Insight – China 2021 wrap: e-commerce and consumer insights in beauty, skincare, dairy & supplements
17 February 2022
Major new trends emerged in China’s consumer markets in 2021. These trends impact Australian consumer goods exporters, especially in beauty, skincare, dairy goods and supplements.
In this extended insight, the China Skinny team looks at some of the challenges and opportunities in Australia’s ecommerce and consumer markets.
Beauty and skincare
Beauty and skin-care exporters faced increased competition from ambitious domestic brands in 2021. However, foreign brands still perform better in certain skincare categories and during festival periods.
- Domestic brands like Perfect Diary, Huaxizi and Colorkey outperformed from August to November. This is when colour cosmetics are most popular. Domestic brands also dominate lipsticks.
- In 2021 the market share of foreign skincare brands outsold domestic brands during key shopping festivals in China. These include 6.18 and Singles Day.
This divide shows up in sales data. Foreign brands held 69% of the overall market share for the Singles Day build-up month. Estée Lauder received 35% of its total online sales during the 6.18 shopping festival.
Domestic brands are active in collaborations and not afraid of crossing into other categories. They typically target younger consumers and have lower price points. However, they often collaborate with popular foreign brands to boost appeal.
For example, Perfect Diary collaborated with Bailey’s cream liqueur. They released a gift box that includes sample-sized Bailey’s cream with an eyeshadow palette. The company also collaborated with Australian singer, Troye Sivan, to boost sales.
Top claims in beauty and skincare
The highest performing foreign claim in 2021 was ‘For Oily Skin’, used by Velvet. The highest overall sales revenue for foreign and domestic brands went to the claim ‘Long-Lasting’.
Consumers seem to prefer foreign brands for specific purposes:
- Consumers show a preference for foreign beauty brands that are skin-related. This includes foundation products and beauty/blemish balm (bb cream).
- Domestic brands were preferred when the product is applied multiple times during the day.
Domestic brands also predominate in ‘one-off’ goods like lipstick and eye shadow – as well as colour cosmetics.
Foreign brands should stress safety
Domestic brands like Proya, Winona and Chando are growing quickly in the domestic skincare market. This is because these brands target trends that foreign brands are slow to meet.
We anticipate this trend will continue as ‘guochao’ (national pride in China products) continues to gain traction.
Foreign brands sell well when they serve a specific function. ‘Anti-Aging’ and ‘Anti-Glycation’ are the highest performing functional claims for foreign brands. It appears that:
- Chinese consumers trust foreign brands’ ability to provide a safe product that will heal skin.
- Domestic brands do well in categories where safety is a lesser factor. These include face masks and general moisturizers.
Therefore, foreign beauty and skincare brands should stress the quality and safety of their product. This will help justify higher costs to the consumer.
Dairy products: alternatives gain traction
Domestic brands hold a 32% sales-price premium over foreign brands in dairy categories. Like beauty products, however, foreign brands sold better during festivals in 2021, including during 6.18 and Chinese New Year.
This may be because consumers stock up on heavily discounted foreign brands in the run up to festivals.
Milk alternatives are starting to gain traction
Chinese consumers are increasingly aware of lactose intolerance. Major dairy companies are launching plant-based goods, such as Yili’s Plant Selected brand.
Health benefits are a key driver for Chinese dairy consumers. As a result, many milk alternatives contain extra minerals and vitamins. This enables milk alternatives to compete with fortified dairy products.
Demand for milk alternatives is small but growing. As a product claim, ‘Lactose-Free’ had a market share of 0.5% in China Skinny’s Dairy Ecommerce dataset in July 2020. This increased to 1.6% by December 2021.
Supplements: foreign healthy lifestyle brands catch up
Foreign supplements brands outperformed on major e-commerce platform, Tmall in 2021. They started with a market share 40% behind domestic brands. This narrowed to just 2% by December 2021.
Foreign brands do well in healthy lifestyle ranges, as opposed to quick fix remedies.
- Domestic brands sell well in claims categories that include ‘weight loss’, ‘burn fat’, and ‘oil expulsion’.
- The 3 top-selling claims for foreign brands were ‘muscle gain’, ‘collagen peptides’ and ‘exercise’.
Fish oil and collagen sell well in 2021
Influencers are helping to drive sales of fish oil by promoting its stress-management benefits. This resonated with Millennials and Gen Z consumers during the pandemic. New customer segments include:
- Fitness enthusiasts. This is due to the perceived benefits of fish oil in training regimes.
- Pet owners. Some brands focus marketing on using fish oil as a supplement in pets’ diets.
Oral collagen products are relatively new to the market. Formats such as ‘collagen gummies’ are popular. And leading brands like BY-HEALTH having invested heavily in new product launches that allow easier digestion.
About this insight
We commissioned this insight from China Skinny. China Skinny is a Shanghai-based market research consultancy.
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