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Chao news client reporter Liu Yixin

In 2023, the smoke of double 11’s war has gradually dispersed. However, this big promotion has changed the face of the beauty industry and re-defined: the domestic beauty leader topped the Tmall beauty and skin care list for the first time in the past six years; Competition in the industry has intensified, and scientific and technological strength has become an important starting point for major domestic brands to break through. The high-quality development of China Beauty Town has attracted the attention of the industry. Recently, at the 7th China Cosmetics Industry Leaders Summit held in the town, technology and innovation became a hot word.

The high-quality development road of China Beauty Town has attracted the attention of the industry. Photography He Weiwei

The beauty industry has ushered in a new pattern.Domestic brands accelerate their rise.

Although the GMV of double 11’s beauty category was only 78.6 billion yuan in 2023, and the data declined, the leading brands of domestic beauty products still performed strongly and made a qualitative breakthrough, which led to a brand-new pattern in the beauty industry.

In 2023, double 11 Tmall’s TOP20 Brand List of Beauty and Skin Care showed that Polaiya ranked first with GMV of 2.219 billion yuan, L ‘Oré al ranked second with GMV of 2.003 billion yuan, Lancome ranked third with GMV of 1.836 billion yuan, Estee Lauder ranked fourth with GMV of 1.566 billion yuan, and Winona ranked fifth with GMV of 1.286 billion yuan.

First of all, from the list, Polaiya advanced four places, becoming the first place, Winona ranked fifth, and entered the top five for the first time. Nature Hall advanced six places, ranking 13th, and Kerfumei, which did not enter the TOP20 in 2022, ranked 17th this time.

For consumers, ranking first or last is not important, but it has unusual significance for brands and domestic beauty cosmetics, which indicates that under the new beauty pattern, domestic brands have ushered in a new development stage.

Tang Xiujie, an analyst in the beauty and nursing industry of Zheshang Securities, believes that the results of this year’s double 11 promotion show that international brands have weakened, especially Japanese and Korean brands have fallen off the list, while domestic brands have accelerated their rise.

Looking back on the e-commerce promotion in recent years, before 2015, because international brands did not pay attention to online sales, the e-commerce platform was dominated by domestic products. However, since 2016, major international brands have successively settled in the Tmall platform and made efforts. After that, domestic brands gradually lost their dominance in the e-commerce platform. Especially since 2018, domestic brands have been at a disadvantage in e-commerce sales. For example, in Tmall double 11 from 2018 to 2022, the top three or even the top four in the beauty list are international brands.

Proya Hou Juncheng: Technological innovation leads the high-quality development of domestic products.

As the leader of domestic beauty products, Polaiya’s rise and breakthrough has become the industry benchmark.

At the China Cosmetics Industry Leaders Summit, Hou Jun, Chairman of Polaiya (603605.SH), told the story of how cosmetics enterprises can achieve scientific and technological innovation and quality development based on the company’s 20-year practice.

In the first three quarters of this year, Polaiya Company achieved a total revenue of 5.249 billion yuan. This is a milestone for the company. For the first time, Polaiya has become the largest cosmetics listed company in China in terms of revenue. During the just-concluded "Double Eleven" period, Polaiya brand won the beauty category of Tmall platform and Tik Tok platform, which not only broke the best record of Polaiya brand, but also created a new history of cosmetics enterprises in China. "This is consumers’ full affirmation of Polaiya." Hou juncheng said.

"In the past few years, we have continuously increased investment in scientific research, introduced a number of advanced R&D equipment and talents at home and abroad, and established close cooperative relations with well-known raw material suppliers, scientific research institutions and universities at home and abroad, and are at the forefront of scientific research and innovation of domestic cosmetics enterprises." Hou Jun shared some specific practices of the company in scientific and technological innovation with other big coffee companies.

At the recent 20th anniversary strategy conference, Polaiya Company also disclosed the situation of Shanghai R&D Center and Hangzhou Longwu R&D Center for the first time, showing the company’s scientific and technological strength to the public in an all-round and three-dimensional way. Obviously, the R&D Innovation Center and the International Academy of Sciences have become the innovation engines of Polaiya Company. The strategy conference also unveiled the company’s 20-year-old scientific research strength work-Polaiya Energy Essence, further improved the new Polaiya Energy Series listed in September this year, and committed to providing consumers with anti-aging root solutions. It is understood that Polaiya Energy Essence will be officially listed in January next year.

Freda Gao Chunming: Continuous innovation is the only way for brands.

