Abstract: Makeup has encountered a cold wave, lipstick effects have failed, and skin care brands are on the rise.
Author | Luo Lizuan Jia Yang
Editor | Wang Xiaoling
This year’s “618” has just ended, which may be an important turning point for domestic beauty products.
From the perspective of and , the performance of the beauty industry this year is not optimistic. According to Magic Mirror data, GMV in the cosmetics industry fell 14.3% from June 1 to 17. The skin care industry was slightly higher, recording a 2.4% gain.
More importantly, we may need to update the cognitive model next. This year, domestic beauty products, especially color cosmetics brands, have generally encountered a cold wave. Some of the previous strategies no longer work. Not only does the lipstick effect fail, but even the previous big promotion strategies no longer work.
But at the same time, new winners are emerging.
Makeup is down, skin care is up
In the cosmetics industry, domestic brands that have performed well in the past are now facing a painful decline. According to Mojing data, Yixian e-commerce , the parent company of Perfect Diary , achieved a transaction volume of 90 million during the 618 promotion period, a year-on-year decrease of 52%. Hua Xizi and Mao Geping , two equally important new domestic cosmetics brands, have experienced sales declines of more than 30%.
A report released by Caitong Securities Research Institute stated that Taobao (Taobao + Tmall ) Q1 cosmetics sales were 19 billion yuan, a growth rate of 28.5% lower than the previous quarter; sales volume was 320 million pieces, a 25.8% decrease from the previous quarter. Cosmetics sales on the Douyin platform were 1.5 billion yuan, down 9.5% month-on-month.
Moreover, the decline will continue for a long time. According to the Big Data of Beauty Cultivation, in the first quarter of 2022, a total of 54,939 new cosmetics product registration information were added under the six categories of makeup/perfume, skin care, mother and baby, body care, hair care, and sunscreen, which was significantly lower than the same period last year. Less, a decrease of 43%. Among them, a total of 9,504 pieces of new product registration information were passed in the cosmetics/perfume category, which was a significant decline from the 14,285 pieces in the same period last year, with a decrease of 33%. The core reason for
is that the consumer market demand has declined due to repeated epidemics. As consumers spend more time at home and wear masks for longer periods of time, the opportunities to be able and want to put on makeup have been significantly reduced.
To make matters worse, while the market’s desire for consumption is decreasing, the cost of raw materials for cosmetics products is rising. For example, the 2021 annual financial report of Ant Cosmetics, a mainstream domestic cosmetics OEM, shows that the gross profit margin of powder makeup, wax-based, and cream products fell by 20% to 40%. Regarding the decline in the company's operating profits, Ante shares explained that it was the increase in product material costs and administrative expenses.
Previously, new domestic cosmetics have always adopted a cost-effective route, trading low prices for the market, which eventually led to low profits and no profit becoming the norm for domestic cosmetics brands. The market has become accustomed to such price anchors. Once the price increases, the original market may be lost. In addition, the repurchase rate of users who are attracted by the price is not high; consistent low-price sales are like cancer, sucking away the company's profits and cash flow reserves, leaving makeup brands with not much room for improvement in the face of crisis.
has not seen much growth for international brands that have also joined the price war since last year’s Double 11 and began to promote in the form of a large number of gifts. For example, Lancôme , Estee Lauder , and Shiseido were unable to resist the market downturn and experienced varying degrees of negative growth, but at most it was only a 16.7% drop for Estee Lauder.
Costs are rising and revenue is declining. In order to survive, cosmetics brands can only significantly reduce marketing expenses. But soon, the market discovered that as long as purchases were suspended, the growth rate of these cosmetics brands would slow down significantly, or even suffer negative growth. In other words, their previous launches left too few naturally growing user groups to cope with the growth needs of such a highly valued company, which naturally triggered a collapse in market value. For example, Perfect Diary has lost 95% of its market value since its listing.
In sharp contrast to the cosmetics industry, skin care brands are ushering in an era of rapid growth. According to the Orient Securities report, among the brands with a growth rate of more than 60% during the 618 period, there are domestic brands Mibell and Quadi , as well as international brands Olay, Helena , Proya , and Lamer. Those with growth rates between 20% and 60% are mainly functional brands, such as Winona , Dr. Ayer, Kiehl's , and SkinCeuticals .
