There is no denying the rapid growth of the beauty industry in Indonesia. In recent years, Indonesia has become one of the top markets for beauty products due to its growing middle class and increasing spending power among its citizens.
Top market players in the beauty industry in Indonesia
Indonesia has an increasing demand for personal care and beauty products. Hair care products account for 37% of the growth, followed by skin care products (32%), and makeup (10%). According to the report by Statista, the revenue generated by the beauty and personal care market in 2020 was approximately 2.99 billion U.S dollars. The second was the skincare segment with a revenue of approximately 2 billion U.S dollars. According to the Consumer Market Outlook, revenue in the personal care segment will reach roughly 4.1 billion USD by 2025. The Indonesian skin care products market is projected to have a CAGR of 7.5% from 2021 to 2027.
There are many international brands that invest in local factories and many have entered and are distributing their products in Indonesia. The top international brands for skincare include L’Oreal, SK-II, Dove, Nivea, Estee Lauder, Chanel, Lancome, Olay, and Johnson’s whereas the international cosmetic brands include L’Oreal, SK-II, Maybelline, MAC, Shiseido, Olay and Kiehl’s. Indonesian consumers tend to prefer global brands or popular culture trends, especially those from Europe, America, Japan, and South Korea.
With the popularity of Korean culture in Indonesia, people of Indonesia are under the influence of South Korean beauty trends. A survey on skincare and beauty products was conducted by Rakuten Insights and according to July 2021 data, 43 % of Indonesian respondents who used South Korean beauty products owned between 25 and 50 % of them. K-beauty, also known as South Korean beauty products, has gained popularity over the years.
The international brands are most trusted among the people due to their promising consumer grip but now the local brands are also entering the competition. There are many big local beauty brands in Indonesia such as Mustika Ratu, Martha Tilaar, and Wardah, and some smaller local brands such as Make Over, PAC, Polka, Rollover Reaction, BLP, Mizzu, ESQA Cosmetics, and Mineral Botanica. The brands which are made in Indonesia are competing in a fierce market, especially in make-up.
A new trend in the beauty industry
In 2021, there were 43 beauty startups and beauty companies were seen excelling in the market. The top was Sociolla which is an online service provider for beauty and skincare with around 2.8 million web visits per month, recorded on Sociolla’s website as of the first quarter of 2021. Sociolla expanded its business in 2019 by opening its first physical store after its success as the country’s leading e-commerce cosmetics site. The second is the LYKE which enables the user to find style using AI-enables visual recognition technology. Mecapan is also a solution for salon and beauty treatment providers.
There is a growing demand for beauty apps that provide AI try-on features and enable the user to see the makeup result on the app, all of these factors fuel growth in the online beauty market such as Sweet Face Camera, Barber Chop, Skincare Editor, and many more.
How digital advertising is helping in the beauty industry
The growth of the beauty industry is also driven by digital advertising, which allows marketers to reach potential consumers more efficiently than traditional advertising. Digital media and apps help consumers understand product benefits and trends faster than ever before.
In order to increase brand awareness and influence consumers’ preferences and behaviors, brands choose influencers based on their niche. Celebrity and Influencers play an important role on social media to influence the beauty trend and customers’ decisions. The influencer market was expected to reach $9.7 billion by 2020 and it reached $13.8 billion in 2021. There is a forecast that the market will grow to $16.4 billion by the end of this year. In 2022, according to sources of Brand Discovery in Indonesia, 35.7% of users buy the product from social media ads and 23.7% of users make decisions through the reviews of expert bloggers whereas 77% of consumers stick to their long-term brands and do not like to try new products.
More opportunities to be explored
The beauty industry in Indonesia will not be diminished by increased competition. The country is a highly appealing market due to strong demand growth from first-time users among male and rural individuals, as well as the expensive tastes and rising affluence in major cities.
At the same time, the opportunity of entering into ASEAN is comparatively easy which let local companies reach more consumers. Indonesia is the biggest market in ASEAN. Once the Indonesian market is won, supply chain and logistics are not the issues anymore. Shopee and Lazada cover the entire ASEAN market, it is much easier to copy what you learn from the Indonesian market to other markets with the localized solution.
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