"China cosmetics are entering the golden age of brand rise, and global cosmetics are entering China time." Gao Chunming, deputy general manager of Freda, made his judgment clear at the China Cosmetics Industry Leaders Summit.

Dr. Yi Lian and Dr. Ai Er, owned by Freda (600223.SH), are also outstanding domestic brands in recent years. The company’s performance has grown by leaps and bounds, from 221 million yuan in 2018 to 1.969 billion yuan in 2022, an increase of nearly eight times in four years.

"From the perspective of the history of global economic development, a world-class consumption center will surely breed a world-class brand." Gao Chunming made an in-depth study on the history of the world economy and cosmetics. For example, he said, L ‘Oreal was born when the European economy rose, Estee Lauder was born when the American economy rose, Shiseido was born when the Japanese economy rose, and Amore was born when the Korean economy rose. At present, the cosmetics market in China has become the second largest market in the world, and he predicts that a world-class cosmetics brand in China will be produced in the next 10 years.

However, it is not so easy for domestic brands to stand out as world-class super brands. "To become a world-class brand, first of all, your products must have long-term vitality." Gao Chunming believes that continuous innovation is the only way. Taking Dr. Ai Er as an example, he described how brands make efforts in demand innovation, technology innovation, raw material innovation, category innovation and channel innovation. The brand broke through the scale of one billion in four years, and created a new track for micro-ecological skin care.

Gao Chunming also discussed with big coffee makers in other industries-where are the opportunities for China cosmetics brands in the future?

"The biggest opportunity is hidden in non-customers, which is a new business opportunity." Gao Chunming said that why non-customers don’t buy your products is actually more worthy of attention than why they buy them, because it will provide opportunities for brand improvement. Now there is a tendency in the industry: excessive trust in big data and algorithms. Gao Chunming believes that this may make the brand narrower and narrower. Everyone only pays attention to the target customers, and there is a high probability that they will fall into homogenization competition. Gao Chunming believes that letting non-customers see your brand advertisements will increase the satisfaction of existing customers.

Deeply cultivate scientific research and innovation, and the race of "long-term doctrine" continues.

Deng Wenhui, an industry analyst of Guolian Securities, said that according to the double 11 list of Tmall Beauty Cosmetics and the data of many third-party organizations, in 2023, domestic brands in double 11 achieved a breakthrough from "quantity" to "quality". Deng Wenhui further analyzed that there are three reasons behind the new pattern of the industry. First, consumers are more rational in placing orders and emphasize cost performance; Second, domestic brands cultivate their own internal strength, constantly increase their scientific and technological strength, and build their own "scientific ecology" in terms of self-developed ingredients and raw material innovation; Third, under cultural self-confidence, consumers no longer blindly worship foreign brands.

Photo courtesy of vision china.

In this year’s double 11 Promotion, the exclusive self-developed ingredients are often the signboard of each family, and each family continues to tap the potential in raw material innovation. In July this year, the filing data of new cosmetic raw materials of the State Food and Drug Administration showed that more than 60 new raw materials had been registered, and most of them were reported by domestic enterprises, among which the number of anti-aging ingredients was the largest. Taking the new track of synthetic biology as an example, it soon attracted the layout of companies such as Huaxi Bio, Polaiya, Betani, Freda, Juzi Bio and Marubi Co., Ltd. The existing raw materials of biosynthetic cosmetics include hyaluronic acid, collagen, astaxanthin, ergothionine, ginsenoside, polypeptide synthesized by enzymes, arbutin and so on.

Zheshang Securities Tang Xiujie believes that the competition in the beauty industry is intensifying, and if domestic products want to stand out, hard manufacturing and soft power are indispensable. The R&D strength has been the focus of domestic beauty companies’ competition, and weak brands are prone to growth bottlenecks.

In terms of R&D expenses, according to the data of the third quarterly report of cosmetics listed companies, in the first three quarters, there were five companies whose R&D expenses exceeded 100 million yuan, of which China Hi Bio (688363.SH) was 277 million yuan, Betaine (300957.SZ) was 181 million yuan, Polaiya was 128 million yuan, and shanghai jahwa (600315.SH) was 1. Judging from the year-on-year growth rate, in the first three quarters, Betani increased by 44%, Polaiya increased by 32%, Freda increased by 25%, shanghai jahwa increased by about 10%, and Huaxi Bio increased by 0%. Judging from the amount, the R&D expenses of Polaiya and Betani in the first three quarters of this year have exceeded the whole year of last year.