The core reasons for the growth of skin care products and the decline of the cosmetics industry are two sides of the same coin. Consumers spend more time at home and reduce optional purchases such as beauty products. However, skin care products are still needed for daily use and are "rigid" purchases. At this time, new brands that are innovative enough, have strong brand power, or have enough ammunition to launch will be favored by consumers.
Caitang took another path
In the overall sluggish beauty environment, Caitang has become a brand that has suddenly emerged.
According to Soochow Securities and Magic Mirror data, Caitang’s sales during 618 reached 76 million yuan, a year-on-year increase of 231.4%. The sales completed this year have been equivalent to 305.6% of last year. Compared with Perfect Diary, which had a turnover of 90 million, which fell by 52%, and Huaxizi, which had a turnover of 121 million, which fell by 34.1%, it can be said that it has bucked the trend and exploded.
To a certain extent, there is a time gap between Caitang and Perfect Diary. The paths chosen by each also just become a mirror image. It’s just that in 2019, which can be called a watershed year, there are many opportunities and many things are still uncertain.
In 2019, Perfect Diary was the most popular, and its valuation was promoted from US$1 billion to US$4 billion within a year. Perfect Diary had revenue of 3 billion yuan and profit of 150 million yuan that year. According to founder Huang Jinfeng’s statement to Caixin , “At this point in time, the brand is healthy.”
Also in 2019, Caitang was invested in by the listed company Proya and subsequently acquired. Caitang, a brand founded in 2014 by makeup artist Tang Yi - earlier than Hua Xizi, which also focuses on Chinese aesthetics, has truly entered the horizons of consumers. At this time, Caitang’s annual sales were far less than 100 million.
Then Perfect Diary began to continuously launch new products - from 2018 to 2019, the number of registered SKUs reached 1,553, which is 5 times that of Huaxizi. At the same time, supplemented by a global marketing bombing, GMV continued to rise. It is trying to focus on cosmetics, which have low consumer loyalty, to pursue its ambition of "L'Oréal China". This is a challenge similar to Sisyphus climbing a mountain.
An FA who pays attention to consumption analyzed to 20 News that the repurchase of cosmetics products is low and they need to constantly introduce new products and launch them. The customer acquisition model is not very healthy. "Actually, if you look at the income structure of international beauty companies, they also make money from skin care. They don't make much money from makeup, but they rely on frequent launches of makeup to occupy users' awareness."
When Perfect Diary discovered that the marketing method was not working, they put Sales expenses have dropped from nearly 70%, and when trying to increase research and development to focus on creating celebrity items (base makeup) with longer life, we found that people have actually been walking on this road for a long time, and in the near future, they finally It is beginning to stir up the top structure of the beauty industry. That is Caitang.
According to Mojing data, Caitang has appeared on the Tmall beauty sale Top 10 list for the first time; and according to Yibang data (counting an additional 2 days to June 20), Caitang’s 618 Tmall GMV even exceeded The perfect diary. After
Proya became a shareholder in 2019, Caitang’s strategy was to streamline SKUs, upgrade the supply chain, and provide marketing support. The "big item strategy" that Proya has been exploring and confirming since 2019 (from bubble masks to "Morning C and Night A" combination, Yuanli Essence and Double Anti-Double Essence and other star single items) has also been implemented in the Caitang brand. . Caitang has missed out on fashion FMCG brands in the market (focusing on color cosmetics, fast promotion of new products, low unit prices, and high marketing), and instead focuses on contouring and base makeup products with larger profit margins.
The essence of the so-called large single product is not only to have high sales, but also to be able to continuously iterate, have pricing power, and establish strong brand awareness and user stickiness, thus driving the improvement of the entire brand and series of products.In Caitang's Tmall flagship store , there are currently only 34 SKUs, and the three-color one-in-one high-gloss contouring palette is the most popular. So this year, the original formula was upgraded to version 2.0, and the price was further increased to 199 yuan.
In an environment where the beauty industry is shrinking as a whole and investment and financing in the industry are cooling down, Caitang’s outbreak is closely related to its counter-cyclical increase in marketing. Caitang is here to “buy the bottom”.
According to Proya's 2021 financial report, Caitang has been officially listed separately from the matrix of Yuefuti, Youzilai , etc., becoming the second core brand besides the main brand. Marketing expenses, mainly around these two major brands, also increased by 33%. In this year's Q1 financial report, Caitang also stated that it will "seize the mid-range makeup market share", continue to penetrate new media, strengthen cooperation with head and waist KOLs, continue to break through the circle, and convey product differentiation advantages and the brand's professional makeup attributes.
