During the 2019 Hanhoo product conference, Hanhoo (a famous domestic cosmetic brand in China) claimed that the essence market size in China reached 40 billion yuan in 2019 [1]. Other data also suggests it is a promising market. The latest data from Tao Data shows that during the last 60 days (starting in April this year), facial essence sales have become the largest skincare sub-category across all e-commerce platforms in Alibaba, increasing 36% month-on-month [2]. According to the 2018-2019 Cosmetic Consumer Report co-released by Nandu Big Data Research and JD.com, in the online cosmetic market, essences had the highest growth rate, with an increase of 90%, 25% higher than the growth rate of the category ranked second, i.e., sunscreen [3]. Essences accounted for 10% of the online skincare product market [1].
The buying power of China’s young consumers combined with product development and consumer purchasing preference trends towards premiumization, segmentation and high efficacy products are the main drivers of growth in this sector. Essence products used to be perceived by consumers as anti-wrinkle products and targeted at consumers 35-years of age or above. Now young female consumers are also considering essence products. The Facial Essence Trend Report released by Tmall New Product Innovation Center shows, "The surge in the number of consumers has contributed 90% to the growth of facial essence sales." The core consumer group of the essence category is young women under the age of 30, who focus on quality and love fashion. Among them, consumers aged 18-24 accounted for 30%, and those aged 25-29 accounted for 27% [5].
High-end international brands, such as Lancome, Estee Lauder, SK-II, Shiseido, benefit the most from growth in the essence market. Their high-end products have dominated the market for a long time. However, things are changing.
Main high-end essences
New trends in the market
- The rise of middle-priced domestic brands
According to the data from Tao Data, among all essence products, products below 300 yuan accounted for nearly half of all sales in the first quarter of 2020. Essence products priced between 100-200 yuan were more popular, with sales accounting for more than 25%. Most of these more affordable products are domestic brands [2].
In the top 10 of Tmall's "Bestselling Essence Liquid," the top 20 of Pinduoduo's "Brand Facial Essence Selling List," and the top 30 of JD.com's "Facial Essence List," a total of 26 domestic brands appeared once in each list or repeatedly across each of the three lists. The domestic essence sector is made up of established local brands such as MARUBI (丸美), COGI (高资), PROYA (珀莱雅), One Leaf (一叶子), HFP, and Little Dream Garden (半亩花田), and newer entrants such as Lipostides (丽普司肽), Omenfee, Haa, etc. Among the domestic brands listed, only six products are price in the 100-200-yuan range, while the rest are all economically priced below 100 yuan.
- Consumers are paying more attention to ingredients.
Besides always-popular ingredients, such as hyaluronic acid, hyaluronic acid, nicotinamide, and retinol, more and more new ingredients, like lactobionic acid, astaxanthin, and various yeast extracts, are gaining traction.
Data from Tao Data show that lactose and oligopeptide have become the two most popular ingredients, with related essence sales accounting for 44% and 42%, respectively. The market performance of astaxanthin essence is also garnering a lot of attention [2].
- Pharmaceutical companies join the competition.
Brands that have a strong medical background are more likely to be trusted by consumers. Skincare products, particularly essences manufactured by pharmaceutical companies, are beginning to establish a strong market presence in China. In Pinduoduo's "Brand Facial Essence Best Sellers List," two products from Xiuzheng Pharmaceutical ranked 6th and 12th respectively; one product from Renhe Pharmaceutical also ranked fourth on the Tmall platform "Hot Selling Essence Liquid," with monthly sales reaching 48,000 units.
Renhe Pharmaceuticals
Lipostides (丽普司肽) Essence, which ranked third in Tmall's "Hot Selling Essence Liquid List," is a new product commercialized from research conducted by the Medical Center of Jinan University. The two leading R&D experts behind this product are both university professors.
