The Indonesia skin care products market to reach $ 14.7 billion by 2026

The Indonesia skin care products market size was valued at $9,758 million in 2019 and is expected to garner $14,716 million by 2026, registering a CAGR of 7.5% from 2021 to 2026 due to increasing awareness regarding personal grooming among all age groups.

Definition / Scope
Market Overview
Market Risks
Market Drivers
Market Restraints
Industry Challenges
Technology Trends
Other Key Market Trends
Market Size and Forecast
Market Outlook
Technology Roadmap
Competitive Landscape
Competitive Factors
Key Market Players
Strategic Conclusion
References

Definition / Scope

Skincare refers to the practice of enhancing appearance and skin integrity with the use of a wide range of skin products such as face moisturizer, cleansing balm, and sunscreen. The products are formulated using a mixture of chemical compounds derived from natural sources or created synthetically.

Skincare differs from dermatology, as traditionally practiced, by its additional but less medical scope and by its inclusion of non-physician professionals, such as estheticians and wound care nursing staff. Skincare includes modifications of individual behavior and of environmental and working conditions.

Table: Indonesia Skincare Products Key Market Segments

BY TYPE	Cream Lotion Others
BY DEMOGRAPHICS	Male Female

Market Overview

The Indonesia skin care products market size was valued at $9,758 million in 2019 and is expected to garner $14,716 million by 2026, registering a CAGR of 7.5% from 2021 to 2026. Skincare refers to the practice of enhancing appearance and skin integrity with the use of a wide range of skin products such as face moisturizer, cleansing balm, and sunscreen. The products are formulated using a mixture of chemical compounds derived from natural sources or created synthetically.
The sale of counterfeit cosmetic products in Indonesia hampers the market growth. Despite various efforts to curb the sale of counterfeit and illegal skincare products in Indonesia, Indonesia’s National Agency of Drug and Food Control (BPOM) still found these products to be available in the domestic market.
The Indonesia skin care products market is segmented on the basis of product type, demographics, age group, and sales channel. Depending on product type, the Indonesia skincare products market is classified into cream, lotion, and others.
By demographic, it is bifurcated into male and female. As per age group, it is segregated into generation X, millennial, and generation Z.
According to the distribution channel, it is fragmented into supermarket /hypermarket, specialty stores, department stores, beauty salons, pharmacies & drug stores, and online sales channels.
Skincare products, make-up, and personal care are increasingly becoming an integral part of Indonesian lifestyles. Consumers are getting more concerned about their well-being, especially when it comes to hygiene and appearance. This is attributed to improved awareness on sanitation, rise in income, and increase in celebrity, as well as social media influence on fashion & health.
The active players profiled in Indonesia’s skincare products industry includes L’Oréal Group, PT Martina Berto Tbk, Mandom Brands, Kino Indonesia, Unilever Indonesia, Wardah, Procter & Gamble Company, Mustika Ratu, Beiersdorf AG, and Estee Lauder Companies Inc.

Market Risks

Though the market for Indonesia Skincare seems to be growing, there are several issues and risks a market player has to contend with. Some of these are:

Higher operational costs

The high operational cost associated with skincare products can be a major risk for potential players.
Likewise, the method to prepare these skincare products and the packaging system is costly in itself.

Counterfeit Products

Indigenous peoples often lack the legal resources and financial means, which need to be mobilized in order to hope to gain an intellectual property right internationally acknowledged.
Their traditional know-how benefits, however, from the partial protection of the United Nations Convention on Biological Diversity, adopted at the Earth Summit in Rio de Janeiro in 1992, which attempts to regulate access to living resources, and entered in international law the recognition of traditional knowledge.

Lack of general awareness

This issue is far from everyday concerns. As far as sustainable development is concerned, there are often many more priorities to be solved before this one really emerges. Yet, brands are far more vulnerable than ingredient suppliers whose names are rarely known to the general public.

Top Market Opportunities

Rising concerns regarding skin nourishment owing to a number of factors such as the increasing occurrence of acne, black spots, scars, dullness, and tanning have increased the demand for skincare products.
Skin brightening products, toners, and scrubs are witnessing higher demand from the younger population, whereas products that provide the solution to wrinkles or cracked heels are gaining major traction owing to its increasing demand from the aged population.
Changing lifestyles and sending patterns of consumers on premium beauty care products is projected to support the overall growth of the skincare products market.

