually, foreign brands distribute their products by import subsidiaries, authorized distributors, or SME’s distributors; The larger brands prefer setting up import subsidiary or appointing authorized distributors, whereas smaller brands would use SME’s distributors. 3 Types of Importers and Distributors in Thailand Import Subsidiaries of SME’s Importers & 1 international brands 2 Authorized distributors 3 Distributors Handle only own brand group products Thai companies handle various brands Numerous local SME companies . 100% Foreign owned subsidiaries e.g products eg. Central Marketing Group handle various Thai and foreign brands Loreal (Thailand), ELCA (Thailand), LVMH (Clarins, H2O), Minor International PLC products. Perfumes and Cosmetics (Thailand) (Red Earth, Laneige). JV with local firms e.g. Shiseido (Thailand) Kanebo Cosmetics (Thailand) 7 (3) Retailing of Cosmetics and Beauty Products With variety retailing channels for cosmetics and beauty products, company could consider exploring multiple channels by collaborating with existing players or engaging in retailing activities to tap into downstream opportunities. Major Cosmetics Retailing Channels in Thailand Department Store Specialty Store Supermarket/Hypermarket Local Players Foreign Players Local Players Foreign Players (JV with Local Players Foreign Players (JV with • TOPs • Max Value (by Aeon) • Central Group Thais) • Beauty Buffet Thais) • Big C Supermarket • The Mall Group • Isetan (Thailand) • Eve and Boy • Boots • Tesco Lotus • Siam Piwat • Bangkok-Tokyu • KARMART • Watson • Makro Convenience Store E-commerce Local Players Foreign Players Foreign Players (JV with Local Players • WeloveShopping • Lazada • 7-Eleven Thais) • Tarad • Mini Big C • Family Mart • Central • Lotus Express • Lawson • SMEs from Facebook 8 Cosmetic Sale Counters in a Department Store (4) End Users With large number of upper middle income family, beauty salons and numerous foreign tourist visitors, Thailand offers attractive market opportunities for cosmetics and beauty products. Upper middle income customers Foreign Tourists as additional Beauty Salon as end user, 1 with considerable growth 2 target group 3 influencer, and retailing channel Income per Capita 30 million USD 1.4 billion USD5,500 tourists/year market value With above $5,500 income per capita, With approximately 48% foreign tourists Beauty salons and spa could be considered as Thailand has sufficiently high purchasing buying cosmetics, businesses could consider influential end users, very useful as marketing power, creating market potential for high-end foreign tourist as additional target group for method as well as retailing channel. cosmetics. their products. 9 Table of Content Market Opportunities 10 Thailand’s Market - Overview 3.5 billion USD of Thailand’s market value of cosmetics and beauty products in 2016 Facts about Thailand’s Cosmetic and Beauty Products Market Thailand Market Value of Cosmetics and Beauty Products, as of 2016 Thailand is the largest market for cosmetics 1.1 billion USD in ASEAN. Import 32% Thailand is among the fastest growing market in the world with 8% to 10% annual growth rate. Domestic International brands are very popular Production among Thais, including both domestically 68% produced foreign brands and imported brands. 2.4 billion USD 11 Thailand’s Market for Imported Brands - Overview Recently, imported brands have extraordinary high growth (16%-22%), especially skincare and make up, indicating high growth potential for Thailand’s market expansion. Import Value of Cosmetics and Beauty Products 1.1 billion USD Total Import Value Skincare 1 Skincare Import value 2015: Growth in import value during 2012- 2015 48% USD 504 million 16% Lip Make Up Lip Make Up 2 Growth in import value Import value 2015: during 2012- 2015 Others Skincare & USD 47 million 22% 40% Cosmetic 4% 60% Eye Make Up Eye Make Up 3 Growth in import value Import value 2015: during 2012- 2015 4% USD 42 million 16% Powders Powders Growth in import value 4 Import value 2015: during 2012- 2015 12 4% USD 39 million 6% Thailand’s Market – Business Landscape Nevertheless, business landscape for cosmetics and beauty products market is considerably competitive, in which local brands dominate low income segment and international brands dominate middle to high income segments. Business Landscape of Cosmetics and Beauty Products Market in Thailand Market Segment Low Income Group Middle Income Group High Income Group Beauty and personal care producers use different • High exposure to local • Perceive that Korean and Japanese women have • Highly value for beauty and healthy skin distribution channels to reach Customer media. Hence, often use flawless skin. Hence increasing popularity of with specific needs for skincare. Hence each target group. Sales Characteristic local movie stars/ idol as a Korean and Japanese brands. need to have beauty advisor (BA) to sell counters in local department selling point products. stores are the most common channel to reach high income Mostly local brands Japanese Brands Non-Japanese Brands Japanese Brands Non-Japanese Brands • Mistine • Hada Labo • L’Oreal • Shiseido • Clarins customers, whereas specialty Key Players • Cute Press • KATE • Maybelline New York • SKII • Estee Lauder stores with display of various • Tell Me • Canmake • Revlon • Three • Christian Dior cosmetic brands have • Beauty Buffet • Biore • Kose • YSL become a popular channel for targeting middle income • Hypermarkets • Cosmetic Specialty Stores • Department Stores (Cosmetics Sale customers. • Convenience Stores • Department Stores (Cosmetics Sale Counters) Counters) Distribution Channel • Cosmetic Specialty Stores E-commerce and online channels are suitable to reach all target groups. 13 Thailand’s Market – Recent Trends Target customers consist of young and elderly populations; The young prefers whitening products and colorful make up, whereas the old prefers anti-aging skincare. Whiteness as the standard Wearing make up at Anti-aging beauty for Going natural as a of beauty young age mature women growing trend Potential Products: Potential Products: Potential Products: Potential Products: o Whitening Skincare o Colorful Cosmetics o Anti-Aging Skincare o Herbal & Organic Skincare o Sun Screen o Acne Skincare o Covered Cosmetics o Cosmetic for sensitive skin o Brightening Cosmetics 14 Recent Consumer Behaviors: Gen Y VS Gen X Both gen Y and gen X in Thailand spend considerable amount of time on the internet; But they consume different media and use different mobile applications. Media Consumption Behaviors Gen Y VS Gen X Gen Y Gen X TIPS for business Born between 1981-2000 Born between 1965-1980 Mobile responsive website for products Most Popular Device Mobile phone introduction is necessary as both gen Y and for Internet Access 1 gen X access the internet via mobile devices. Average Internet Choose appropriate social
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