's performance in "buying the dip" is obviously good. During the two major promotions of “3.8” and 618, Caitang’s GMV increased several times.
But there is another point that deserves more attention. Caitang’s marketing strategy is not a flood of information regardless of cost. According to Minsheng Securities , in Q1 of 2022, Caitang, Yuefuti, and Youzilai brands all achieved profitability.
In fact, looking at the general trends of the industry and the latest regulatory policies, the industry that was originally diverse and chaotic in 2019 is now more standardized. The "Cosmetic Efficacy Claim Evaluation Standards" implemented last year requires cosmetics registrants and filers to evaluate the efficacy claims of cosmetics within the specified time and upload a summary of the basis for the product's efficacy claims. This means that the efficacy of new products must be based on real evidence and real materials.
Just this month, a cosmetics entrepreneur issued a farewell message saying that he had canceled his product creative company. Because with the advent of the efficacy era, conceptual additions have been suppressed, and effective additions and efficacy testing have greatly increased product costs. (Cosmetic companies) are unable to iterate quickly, and are required to extend the product life cycle as much as possible, so they are required to create products that are difficult to copy. barriers, rather than product ideas that can be easily copied. He wrote: "What is most needed in the functional era is not product creativity, but product barriers."
In short, the feasibility of the perfect diary style of play has been blocked by policies. If before, companies such as Proya and Winona still chose to follow the big single product strategies of international big names, then this will also be a policy-driven road.
And when we look at this year’s 618 data, the trend of large single products in the beauty industry becomes even more obvious.
According to Mojing data, comparing the 2021 pre-sale period (May 25-May 31) and the 2022 618 pre-sale period (May 26-May 31), several key international and domestic brands CR1 And the concentration of CR3 has basically been greatly improved. For international brands such as , L'Oreal , the CR1 proportion will increase from 20% in 2021 to 29% in 2022; the CR3 proportion will increase from 31% in 2021 to 48% in 2022. For domestic brands such as Winona, the proportion of CR1 will increase from 23% in 2021 to 28% in 2022, and the proportion of CR3 will increase from 44% in 2021 to 76% in 2022.
This represents a return to some common sense. It also means that the entry threshold for playing this game is higher.
618’s postmodern winners
There are also some category winners that have become bright spots in the ordinary. According to statistics from Star Chart data, this year 618, washing, care and cleaning increased by 33.7%.
pays attention to the consumer demand brought about by personal health and successfully crosses the cycle. This year’s 618, personal health product data generally performed well. Health products cover many categories and generally perform well. A friend who follows Liu Genghong in shuttlecock exercise, after being recommended ammonia sugar by the planting platform, decisively placed an order on 618 to protect his joints.
As for scalp care, let alone it. The "2021 National Scalp Health White Paper" released by Yicai last year showed that there are about 250 million people in China suffering from hair loss, pushing the economic scale of the entire hair care and related industries to expected to exceed 40 billion yuan.According to
's "White Paper", more than 60% of citizens have begun to spontaneously pay attention to the health of their scalps, and the demand for oil-controlling and fluffy hair has become a popular trend; in the overall care market, only some brands have entered this track.
As early as 30 years ago, Rejoice , a subsidiary of Procter & Gamble , entered Chinese supermarkets. However, as the "White Paper" said, the market needs new stories and is no longer satisfied with washing clean hair, but mainstream brands have failed Fill this gap in time.
Kérastase , with an average price of two to three hundred, has not only become the sales champion in China, but also performed well in the global market. In fiscal year 2021, L'Oreal's revenue was 32.29 billion euros, a year-on-year increase of 16.1%, more than twice the growth rate of the global beauty market. L'Oreal, which started out as a hair dye company, is enjoying the dividends brought by the growth of hair care products. The Professional Products division, which includes Kérastase and L'Oreal Hair Care Professional line products, contributed 24.8% growth.
and Kérastase have the same growth logic as ulike, although in various platform statistics, hair removal devices are classified as beauty devices.
In the beauty category, another category that has crossed the cycle is beauty tools.
According to the research report of Guotai Junan , the pre-sales of "personal protective equipment" increased by an astonishing 124% in 618 this year. The star of this category is the beauty device. Among them, Ulike, Yameng , Chupu, and amiro all exceeded 100 million yuan in sales in the first week of Tmall 618. By June 6, Ulike’s sales had exceeded 500 million yuan.
