The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
LONDON, United Kingdom — You'd be forgiven for thinking that ginseng, mushrooms, bamboo, bird's nest and pig collagen are an old family recipe for slow-cooked Oriental stew. But in fact, these ingredients are as common in some beauty regimes as they are on the dinner table.
Along with bee venom, donkey milk and aloe vera, seemingly exotic ingredients have been popular in Asian beauty products for quite some time. Now, the Asian brands that use them in makeup, creams, masks, peels and serums find themselves at the forefront of the global beauty business.
While the West has long been a breeding ground for beauty trends, brands from the East have increasingly been claiming a bigger stake of the global beauty market, estimated to be worth $44 billion, according to the NPD Group. As a report by Euromonitor International revealed, 80 percent of global skincare revenue gain by 2019 will come from Asia, with China set to account for 75 percent of total regional growth.
“Asian-ifcation (Asia’s increasing influence on innovation in beauty) is continuing to be one of the major growth factors in beauty, especially skincare,” Nicole Tyrimou, beauty and personal care analyst at Euromonitor International, told BoF. “While influencing innovation through the introduction of new product concepts, Asian beauty brands are expanding well beyond their home market.”
Fueled first by obsessive beauty bloggers and an increasing ease of international shipping, the Asian beauty craze has now gone mainstream, with brands such as Suqqu setting up shop in Fenwick, Shiseido in Harvey Nichols, AmorePacific in Nordstrom, RMK in Selfridges, and SK-II in Harrods. So, what does this world of double-cleansing, essences and mask sheets have to offer?
“The Western market has long been influenced by emerging beauty trends from Japan, but we are increasingly looking to China and South Korea for developments in skincare,” said Daniela Rinaldi, group commercial director at Harvey Nichols. “They are driving innovation in the field, from BB creams to serums, brightening creams, dark spot correctors, face masks and anti-aging products. Asian consumers are some of the most discerning globally and tend to spend more on beauty products than those in the West, which tends to translate to Asian brands investing in higher quality ingredients within their products.”
AmorePacific Group's products | Source: AmorePacific
Indeed, AmorePacific is one of many homegrown Asian brands that have emerged as a major competitor to established Western brands. Founded in 1945, AmorePacific had its humble beginnings in the kitchen of Suh Kyung Bae, chairman and chief executive of the Korean company. As the story goes, Suh’s grandmother concocted a camellia oil formula, selling it to trendy women who would use the oil to style their hair.
Seven decades later, riding on the overwhelming popularity of K-pop and Korean style trends, AmorePacific Group has become Korea’s largest cosmetics manufacturer, housing over 26 brands including Sulwhasoo, Etude House and Laneige. It is also the 14th largest cosmetics company in the world by sales, with record revenue of 4.7 trillion won ($5.7 billion) in 2014.
“AmorePacific has definitely made a big impact in the Western space. Sulwhasoo and AmorePacific are among the brands that are experiencing higher-than-average growth at Nordstrom,” said Gemma Lionello, Nordstrom executive vice president and general merchandise manager, cosmetics. “Whereas this hasn’t always been the case, customers from all areas of the globe are purchasing Asian beauty products.”
This is part of AmorePacific’s strategy, as the group eyes the US as the next stop in their global expansion plans. “We have been growing our presence across Asia, North America and Europe. In particular, we are seeing an accelerated growth in the US market,” Kim Seung-Hwan, chief strategy officer at AmorePacific, told BoF. “In total, we have over 200 counters for our brands throughout the US, including Bergdorf Goodman and Neiman Marcus. We recently opened a large store in Bloomingdales. For Laneige, our premium beauty brand, it’s in over 750 Target stores.”
While the domestic market currently drives most of AmorePacific’s revenue, global sales accounted for almost 19 percent, with sales in the US increasing by 49 percent from 2013 to 2014. “Our goal is to grow our global business at an annual rate of over 40 percent on average, making it accountable for 50 percent of the total revenue by 2020,” stated Kim.
“South Korea and Japan have long been a source of game-changing R&D in skincare. A great deal of this innovation is driven by the hyper-sophistication of the skincare client in Asia,” said Jan Masters, editor at Harrods Magazine, a monthly title published by the London-based luxury department store.
Japan’s influence on the global beauty and skincare market has been far-reaching, with long-esteemed brands such as SK-II and Shiseido popularizing anti-aging ingredients and newcomers like Suqqu and RMK offering skincare and skin-tone balancing products.
“The Japanese market is the second biggest beauty market in the world after the US,” stated Yuka Kaneko, UK general manager at Kao Corporation-owned E'quipe Japan, which manufactures and distributes brands RMK and Suqqu. “The average Japanese woman spends more money on skincare than on any other product, so skincare product innovation has always been the biggest driver for us.”
Kao Corp. — which also has Bioré, Kanebo, Liese, Molton Brown and Sofina under its stable of brands — has seen healthy sales, both in its homeland and overseas. In the year end of 2014, Kao Corp. reported sales in Japan of $7.8 million, followed by the rest of Asia at $1.6 million and the US at just over $1 million.
Kaneko observed, “Our Asian customers buy skincare products as series for a better result, meaning that they purchase a group of three to five products at once. The Western customer is more cautious and tends to purchase one product at a time.”
This is reflective of Asian consumers’ skincare regime, which often include as many as 10 steps compared with the far fewer steps in the West. While this may be seen as a window of opportunity for brands to get customers to spend more, it has provided Asian brands with more of an incentive to experiment, specialise and innovate.
“Women from Korea, China and Japan are known for the care, time and research they put into their skincare regimes. They ensure they’re well-educated about what they’re using, making them demanding consumers because they expect the best,” said Lisa Niven, online beauty editor at British Vogue.
