Beauty care in Thailand – An attractive market

Thomas Hundt

The beauty products market in Thailand ranked third in South-East Asia in 2022 at US$5.3 billion, after Indonesia (US$ 7.2 billion) and Philippines (US$ 5.5 billion). Market observers forecast that sales in Thailand will grow at an annual average of 5.2 per cent until 2028.

PURCHASING POWER AT A MEDIUM LEVEL BUT RISING

The International Monetary Fund forecasts annual increases in national income of around 5 per cent until 2028. The average household consists of three persons and had a monthly income of about US$ 850 in 2021. Of this, they spend about US$ 22 per month on personal care.

PREMIUM, HEALTH AND NATURE TRENDS

According to surveys, consumers are willing to pay more money for premium and natural products. Since COVID-19, they are paying even more attention to their health and inform themselves more comprehensively, which is why products recommended by dermatologists or other doctors are in demand. Products based on herbs and plant extracts are also selling particularly well, according to the Thai Cosmetic Manufacturers Association. Domestic suppliers are strongly represented in this segment.

Cosmetics that lighten the skin are a little less popular. Because the whitening ingredients are considered hazardous to health and some have even been banned, the demand for whitening products is waning. The skin's appearance should rather shine brightly and naturally. Many beauty and make-up trends come from the Republic of Korea and that country’s cosmetics and care products promise a soft, glowing "K-beauty look".

INFLUENCER MARKETING WORKS

Consumers spend considerable time on the Internet as well as on social media channels. The top social media platforms are Facebook, Instagram, Line and TikTok. Consumer goods marketing is commissioning more and more influencers and the strategy is successful. If influencers recommend a beauty product and readers comment positively on their recommendation, sales increase. According to a consumer survey by Rakuten Insight, influencers influenced two-thirds of all cosmetics purchases in May 2023.

Influencers link directly to sales platforms such as Lazada or Shopee on their channels. Sales of beauty products via online retail accounted for about a quarter of total sales in 2022. Sales via bricks-and-mortar retail are also diverse. Multi-brand stores offer cosmetics and care products in a large selection at competitive prices. Supermarket and drugstore chains also serve the mass market, while premium brands can be found in exquisite shopping centres.

STYLISH YOUNG AND OLD PEOPLE

The younger generation is keen to experiment and follow trends, and is open to new, smaller brands. Celebrities from the Republic of Korea are popular. More than half of Thai consumers in 2022 said that the Republic of Korean beauty ideals were popular.

The beauty industry is not just targeting the younger Y and Z generations. Half of the population is older than 40 years but wants to look young and beautiful. Many people buy anti-ageing products from middle age. For example, products that contain collagen or active ingredients that support collagen production are in demand.

Men are an increasingly interesting customer group. They are paying more attention to appearance; for example, most older men dye their grey hair.

STRONG DOMESTIC INDUSTRY

The Department of Business Development reports exactly 3,961 companies have produced personal care products, cosmetics and fragrances in August 2023. They recorded combined revenues of US$ 2.6 billion in 2022. Their sales grew by 8 per cent compared to the previous

The largest manufacturers listed in the company directory are Beiersdorf (Thailand) with revenue of US$ 340 million, Johnson & Johnson (US$ 208 million), Neo Factory (US$ 171 million) and Milott Laboratories (US$ 166 million). Larger companies in the sector are also listed on the Stock Exchange of Thailand. The largest public company in the personal care products segment is S&J International Enterprises.

The Thai Cosmetic Manufacturers Association has around 400 members. It represents manufacturers, traders and importers of care products and ingredients. The manufacturers produce their own brands and are successful as contract manufacturers.

Exports of prepared perfumes, toiletries and beauty products as well as essential oils and resinoids (HS Chapter 33 of the Directory of Foreign Trade) amounted to US$ 2.3 billion in 2022. The most important buyer was Japan with a share of 13 per cent. The other top 10 buyer countries are also in the Asia-Pacific region.

Imports of HS Chapter 33 reached approximately US$ 1.7 billion in 2022 (+11 per cent compared to the previous year). Most industry products entered the country via the logistics hub of Singapore, with a share of 26 per cent. France, China, Indonesia and the United

States of America each supplied around 10 per cent of the imports. Japan and the Republic of Korea accounted for 8 per cent and 7 per cent, respectively. Imports worth US$ 18 million came from Germany in 2022, accounting for about 1 per cent of total imports.

Import duties on goods of Chapter 33 of the Harmonised System are up to 50 per cent. Information on import duties is provided by Thai Customs. Before importing care products and cosmetics, the importer or trader must register with the Thai Food and Drug Administration (FDA). The FDA also provides information on labelling requirements and prohibited ingredients.

Counterfeit and unregistered products also enter the country. These are offered for sale via Facebook or other channels. The FDA and customs are taking action against this.

Contact details:

Thomas Hundt

Director Thailand, Cambodia, Myanmar, Laos

GERMANY TRADE & INVEST

www.gtai.com