"Falling Spring Cold"
After years of running blindfolded, the Chinese cosmetics market "stepped on the brakes".
Since last year, the growth rate of total cosmetics retail sales has begun to show signs of slowing down, and the overall performance of China's cosmetics market in the first quarter of this year is not optimistic. According to the data released by Qingyan Intelligence, in the first quarter of this year, the size of China's cosmetics market was 219.63 billion yuan, a year-on-year decrease of 0.28%. Some senior industry insiders believe that in the first quarter of this year, mainland cosmetics showed a situation of "low opening and low walking", which may also mean that the once booming cosmetics industry has entered a new stage of development.
2024 is off to a bad start
The pressure is obvious, and the cold is pressing. According to the data of 40 domestic listed beauty-related companies according to the statistics of Blue Eye Information, in 2023, the total revenue of domestic cosmetics-related listed companies will be 102.143 billion yuan, a year-on-year decrease of 2.3%. Among them, the total revenue of raw material suppliers was 35.456 billion yuan, a year-on-year decrease of 16.1%, and the revenue of OEM/ODM enterprises was 3.597 billion yuan, a year-on-year decrease of 20.8%. Brand owners and oral care companies increased by 11.7% and 13.4% year-on-year respectively, slowing down.
▍Intercepted from Blue Eye Intelligence
There is no doubt that the 2023 annual reports of the 40 listed companies are also a microcosm of the current state of the industry last year. According to the data of the National Bureau of Statistics, from January to December 2023, the national retail sales of cosmetics will be 414.2 billion yuan, a year-on-year increase of 5.1%, which is significantly lower than the overall growth rate of 7.2% in the retail sales of consumer goods in the same period, and at the same time, it is also lower than the growth rate of 5.2% of the national GDP.
It is an indisputable fact that the growth rate of the cosmetics market has slowed down. Following the downturn of the previous year, the overall performance of the beauty market in the first quarter of this year was not optimistic. According to Qingyan intelligence data, in the first quarter of this year, the size of China's cosmetics market was 219.63 billion yuan, a year-on-year decrease of 0.28%, of which the online scale was 114.17 billion yuan, a year-on-year increase of 3.4%, and the offline was 105.46 billion yuan, a year-on-year decrease of 4%.
▍Intercepted from Blue Eye Intelligence
From the perspective of various channels, in the first quarter of this year, among the online channels, the largest sales volume was still the Tao system, with sales of 52.38 billion yuan, accounting for 23.85%, a year-on-year decrease of 9.8%; Douyin ranked second, with sales of 39.72 billion yuan, accounting for 18.09%, a year-on-year increase of 32.8%, the largest increase among all channels.
▍Intercepted from Blue Eye Intelligence
In addition, in the offline channel, except for the department store, which achieved a slight increase of 0.4%, the rest of the sub-channels showed a decline in sales. Among them, the sales of KA channels in the first quarter of this year were 19.8 billion yuan, accounting for 9.01%, a year-on-year decrease of 13.1%; The sales of CS channels were 39.38 billion yuan, accounting for 17.93%, a year-on-year decrease of 2.8%.
Although, according to data from the National Bureau of Statistics, from January to March this year, the total retail sales of cosmetics (above designated size) were 108.6 billion yuan, and a year-on-year increase of 3.4%. However, such a growth rate is also rarely lower than the growth rate of the total retail sales of consumer goods (5.9%), and the growth rate of 3.4% is even more obvious compared with the growth rate of 41.4% in the cosmetics category in the same period in 2021.
According to Mojing market data, in February and March 2024, the sales of beauty and skin care products fell by 37.6% and 29.6% respectively; The cosmetics/fragrance category fell 29.6% in February and 12.8% in March. The import data for the first quarter of 2024 recently released by the General Administration of Customs shows that the import volume and import value of cosmetics have both declined, and the decline rate is more than 17%. Therefore, whether it is from the perspective of category or import data, it reflects that consumers' willingness to consume cosmetics is decreasing.
"This year's beauty business is getting more and more difficult to do" has almost become the common voice of most people in the industry. Some people in the industry pointed out that the slowdown in the growth of the industry is not accidental, but the result of a combination of factors. On the one hand, after the pandemic, consumers' consumption concepts and purchasing habits have changed significantly, and they have become more cautious about spending non-essential goods. On the other hand, the competition in the cosmetics market is also becoming increasingly fierce, domestic and foreign brands are competing for market share, price wars, quality wars, and marketing wars one after another, which also makes the profit margins of the industry squeeze to a certain extent.
The cosmetics market was once considered to be a representative of consumption upgrading and quality of life, and its rapid growth was once regarded as an important embodiment of China's economic vitality. However, the data for the first quarter of this year has added a touch of gloom to the industry.
The wave of cancellations and bankruptcies has come and gone
It is worth noting that this year, the beauty industry not only showed an unfavorable start, but also many companies chose to withdraw from the industry or even "fell".
It is reported that in February this year alone, 23 cosmetics manufacturers in Guangzhou cancelled their cosmetics production licenses. It is understood that these enterprises are all "voluntary cancellation". The cancellation of the cosmetics production license also means that the company has voluntarily withdrawn from the ranks of cosmetics production.
More than that, according to the recent combing outside the blue eye, from January to March this year, at least 23 cosmetics companies were either filed for bankruptcy, or entered bankruptcy liquidation procedures, or were officially declared bankrupt due to insolvency. Among these 23 companies, there are 11 cosmetics sales/retail enterprises, accounting for 48%; There are 9 enterprises involved in the production and sales of cosmetics. Among them, there are some well-known enterprises and established enterprises. For example, the parent company of Only Write, an online celebrity beauty collection store, has declared bankruptcy and is auctioning off its assets; A number of companies established for more than 20 years, such as Shanghai Huayimei Cosmetics Co., Ltd., the parent company of the well-known acne brand Zeping, have also declared bankruptcy due to insolvency (see the article "Bankruptcy Tide, 23 More Cosmetics Companies Can't Hold On!"). 》）。
On the whole, from retailers to brands to upstream raw materials and packaging material manufacturers, the bankruptcy cold wave in the first quarter of this year has swept the entire cosmetics industry.