Market Drivers

Increasing Awareness Regarding Personal Grooming among All Age Group:

Increasing awareness regarding grooming products for men and strong advertising initiatives by manufacturers along with the digitalization trend has enhanced consumer awareness about the skincare products and same creating an increased demand for products, such as fairness cream and aftershave creams from male end users.
For instance, according to “prima & Prep’s Men Grooming survey 2019’ about 89.5% of the men are concerned about skin issues, of which 35.8% of men use skincare and anti-aging products on a daily basis.

Increasing Demand for Sustainable Products:

Consumers are now focusing not only on their healthcare with the use of skincare products but are also inclined towards using environmentally friendly products. For instance, exfoliating skincare products contain plastic beads, which are a major concern for plastic pollution: therefore consumers are inclined towards using products that do not contain plastic beads.
Companies like BioPower are taking initiatives for developing biodegradable microbeads intended to be used in exfoliating products, which will not lead to any waste generation.
Moreover, innovative and eco-friendly product packaging, which is recyclable or refillable, is also in high demand in the market. Furthermore, owing to rising awareness regarding animal rights, consumer [reference has shifted towards vegan ingredients, which are entirely derived from only plant-based products.

Market Restraints

Regular use of skincare products for an extended time can damage the skin, which can result in skin irritation, redness, burning sensation, discoloration, and rapid aging of skin cells. Some of the skincare products are only meant to be used for particular skin types such as dry skin or oily skin or combination skin.
However, consumers tend to purchase products by focusing on brand name and ignore other product details, which tend to damage their skin. Moreover, few products can also show allergic reactions and the development of pimples due to certain ingredients used, which are not suitable for the particular individual.
Furthermore, excessive use can also lead to severe issues, including skin cancer such as melanoma. Therefore, these are some of the major restraining factors responsible for hampering the market growth.

Industry Challenges

Despite the enticing prospects of the Indonesian skincare market, selling skincare products in Indonesia can prove to be a challenge for a lot of eCommerce players outside of Indonesia.

For one, skincare products are considered as controlled goods by the Indonesian customs, and companies who would like to send skincare products to Indonesia are required to register for a license with Indonesia’s National Agency of Drug and Food Control (BPOM).

With this in mind, companies can either try to apply directly to the government or they can work with logistics companies like Janio to secure such a license.

Not only that, but recent Indonesian changes to customs regulations have also lowered the de minimis value for parcels being sent to Indonesia from USD 75 to USD 3 per consignment note. This means that tax and duties now apply to B2C shipments with a value above USD 3.

Sales of skincare are now expected to grow by 9% in 2020 in 2019 constant value terms in light of the impact of COVID-19. This compares to an expected 8% rise forecast for 2020 during research conducted at the end of 2019 before the spread of COVID-19.

Despite the current COVID-19 situation, most product areas in skincare are still expected to see stronger value growth at constant 2019 prices in 2020.

Many consumers are opting to wash more frequently in the hope of preventing the transmission of the virus, often every time they return home, with this boosting the use of post-wash skin care including body care and moisturizers and treatments and also supporting stronger sales growth for facial cleansers.

According to Google search trends, searches on skincare have increased up to 230%, while searches for skincare products have risen by 130% since the COVID-19 pandemic started in Indonesia.

Most product areas in skincare are expected to see stronger value growth at constant 2019 prices 2020 as a result of the impact of the COVID-19 pandemic.

Skincare is expected to see a strong performance over the forecast period, with a slightly stronger value CAGR at constant 2019 prices in comparison to the review period. Consumers are becoming increasingly sophisticated and demanding when buying skincare, with a growing number of researching products online in the hope of achieving optimum skin condition.

Given the realities of working from home, physical distancing, and mask-wearing, it has become much less important to wear makeup and fragrance. With more people working from home and generally staying in, lower-maintenance looks are the go-to.

Technology Trends

At the Consumer Electronics Show (CES) each year, start-ups and well-established companies descend upon Las Vegas to showcase their latest and greatest innovations. Many of this year’s novel apps and devices incorporate artificial intelligence (AI) and augmented reality (AR) and just may shake up the already popular health and beauty home device category.

BEAUTY 3.0 BY PERFECT CORP

Perfect Corp unveiled Beauty 3.0, their new patent-pending AI and AR app that uses deep learning and neural networks to recognize shapes, colors, and skin pixels from images. Beauty 3.0 offers AI product recommendations, AI smart shade finder for instant foundation matching, and AI skin diagnostics to detect specific skin concerns and track progress over time.
In addition, users can experience the latest in hyper-realistic virtual makeup/skincare trials, live ombré hair color makeovers, and on-demand beauty advisor video consults.