In terms of the number of patents, Polaiya has 234 patents, 17 new patents and 18 new patent applications in the first half of 2023. Huaxi Bio obtained 395 patents, and 58 new patents were added in the first half of the year. These patented technologies mainly focus on functional sugars and amino acids. Bettini’s patents mainly focus on Yunnan characteristic plant extracts, which is also the company’s independent research and development technology. The company claims to have a number of core technologies and patents in this field. Freda has 31 patents in the first half of the year, and 37 new products have been developed and put into production. Shanghai jahwa didn’t disclose it in the first half of last year. Only in 2022, when the annual report was disclosed, 9 national authorized invention patents and 43 patent applications were added.

Analysts believe that domestic beauty brands focus on scientific research to build their own scientific and technological strength, which is a good start, but compared with international brands, the amount and duration of investment are far from enough. For example, L ‘Oré al’s R&D investment in 2022 is as high as 1.139 billion euros, about 8.8 billion yuan. Moreover, behind every heavy product like L ‘Oré al, there is a patent technology blessing.

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The domestic cosmetics retail industry is gradually recovering.

According to the data of the National Bureau of Statistics, from January to July this year, the total retail sales of consumer goods nationwide decreased by 9.9% year-on-year, but the retail value of cosmetics products gradually recovered, with a cumulative year-on-year increase of 1%. In the previous quarter, the retail value of domestic cosmetics products once fell by more than 13%.

From the sharp decline to the gradual recovery, many beauty brands are trying to adapt to the special consumption environment: the head international brands have increased their promotion on the e-commerce platform, and the live broadcast room has become a "heavy place" for the marketing of major brands.

However, for the new Xiaomei makeup brand, the low-price strategy is obviously unsustainable. From the current fiery live broadcast industry, there are "sales myths" and "tragic rollover". Behind the rapid increase in sales, there are also hidden concerns about high return rate. How can beauty brands play the live broadcast card well?

Under the epidemic situation, one of the measures taken by many beauty brands to boost sales is to exchange price for quantity. Even for international brands with stable pricing, "promotion" has become something that has to be done now.

Jian Weiqing, president of Taomei Beauty Business Association, described this year’s beauty industry as "the Warring States Period". "The market competition is too fierce. We made an analysis during the’ 618′ period and found that the promotion efforts of mainstream brands this year can be said to be’ unprecedented’, especially the cross-border big brands. The shipment prices have plummeted this year, and many brands have dropped by 20% to 30% compared with previous years."

Zhongtai Securities related research report pointed out that during the "618" period this year, platform and brand discounts increased. On the platform side, the discount and duration of Tmall’s "6.1 Activity" were expanded and extended respectively. In terms of brands, the pre-sale prices of major items of international brands with stable pricing in "618" are close to last year’s "Double Eleven". According to the data of the research report, from the data of the "6.1 Activity", the sales of Tmall beauty products broke through 100 million yuan in one minute and 500 million yuan in 22 minutes that night. One hour after the opening, the sales of L ‘Oreal, Estee Lauder, Lancome and OLAY exceeded 100 million yuan. Two hours later, the sales of 61 beauty brands such as Estee Lauder, SKII and HR exceeded the whole day of last year.

Under the epidemic situation, the online transaction volume of international brands has increased significantly. In this regard, Tu Xian, the head of Taobao’s global purchase brand and supply chain, has the same feeling: "Under the epidemic, the growth rate of global purchase is very fast, reaching 30% to 40%, of which the fastest growth rate is the bonded mode, while the direct mail mode shows a downward trend. Because of the restrictions on leaving the country this year, our buyers can no longer run overseas, so our overseas direct mail business has dropped by about 13% compared with last year."

The figure further indicates: "From the perspective of the entire Haitao market, the growth rate of Haitao people is very fast this year. We predict that the number of people who pay attention to Haitao goods will reach 235 million this year. In the entire Taobao ecosystem, nearly one-third of the 800 million monthly users focus on overseas brands."

The figure also mentioned that affected by the epidemic, Taobao Haitao beauty market has undergone three changes: first, the consumption classification brought by segmentation, local care such as head and eyes have become the habitual demand after the epidemic, and the sales of nose paste, eyelash growth liquid, mask, hair dye cream and eye essence have increased significantly; Second, the beauty users are younger, and the generation after 00 and generation Z are the fastest growing groups of beauty consumption, with a per capita expenditure of 1713 yuan/year, far exceeding the traditional quality population after 80; Third, product ingredients exceed brand awareness and other factors, which has become the first choice for consumers to consider new products. More than 50% Haitao users will pay attention to the main functional ingredients of products when purchasing cosmetics.