It is worth noting that at the end of 2022 and 2023, Qingyan has sorted out the bankruptcy of cosmetics companies. According to incomplete statistics, 11 and 40 companies will file for bankruptcy in 2022 and 2023 respectively. In just three months into 2024, at least 23 cosmetics companies will go bankrupt, which is twice as many as in the whole of 2022 and more than half of the whole of 2023. This year's difficulties for enterprises can be seen.
Not only that, but the life of some leading domestic enterprises is not easy. For example, Jiaheng Jiahua's 2023 annual report shows that the company's revenue was 1.016 billion yuan, a year-on-year decrease of 3.41%, and its net profit decreased by 42.39% year-on-year to 40.16 million yuan. The company said that the poor performance was due to the decline in some cosmetics OEM business, which was caused by the slower than expected recovery of the industry and low product demand. In addition, Bloomage Biotech also recorded a double decline in revenue and net profit for the first time in 2023, with revenue of 6.076 billion yuan, a year-on-year decrease of 4.45%, and a net profit of 593 million yuan, a year-on-year decrease of 38.97%. It is worth mentioning that last month, Qingsong Co., Ltd. also issued an announcement saying that due to the slowdown in demand and overcapacity, the announcement of the termination of the construction of Nosbel's 148 acres of land project has attracted widespread attention from the industry.
Some industry analysts believe that on the one hand, with the implementation of the new regulations and supporting regulations, the supervision has become stricter, and some enterprises that take advantage of loopholes and play side balls can only choose to withdraw or die out; On the other hand, in the case of a poor environment, industry competition is even more intensified, and "extraordinary volume" is the general voice of the industry.
A makeup R&D engineer in Guangzhou told Qingyan that the current industry is "boundless", and the price has become a "floor price". He said that he originally wanted to research a makeup remover product recently, but after conducting market research, he found that the makeup remover product of a well-known brand was as low as 50 yuan/100 ml. "After seeing such a price, we directly gave up the research and development of this product."
In fact, many people in the industry said that "low price" has become a normalized means of competition, whether it is Taobao, Douyin, Kuaishou and other e-commerce platforms, or beauty brands, are involved in low-price competition. Previously, some people in the industry said that the current consumption power is declining, and the expectations of the public and enterprises for the future are declining, which highlights the structure of oversupply in the industry, so the low-price involution will only become more serious, and in the long run, it will "kill a group of players".
Can 618 save the decline?
The first quarter was not smooth, so the second quarter with the blessing of 618 promotions is expected to reverse the situation?
According to the situation understood by Qingyan, most people in the industry believe that it is "not too optimistic". An insider with nearly 20 years of experience in the industry told Qingyan, "This year is not only off to a bad start, but the market situation in the past April is not particularly good. The person also predicted, "The situation of 618 this year is not expected to be very good." ”
Qingyan learned from the person in charge of a number of factories that the factory has not received orders for 618 for the time being. A person in charge of an OEM factory said, "In the past good years, in April, some brands will start to prepare for the 618 promotion and start to find factories to place orders, but this year, brands are very cautious about the 618 promotion." So far, we haven't heard anything from the upstream end. ”
In addition, many people in the industry have said, "At present, the domestic economic situation is declining, and it can be clearly felt that everyone is unwilling to consume, and the inability to improve consumer confidence is the biggest problem at present." "Everyone has a strong sense of crisis, and the industry is further increasing." In addition, the person in charge of a well-known packaging material company also believes that "the original 618, double 11 and other big promotions are to lose money and make money, but now everyone can't afford to lose money and want to pursue profits." This is one of the reasons why everyone is cautious. ”
It is worth mentioning that there have been media reports recently that during the 618 period this year, Taobao and Jingdong have canceled the pre-sale mechanism. According to the report, "Taobao 618's marketing rhythm will be more front-loaded, and it will enter the first wave of 618 in mid-to-late May, and users will recall transactions; From 8 p.m. on May 31 to June 20, the second wave of 618 was achieved, achieving a full-scale outbreak." And "Jingdong 618 will be opened at 8 p.m. on May 31, directly "off to a good start", spot sales, and then enter the special period, climax period and return period in turn.
In this regard, an industry source in the e-commerce field said that the pre-sale mechanism can help merchants reduce inventory risks, but after canceling the pre-sale, merchants need to forecast demand more accurately to avoid overstocking or out-of-stock. It can be seen that the platform is also changing the rules to improve the consumer experience, all in order to promote sales.
Although, it remains to be seen whether 618 can save the current sluggish beauty market this year. However, for the enterprise itself, improving its competitiveness is a magic weapon that does not need to be questioned. As a person in charge of a leading brand said, "In the current poor environment, it is recommended that enterprises start with R&D, production, and organizational capacity upgrades, and practice more internal skills." When we can't change the environment, we can only change ourselves and wait for new opportunities to come. ”
In general, although the current industry is facing the dilemma of slowing growth, it does not mean that the cosmetics market has lost the possibility of development. On the contrary, as consumers' pursuit of beauty and yearning for quality life continue to heat up, the cosmetics market still has huge potential to be tapped. The key is that companies need to grasp the needs of consumers more accurately, continuously innovate products and services, and enhance brand value and competitiveness.