Report to create their own make-up style

Report of Cosmetics industry

Modern cosmetics industry originated in Western Europe, heritage of the ancient art of home-
based perfume workshop from the 18th century to today’s factory production, brand
operations in the global market. Cosmetics has become a brand-driven, group-based global
operations.

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Cosmetics and beauty products are controlled by a few multinationals, for instance, L’Oreal,
Unilever, Procter & Gamble, Estee Lauder and Shiseido. With the increasing popularity of
social media, the cosmetics industry is also borrowing these network platforms to narrow the
distance with consumers. These network platforms not only have strong influence in young
groups, but also can help cosmetic companies to make advertisements for their products.
There are a lot of videos on YouTube are about cosmetic tutorials which are designed to teach
viewers about beauty, for example, how to use a particular type of product to create their own
make-up style which is a good way to helps cosmetics companies promote their products to
attract more consumers.

2. Global overview

The global make-up market has shown a steady growth in the past decade. There has never
been any stagnation or negative growth situation. Even in the economic crisis, the growth
slowed to 1% in 2009 but quickly recovered to around 4% in the recovery which is the normal
level of growth.

According to L’Ore?al’s comprehensive analysis of the global beauty market in its 2016 annual
report (“The world of beauty in 2016”), the global cosmetics market in 2016 is 186.2 billion
euros which increased 4%. In terms of growth rate, the increase of 5% in 2007 is the highest
in the past ten years and the increase of 1% in 2009 is the lowest in the past ten years.

Growth of the worldwide cosmetics market over ten years

Specifically, sales of online cosmetics in the world have accelerated in recent years,
increasing by 20.7% in 2016, far exceeding the growth rate of 4% of the total cosmetics
industry. By the end of 2016, E-commerce business accounted for 11% of the global
cosmetics market.

For the emerging markets maintain exciting growth and at the same time, Asia Pacific market
has become the world’s largest consumer market for cosmetics, accounting for 36.9% of the
global total, followed by Western Europe, North America and Latin America.

From the product category, the largest one in cosmetics industry is skin care market. The
global market for skin care products in 2016 reached 67.61 billion euros, accounting for
36.3% of the total cosmetics market. The market size for hair care products was 42.63 billion
euros, accounting for 22.9% of the total. The makeup market was 33.92 billion euros,

accounting for 18.2% Perfume market size of 22.15 billion euros, accounting for 12.0%;
health supplies market size of 19.69 billion euros, accounting for 10.5%.

From the major consumer countries, cosmetics sales channels are mainly in department
stores, supermarkets, pharmacies and chain Monopoly. According to the actual situation in
different countries, there are obvious differences in the roles of various channels. For
instance, the United States with a well-developed circulation industry and the warehousing
and retail channels are one of its major features, while the direct sales and open markets make
up a big share in Russia. In European developed countries such as Britain, Germany and
Spain, the role of department store channels is very small. Supermarkets, specialty stores and
pharmacies occupy a very high proportion, especially the pharmacy is the most important
sales channel. The British BOOTS chain stores occupy 70% Share.

3. Cosmetics in France

As we all know, France has a global leading position in the cosmetics perfume industry. This
is not only due to the excellent traditions and global professional expertise that the industry
has always admired, but also to French innovation ability in this industry. France is the
world’s number one exporter of cosmetics, and in this industry, “Made in France” is still a
label of great quality in the whole world. Moreover, French cosmetic products are exported to
more than 200 countries and for those emerging countries, the cosmetic companies in France
still try to increased their global market share.

Exports in 2016 exceeded 12 billion euros mark in the cosmetics trade surplus reached 9.2
billion euros, and the global cosmetics market accounted for 1/4 occupied by the French
brands. For China, France is the largest cosmetic supplier. In 2016, the export of French
cosmetics to China increased by 15% to 783 million euros, accounting for 31% of China’s
imported cosmetics. This also allows the French cosmetics industry to become the third
largest exporter after aviation, wine and spirits.

4. Cosmetics in China

China’s cosmetics industry is developing rapidly and has become a new consumer hot spot.
With the global luxury goods industry continued downturn, the Chinese luxury goods market
continued to shrink while the cosmetics industry has ushered in its “new era.” As China has
liberalized the restrictions on imported cosmetics, the international cosmetics giant is
accelerating the expansion of the Chinese market, making the Chinese domestic brands to
withstand the huge impact from the outside. In the Chinese beauty cosmetics market, the
market share of foreign capital or joint ventures is close to 80%, while domestic cosmetics
production can only meet the needs of Chinese consumers by launching medium and low-
grade products through Sino-foreign joint ventures.

In recent years, with the popularization and development of the Internet, the channel of
electricity supplier has developed rapidly. According to statistics, in 2015, the scale of online
transaction of cosmetics in China is about 152.6 billion yuan and the penetration rate of
cosmetics in the retail line is 29%. It is estimated that by 2018, 300 billion yuan.

Take L’Oreal Paris as an example. According to the latest mid-year report released in 2016, as
of the end of June this year, e-commerce sales rose 33%. Currently, the contribution of global
e-commerce sales have accounted for 6% of L’Oreal Group’s total sales. In 2015, L’Oreal
sales reached 1.3 billion euros, growing rapidly, accounting for more than 5% of the Group’s
sales, which is equivalent to the overall sales of L’Oreal’s fifth largest market in Germany. In
the past five years, e-commerce has jumped to become the top three distributors of L’Oreal in
China. In 2015, E-commerce sales increased 60% over last year. Cosmetics companies in
China see the importance of e-commerce channels and have invested heavily.

5. New trend

Due to health and product safety concerns, the growing awareness of green products and
harmful chemical threats of people makes the demand for organic green nursing products will
continue to grow.

In early December 2015, the United Nations Climate Conference was held in Paris. Major
consumer product manufacturers responded to the call for energy conservation and emission
reduction. They jointly signed and set emission targets and committed themselves to
developing renewable resources.

In 2016, Cosmetics design concluded that sustainability is still something that the cosmetics
industry needs to be aware of. Like packaging, many businesses are already using
environmentally friendly and recyclable materials.

Water will also be a priority for the beauty industry, with many companies saying they will
save water in the production of beauty products. And according to Mintel introduction, the
future of beauty products must have a clear environmental standpoint to show consumers that
the brand solution to water shortages, to help them control the personal water.

In recent years, natural organic care products market continues to heat up, according to the
US website fashionmag.com reported that in the past ten years, natural beauty products
become beauty and personal care industry’s number one growth point, with an average annual
increase of 20%, of which the representative Brands include: The Body Shop, Kiehl’s and
Burt’s Bees. The United States market research firm Grand View Research predicts that by
2020, organic natural care products will double the market size.

6. Conclusion and personal opinion

Cosmetics Consumers did not change their purchasing behaviour when the crisis came and
did not reduce the value of cosmetic evaluation. It can be said that cosmetics industry is a
rising market where is full of opportunities and challenges. Cosmetics Market as an
innovation driven seller market with obvious characteristics, consumers are willing to pay for
high-quality and new attractive products. However, with the continuous emergence of high-
tech cosmetics and healthy organic products, the demand of consumers for cosmetic products
is also increasingly strict. How to deal with these challenges will be a serious problem which
we should seriously consider. 

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