According to Jude Chao, who runs popular Korean beauty blog Fifty Shades of Snail, this leads to a much higher standard of beauty in parts of Asia.
“In Western media, if you don’t have any breakouts, scars or wrinkles, that’s considered good skin. In Asian societies, it’s much stricter. It’s about not having a single mark, not even a freckle,” said Chao. “It goes as deep as the texture of your skin, which, in Asian ideals, should be full of moisture. Bouncy is the word that people like to use. If you think about it from an R&D standpoint, there isn’t this intense drive in the West to achieve those specific goals.”
Asia has emerged as a source of innovation in the industry because of the creativity, speed and dedication with which products are developed there.
Laneige's compact cushion | Source: Laneige
One recent trend to emerge is the cushion compact, a makeup compact built with urethane foam, which safely contains and preserves makeup liquid comprising of foundation, sunscreen and skincare formula. According to AmorePacific, one of its own-brand cushion compacts was sold every 1.2 seconds in 2014. Already a popular item in Korea for its easy and flawless application, the cushion has recently gained attention in the global cosmetics market.
"I went to Seoul at the end of last year and I was just blown away by the technology and advancements in makeup," said Lisa Eldridge, creative director of Lancôme, who was inspired by the cushion compact and brought the idea back with her overseas. "We've just launched the cushion foundation for Lancôme — we're the first Western brand to launch a Korean concept in that way."
Lancôme certainly isn’t the only Western cosmetic brand to gain inspiration from the East. In April, New York-based Bobbi Brown announced South Korean actress Claudia Kim as its first Asian celebrity face. Known locally as Kim Soo Hyun, the model-actress, who recently starred in Marvel movie "Avengers 2: Age of Ultron," will kick off her promotional activities for the makeup giant next month, not only in Korea, but all over Asia alongside current Bobbi Brown face, Kate Upton. Part of Kim’s role will be to offer “K-beauty” (Korean style) makeup lessons.
Another beauty trend to come from Korea is the ulzzang look, a popular Korean term meaning "best face" or "good looking," which involves certain characteristics such as dewy skin, doe eyes and the "just bitten" lip look. The latter sparked a beauty craze after members of South Korean girl group Girls' Generation used the look for their "I Got A Boy" music video in 2013.
Since then, the “just bitten” lips look (where the middle of the lips are a darker colour and gradient softly outwards to lighter colours) has popped up everywhere in Korean pop culture, from actress Yoon Eun Hye in Korean drama “I Miss You” to actress Han Ji Min in a shoot for Elle Korea. Hot on the heels of this trend, Revlon released a ‘Just Bitten Kissable Balm Stain’ lipstick line that give lips a gradient flush of colour.
"BB and CC creams have also been a huge success — so many Western brands have their own version now and the ones who don't always tell me that they're under huge pressure to create one," said British Vogue's Niven, referring to brands such as Clinique, Dior, Estée Lauder and Chanel, who have since come out with their own versions.
At many of these companies, there is an emphasis on using traditional ingredients that have long been part of the culture.
“Just as rose and lavender have long been used in the West, we’ve focused on developing botanical ingredients that have been passed down for generations in Asia,” said AmorePacific’s Kim.
For Sensai, the star ingredient of their product is Koishimaru silk. "This ingredient is taken from the precious Koishimaru cocoon. This rare ingredient, which is used in almost all Sensai products, promotes hyaluronic acid synthesis ensuring the skin’s natural reservoir of moisture stays plentiful," said Yuuji Naito, brand manager of Sensai.
But the added value comes from the intensive R&D that goes into ingredients, which is why a firm like AmorePacific was able to register some 200 patents for beauty and skincare formulas worldwide last year.
“AmorePacific has spent nearly 40 years in the research of green tea’s active properties, such as epigallocatechin gallate (EGCG), the dominant anti-oxidant in green tea. As for ginseng, we have nearly 60 years’ worth of accumulated research around the extraction and use of ginsenoside compound K, the anti-aging element in ginseng,” said Kim.
The brand launched one of the world’s first ginseng-based cosmetics in 1966 and the cultivation of its green tea essence has been ongoing on Jeju Island since 1979. Ginseng and green tea are now relatively common additions in beauty products from international labels like The Body Shop to Origins.
Shin Hasebe, deputy general manger of Shiseido, believes that some of the firm’s most effective formulas come from ingredients that have been known since ancient times.
“The fact they have survived this long is a testament to the strong force of vitality within them, making these ingredients more suitable for stable product formulations. Our philosophy is to focus on time-honoured ingredients with a record of proven effectiveness, like ginkgo, collagen and plankton extracts,” he said.
What impedes many Asian beauty brands from expanding further into Western markets is the regulatory framework around health and safety and the knock-off effect creates around export and distribution. Approval by the relevant governmental bodies and pharmaceutical registration laws differ greatly by country and region around the world.
“One of the biggest challenges when entering a Western market is the paperwork involved, which includes regulation and formula registration,” said E'quipe Japan’s Kaneko. “For the US, it affects about 25 to 30 percent of our product due to colour regulations.”
"When shipping across high-temperature regions, we need to obtain certification assuring that our products can withstand certain temperatures without any changes occurring to them. Another issue is timing. Shipping products intercontinentally is a lengthy process, which we need to take into consideration when planning the timing of development and production," said Hasebe.
On the other hand, Sensai, which is owned by Kanebo, the leading Japanese producer of cosmetics, was not entering the Asian market at all as its sights were set overseas. "Our plan is to first build a solid presence in Europe, and then expand from Europe to Japan and other Asian markets. Thus, Sensai products are developed according to European regulation laws," said Naito.
But most experts agree that despite the hurdles they face, Asia’s leading beauty brands will continue to infiltrate markets in the West. By combining ancient ingredients with advanced science and clever branding, many will continue to shape consumer behaviour there too.