ATTAIN BY INCONTROL MEDICAL

Many dermatologists are helping patients prevent or treat incontinence. InControl Medical debuted Attain at CES. Pending FDA approval, Attain could be the first over-the-counter, non-implantable muscle stimulator with biofeedback to treat stress, urge, mixed urinary, and fecal incontinence in men and women, the company states.
Attain provides muscle stimulation, visual biofeedback, a guided exercise program, and a customizable probe to eliminate urinary incontinence and fecal incontinence.

Pricing Trends

With so many Indonesians leaving their digital footprints on social media platforms, eCommerce businesses are presented with a huge social media marketing opportunity, whether in the form of organic or paid marketing activities through viral marketing, paid ads, influencer marketing, and many more.
This healthy appetite for social media and internet usage also explains the rapid growth projection for online sales channel attribution in the personal care market, including skincare, which is expected to more than double between 2021 and 2026.

Regulatory Trends

Based on National Agency for food and drug control (BPOM) regulations Number 27 Years 2013 regarding The Control of Food and Drug Entry to Indonesia, stating that all food and drug, includes cosmetics entering Indonesia shall possess:

Product license
Fulfill prevailing import law
Obtain approval from the Head of BPOM for Import Notification Letter (SKI) that is valid for one-time importation.
There is no formal barrier to cosmetics. The import duty for cosmetics is 10% plus 10% VAT. Rates are 0-5% for products originating in ASEAN FTA members.
It is mandatory to have Halal certification for food products, however, cosmetics/skincare products are not mandatory yet.

Halal regulations in particular have been providing new opportunities for the Indonesia skincare products market.

Not only giving the local brand a competitive edge over global brands in the domestic market, Halal regulations further allow local-based halal-certified cosmetic manufacturers to establish their presence in overseas niche markets too.

For instance, the French cosmetics giant L’Oréal in Indonesia already has a halal-certified factory, which supplies the domestic market and the Southeast Asia region. Most of the products are sold under the Garnier brand, including facial cleansers to halal-approved skin lightening creams.

Other Key Market Trends

Cross border eCommerce shops like StyleKorean who ship directly from Korea also partner up with local influencers like Sunny Dahye, who is a Korean but can speak the Indonesian language fluently, to reach their target consumers in Indonesia.
This strategy has proven to be quite effective considering Rakuten Insight’s research in 2019 that finds out that out of Indonesians who use Korean beauty products, 39% of them found the information from social media beauty influencers.

Market Size and Forecast

The Indonesia skin care products market size was valued at $9,758 million in 2019 and is expected to garner $14,716 million by 2026, registering a CAGR of 7.5% from 2021 to 2026.

INDONESIA SKINCARE LOGISTICS MARKET KEY SEGMENTS

Based on the product, the market has been segmented into face creams and body lotions. Face creams have been further segmented into sun protection cream, skin brightening cream, and anti-aging cream. Body lotions are sub-segmented into mass market body care lotion and premium body care lotion.
The face creams segment held the largest share of the market in 2018 and is expected to continue its dominance over the forecast period.
Rising demand for skin brightening face creams is expected to boost the market growth in the coming years. Moreover, these creams reduce acne scars, freckles, age spots, and discoloration, which will drive the demand further.

Market Outlook

Indonesia has always been known as a market with a lot of potential for eCommerce businesses. As of 2019, Indonesian ecommerce revenue amounts to US$ 18.7 billion. This number is due to growing to a staggering US$ 40 billion by 2022.
When it comes to the skincare market specifically, the projection also shows healthy growth. The market that is worth US$ 1.98 billion at the moment is projected to grow by more than 20% by 2023. Above figures considered space is definitely not a problem for eCommerce businesses wanting to join the skincare market race in Indonesia.
Indonesia’s skincare market is categorized into six main segments by type: skincare, haircare, color, oral hygiene, personal hygiene, and fragrance. Skincare is dominant in the cosmetics industry. The main driving force for the growth of the cosmetics market is the increased demand for natural ingredients, advanced technology, and a wide range of products.

Technology Roadmap

The popularity of the online retail platform is rapidly increasing, due to its advantages such as the ability to read customer’s feedback and the ability to compare the price of goods, brands, increased comfort, and product variety. Thus, the distribution of goods via the online retail platform is anticipated to boost the growth of the skincare market

There is a rising trend for purchasing consumer products online and this is mainly due to the increasing emphasis on e-commerce and eCommerce platforms.

While over four-fifths (84%) of online shoppers have used a laptop/desktop to buy products online, the use of mobile devices is growing, with almost half (48%) of Millennials having bought products from their smartphone.