With Li Jiaqi and other head anchors creating sales "myths", many company executives also walked into the live broadcast room to bring goods. Under the superimposed epidemic, physical sales suffered setbacks, and "live broadcast" became the key word of online sales of major brands, especially in the online beauty industry, where the original sales relied heavily.

Image source: vision china

In the past six months, many cosmetics brands have tried to seek new sources of growth. However, under the hot live broadcast, the repeated rollover of brand live broadcasts and the frequent price break of big-name cosmetics have also brought thoughts to enterprises: How long can the price war in the live broadcast room last? How do new and small brands get a slice of the pie from big names?

According to Zhang Mofan, the anchor of Red Man and the founder of Meimo Emore brand, many brands entering the live broadcast room hope to get short-term sales promotion through live broadcast, but ignore the high return rate behind the promotion. "In fact, we pay great attention to the long tail effect and commodity return rate in live broadcast. I think these can represent your brand. The ultimate goal of live broadcast should be to let consumers buy because of the brand, not because they are discounted today. However, during the live broadcast, I found that many brands are particularly anxious, and they will ignore consumer cognition and brand tonality, and only remember the transformation and promotion. Therefore, we will see many brands overturned in the live broadcast, because he did not lay the foundation of the brand itself, and immediately promoted it, relying on impulse consumption of consumers to temporarily increase sales, and finally the return rate was very high. "

In fact, although the low-price strategy of live broadcast can break through the sales bottleneck through the "hawking" of the red anchor on the one hand, on the other hand, many brands are beginning to worry that the low-price promotion used in the live broadcast room will have an impact on their own brand image.

Jian Weiqing, president of the Taomei Beauty Business Association, said: "Since this year, due to changes in brand ecology and the international consumer market, there have been many cases of brand price breaks in the industry, which actually has a great impact on small and medium-sized brands and retailers, because small and medium-sized brands are more dependent on the channels of small and medium-sized retailers. However, as small and medium-sized retailers, they don’t have the traffic of big brands, and the traffic of big brands is in the hands of mainstream platforms, super big anchors and absolute head-on operating companies. Therefore, if big brands go down to seize market share, small and medium-sized brands will be under great pressure. "

With the price reduction of big brands, where is the way out for the new Xiaomei makeup brand?

Image source: photo network

Jian Weiqing believes that it is not wise to spell the price for the new Xiaomei makeup brand. "Personally, I think it is necessary to stick to the price strategy, which is the lifeline of a brand. New and small brands must pay attention to it. If some big brands dive in price, it is only a short-term strategy. The price of big brands will dive in a short period of time, the brand will be wiped clean, and new clothes will be replaced. You can still go ashore, but if new and small brands follow suit, the C-end will label the brand as low-priced, so it is difficult to go back." Jian Weiqing said.

According to Huang Yong, the founding partner of Baojiehui Innovation Consumer Fund, if domestic beauty brands want to be unicorns, they need to aim at subdivided tracks. "From the past experience, in the field of beauty care, great companies, such as Durex and Weiting, are easy to appear on the subdivided track. Although the category is not big, if the brand becomes the champion on the subdivided track, the market is very big. From the current beauty care industry, I think the product combination of high-priced instruments and consumables such as beauty instruments and essence is the easiest to go abroad. " Huang Yong said.

In addition, Huang Yong said in an interview with national business daily that although beauty brands were affected in retail during the epidemic, from the perspective of the capital market, the popularity of investing in beauty brands remained unabated. "In the past, we saw domestic beauty brands with perfect diaries, flowers and other heads. In fact, this is just the beginning. From the overall trend, China’s beauty industry has been developing at a high speed, and the research and development and production capacity of domestic beauty brands have been improved, and now we can make good products. We predict that in the future, we will have cutting-edge domestic brands in various segments. At the same time, we believe that in the next ten or even twenty years, China’s Procter & Gamble, Unilever and L ‘Oreal will appear. " Huang Yong said.

Cui Jing, vice chairman of Cosme Beauty Group, expressed his optimism about domestic beauty products. He told national business daily that Cosme Beauty has launched a minimum order quantity of 500 as a beauty OEM. "According to our experience, in fact, local beauty companies in China often do better in localization than international brands. We hope to provide support to local beauty companies in China and reduce their trial and error costs by reducing the minimum order volume." Cui Jing said.

national business daily