1. Overview of Vietnam cosmetics market
According to the latest data on Vietnam’s population, Vietnam is one of the countries with the fastest middle-class population growth in Southeast Asia. Currently, the middle class in Vietnam accounts for 13% of the population and is expected to reach 26% by 2026. As people’s income increases, the need for health care and personal beauty also increases. Thereby helping the cosmetics retail market develop more.
In Statista’s recent report on the revenue of the Vietnamese cosmetics retail market, in 2022 cosmetics industry revenue reached 2.2 billion USD and is expected to reach 2.69 billion USD in 2027. In the year By 2023, Statista predicts revenue from the cosmetics retail market in Vietnam to reach 2.36 billion USD. The compound growth rate (CAGR) of the Vietnamese cosmetics retail market in the period 2023 – 2027 is estimated to reach 3.32%.
In the Vietnamese cosmetics market, data from the US Department of Commerce shows that products from Korea dominate with 30% of the total import market share, followed by products from the European Union and Japan. Japan, Thailand and America. In addition, products from China and Singapore are also currently occupying a certain market share.
The demand for cosmetics among Vietnamese consumers is increasing, which causes more and more cosmetic distribution stores to appear in the Vietnamese market to compete together and win profits in the distribution market. combines potential cosmetics while giving customers many experiences in beauty cosmetics.
2. Opportunities of the Vietnamese cosmetics market
Vietnam’s cosmetics market attracts many large and small businesses with great opportunities such as:
Fast growth rate
Along with economic growth and people’s income, the need for beauty is increasingly focused and the cosmetic distribution system is expanded through many different channels, causing the Vietnamese cosmetics market to increase. Growing at an average of 15-20% per year, the Vietnamese cosmetics market is showing strong momentum and clear development potential.
Abundant raw material sources with reasonable prices
Vietnam also has the advantage of abundant raw material resources and reasonable prices. As an agricultural country, Vietnam has many plants and herbs that can be used in cosmetics. According to statistics from the Ministry of Agriculture and Rural Development, Vietnam has more than 10,000 plant species, of which about 1,000 species can be used in cosmetics.
Some popular Vietnamese cosmetic ingredients include:
- Fruits and vegetables: Orange, lemon, grapefruit, aloe vera, cucumber, tomato,…
- Plants: Turmeric, green tea, chrysanthemum, rose, aloe vera,…
- Seeds and vegetable oils: Coconut oil, olive oil, cashew oil, grapeseed oil,…
These ingredients are used to produce cosmetic products for skin care, hair care, makeup and other personal care products. Possessing abundant raw materials at reasonable prices is a great advantage of the cosmetics industry in Vietnam.
The rise of vegan cosmetics in Vietnam
In recent years, vegan cosmetics are becoming increasingly popular in Vietnam. According to a Nielsen report, Vietnam is one of the fastest growing vegan cosmetics markets in the world, with an average growth rate of 30% per year. The rise of vegan cosmetics in Vietnam brings many opportunities for cosmetic businesses. Businesses need to grasp this trend to develop and succeed in the market.
Opportunities for foreign cosmetic brands
The Vietnamese cosmetics market is opening up widely and bringing many attractive opportunities for foreign cosmetic brands. Since 2023, the Vietnamese cosmetics market has witnessed the appearance of many famous brands from abroad. Imported products are not only diverse in type but also provide rich choices for consumers. Imported cosmetic brands such as Dior, Chanel, Estee Lauder, etc. still hold the largest market share, at 75%. These brands possess advantages in brand, product quality and widespread distribution systems and bring incredible business efficiency.
3. Challenges for the cosmetics industry
Although the cosmetics industry is experiencing positive development in Vietnam, there are still many challenges facing it. Here are some notable challenges:
Fierce competition between domestic and foreign brands:
The Vietnamese cosmetics market is experiencing fierce competition between domestic and foreign brands. This leads to rapid changes in trends, prices and product quality.
The lack of stability in the cosmetics market makes it difficult for businesses to build and implement business strategies. Businesses need to quickly adapt to market changes to maintain competitiveness.
Sensitivity to product prices
Vietnamese consumers often have the mentality of comparing prices before purchasing. Therefore, businesses need to focus on controlling product prices to compete effectively.
In addition, Vietnamese consumers also tend to choose products with reasonable prices and good quality. Businesses need to focus on improving product quality to meet consumer needs.
Policy and management issues:
Policy and management issues are also one of the challenges for the cosmetics industry. The lack of regulations and supportive policies from the government has affected the development of the industry. In addition, quality control is also an important issue, especially in the context of increasing consumer demand.
In addition to the main challenges mentioned above, the Vietnamese cosmetics market also has a number of other challenges, including:
– Competition from floating products, fake goods, and imitation goods
– Shortage of high-quality human resources
– Regulations on cosmetic market management are not strict
Businesses need to be clearly aware of these challenges to take appropriate remedies.
With the scale of the industry as well as the future growth rate, the cosmetics & beauty retail sector in Vietnam is still a potential market with many opportunities for cosmetic businesses, including domestic brands both local and foreign. However, businesses also need to pay attention to some market challenges, including fierce competition, product price sensitivity and a number of other challenges.
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Source: Compiled
