New cosmetics brands cash in as pandemic changes beauty habits

Shrugging off the impact of the COVID-19 pandemic, more brands entered China's cosmetics industry in the past year, contributing to stronger sales momentum in the first quarter, a study has shown.

A total of 1,717 new cosmetics brands became available to Chinese shoppers in the past year, taking the total number to 14,274, according to a report by Kantar Worldpanel that tracks the country's cosmetics sector.

The first quarter saw cosmetics sales jump 20 percent year-on-year and by 10 percent compared with the first three months of 2019, before the pandemic struck.

Among the fastest-growing categories were serums and eye makeup, with sales of both growing by 11 percent year-on-year. Sun care products and lipsticks recorded the steepest dip, contracting 7 percent year-on-year.

"These trends are largely reflective of changing habits in light of the pandemic," said Jason Yu, general manager of Kantar Worldpanel China. "Wearing masks highlights the importance of eye contour care, and social distancing and the staying-put trend have reduced the need to avoid sunshine or wear lipstick."

Among the 1,717 new brands, 169 became what the consultancy calls hot items－ones that make them into the top 1 percent in terms of penetration rate in a particular subcategory－with 106 of them Chinese brands.

The consultancy found that subcategories with lower penetration rates were more likely to see new brands make an impact. They are represented by the likes of serums, eye care, and face and eye makeup, categories in which people are more willing to try out new brands, as opposed to face creams and toners.

Chinese brands are also more inclined to emphasize key ingredients in cosmetics when launching new products than their United States or European peers, with 73 percent choosing to disclose such information.

"We are definitely seeing a customer propensity for learning about ingredients rather than being lured by pure marketing stunts like excessive packaging," said Pu Chunhua, chief marketing officer at Shanghai Jahwa, a Chinese skin care brand known for its use of herbs. "Also, there is surging fondness for Chinese brands among beauty seekers."

The company used social media-backed big data to track market trends and adjust its marketing strategy. For instance, it discovered acid extracted from fruits was among the top keywords in searches on Douyin, a short video app, and decided to ride that wave by working with an influencer through a short video to promote a body wash containing that ingredient.

"Results are encouraging: the short video promoting the product garnered 22.6 million views on release day, and the product achieved 1.4 million yuan ($217,870) of sales on the brand's Douyin e-store that same day," she said.

Emerging brands have also fostered the emergence of new products, such as makeup tissues, laundry detergent capsules, hand sanitizing cotton patches, and scalp essential oil, said Shi Qing, an executive focusing on skin care and consumer operations at Tmall, a leading business-to-customer site.

"For new brands to gain popularity, the winning recipe typically features crossover collaboration, such as blending skin care ingredients with hair washes and tissues," she said.

Sharper focus on one consumer niche is also an effective way to kick off growth, according to Kantar's report.

"For instance, new brands like My Little Ondine and Colorkey have been devoted to building strong and fashionable brand personalities and designing creative makeup looks," the report said. "As a result they've become much coveted by young consumers who are actively looking for new ways to express their individuality."