Around 8.1% of the skincare product sales in Indonesia are made online, which in turn propels the growth of the skincare products logistics market.

Distribution Chain Analysis

Cosmetic stores are specialty stores where all the cosmetic products are made available and facilitate customers to physically check the product details. These stores offer customized kits containing a number of cosmetic products packed together for consumers, and the kit is being provided at a discounted price to attract the customer.
Newly launched and latest products are readily made available in cosmetic stores as compared to hypermarkets and supermarkets. Additionally, attendants in cosmetic stores are trained where they can guide the customer to buy specific products as per their requirements.

Fig: Distribution chain analysis of Indonesia’s SkinCare products Market

Competitive Landscape

Indonesian consumers are youthful and digitally savvy; given their relatively young and productive population age of 30.2 years old.They are also well-connected to the internet, with slightly more than 50% of them using the internet regularly.

Mergers & Acquisitions by the major skincare companies of ever-smaller companies at very high values are drawing in more founders and driving more creativity every day. The acquisitions are taking place because the big skincare brands are threatened by the young, independent brands that consumers want now.
For the skincare and beauty industry, Indonesia looks set to deliver world-leading growth rates during the course of the next five years. The expansion and investments gains for skincare are likely to be high for most categories making it one of the fastest growth markets in the world.
South Korea’s beauty giant has inked a business deal with MAP (PT Mitra Adiperkasa Tbk) a leading lifestyle retailer in Indonesia, with more than 2,200 retail outlets in 76 cities throughout the country. With this partnership, the Amorepacific Group intends to strengthen its retail network and expand the presence of its beauty brands beyond Jakarta and across Bali, Surabaya and Bandung regions. The group entered the Indonesian market in 2013 and currently offers its as Sulwhasoo, Laneige, Innisfree brands to local consumers. Through the partnership with MAP, Amorepacific will further add Etude to its operations.

Competitive Factors

Natural Ingredients

People are gradually getting rid of the stereotype that beauty and skincare products are only for women. More brands are targeting skincare products for men- including facial cleanser, moisturizer, anti-aging serums etc.
People across Indonesia are willing to spend more in personal care. Moreover, they prefer all natural ingredients on their skincare products, and that the Indonesian market has been doing from the start.

Advanced Technology

Indonesian skincare market uses various kinds of technology to make their product best and user-friendly. They use various kinds of technology like, BEAUTY 3.0, ATTAIN BY INCONTROL MEDICAL, OLO GO CORDLESS DRYER, etc.
These technology helps to produce the best skincare products and thus the consumer will love it.

Wide Range of Products

In the Indonesian skincare market, the products do not only belong to one specific parts. It has a wide range of products like for male, for female, for child, for eldery, for face, foe body, for foot, for oily skin, for dry skin, for light skin, for dark skin, etc. so this makes it easier for a person to choose the suitable products for themselves.

Key Market Players

The active players profiled in Indonesia’s skincare products industry includes L’Oréal Group, PT Martina Berto Tbk, Mandom Brands, Kino Indonesia, Unilever Indonesia, Wardah, Procter & Gamble Company, Mustika Ratu, Beiersdorf AG, and Estee Lauder Companies Inc.

Company Profiles of Key market players

PT. MARTINA BERTO TBK is located in JAKARTA, Jakarta, Indonesia, and is part of the Personal Care Products Manufacturing Industry. PT. MARTINA BERTO TBK has 537 total employees across all of its locations and generates $37.63 million in sales (USD). There are 4 companies in the PT. MARTINA BERTO TBK corporate family.

PT Kino Indonesia Tbk (Kino) was initially a small distribution company named PT Dutalestari Sentratama (DLS), founded in 1991. Embracing the opportunities at the time, DLS developed its business by establishing PT Kino Sentra Industrindo (KSI), a food production company in 1997.

KSI focuses on a variety of snack products such as candy, snacks, and chocolate, as well as flavored powder drinks which are currently sold in Indonesian and international markets. The first product launched by KSI was “Kino Candy”.

Strategic Conclusion

The skincare market is expanding and peaking its height in the market. People are taking care of their skin and have more knowledge about skincare than that before.
People are more worried about their aging factors and of their face.
Covid-19 has made its impact on the skincare market but the market is not going to slow down in the near future.
The skincare market seems very strong and seems to be growing.

References

Appendix

CAGR- Compound Annual Growth Rate
DOL- Department of Labor
USDA- United States Department of Agriculture
US$- United States Dollar