A few years ago, imported beauty devices flooded into the Chinese market and were classified under the beauty category on Tmall. They have always been a growth star in the beauty track. According to Zhiyan Consulting data, China's household beauty device market will be close to 10 billion yuan in 2021, with a compound annual growth rate of more than 30%. The market size is expected to exceed 20 billion yuan in five years.
A Xiaohongshu blogger said that her 618 is very leisurely. She only organized a fan group to buy a facial cream suitable for sensitive skin and . She also only bought a Mibeier facial mask for less than 200 yuan.
She has never considered the beauty tool products that have soared in 618 data. "For anti-aging, I will go directly to medical beauty. When I buy beauty tools, I only use them once or twice when the pictures are fresh. Later, they will become troublesome and leave them there to gather dust."
On the road of technological beauty, half of the Professionals believe in medical-grade methods, and consumer-grade products such as home beauty devices are also exciting.
Whether it is Kérastase or a beauty device, products with high unit prices have become dark horses. In the field of beauty, the lipstick effect has failed. Even the distinction between mandatory and optional consumption is changing.
Judging from the data performance of 618, some parts of the beauty field confirm this statement, such as the growth of skin care products. But on the other hand, it also shows some post-modern characteristics. Whether it is a must-select product is largely determined by the added value brought by the product. After all, basic needs have long been seen in daily life such as Pinduoduo and Live Broadcasting Room. Discounted channels to meet.
No one recognizes Doukuai’s new brand
A person in the beauty industry expressed her concern before 618 that Doukuai brands are taking over the market share of traditional brands. “They are all new brands that have never been heard of before.” The progress of
Douyin and Kuaishou has added some exciting elements to the relatively dull 618 e-commerce. First of all, according to Star Map statistics, from a broader market perspective, the growth of integrated e-commerce platforms averaged only 0.7%, while the live streaming e-commerce platform still achieved a growth of 10%, accounting for 20.8% of the total GMV.
Secondly, in these two relatively closed traffic fields, domestic products have shown strong competitiveness, and there are also new brands that were previously unfamiliar in the industry.
According to statistics from Yibang Power Network, the top 10 brands in the cosmetics and perfume category of Douyin 618 are Huaxizi, FV, colorkey, Julio, Kazilan, Caitang, Bai Ruimei, Mao Geping, Ermutao, and Perfect Diary. Among them, FV and Julio are Douyin brands that perform particularly well on Douyin, defeating other mature brands with richer channels and resources in the Douyin domain.
During Kuaishou 618, the top 10 beauty and skin care companies were WHOO, Su Mi 37°, Dora Duoshang , Hua Xizi, Yilian , Ou Shiman , Angela, Olofi , Mengquan and PMPM are almost all domestic brands, and their overlap with other platforms is very low.
Another point is that after the "super top" anchors on various platforms have withdrawn this year, brands have more motivation to develop brand self-broadcasting, hoping to attract consumers to private domain conversion. In the list compiled by jumei., we will find that among the top ten Douyin brand self-broadcasts, only ulike (third place) and OLAY (seventh place) are international brands, and the rest are all domestic brands.
It is worth noting that the second-placed Muscle Prophet is also a TikTok brand, with a transaction volume of more than 44 million yuan, only 2 million less than the first-placed Huaxizi.
This shows that a group of new brands have seized the newly increased traffic dividends from Douyin and Kuaishou platforms, and first gained the attention and recognition of consumers. This group of consumers has their own unique demands and price ranges, and they do not have very strong fixed brand preferences. They are actually noteworthy new growth opportunities.
But this is only a small breakthrough point at the moment. If we look at another more comprehensive beauty category compiled by Cicada Mama, we will find that in the field of skin care on the Douyin platform, the advantages of international brands are still very obvious. In the large beauty category covering skin care and beauty tool products, the top 10 are: Hou, Estee Lauder, Ya Meng, Hua Xizi, Proya, Runbaiyan , AMIRO, SK-II, Lancôme and AO lennerso.
Among them, only Huaxizi, Proya, Runbaiyan and AMIRO are domestic brands, and they all have their own unique research and development capabilities or patents. In other words, when it comes to real unit prices and standard products, consumers still trust mature brands more.
