Vietnamese spend an average of $4 a month per capita on beauty products and services, while women spend VND140,000 (nearly $6) a month.
The demand for cosmetics has increased rapidly, but Vietnamese enterprises cannot satisfy it.
Speakers at the Mekong Beauty Show’s press conference said that Vietnam’s cosmetics import value increased from $500 million in 2011 to $2 billion in 2016, according to ITC and World Bank.
Vietnamese buy cosmetics via two major channels – friends (70 percent) and websites (30 percent).
Bui Ngoc Quynh Giao from Ilahui Vietnam said that Vietnam has a lot of potential in retail with a GDP of $220 billion and population of 90 million.
In 2017, Vietnam ranked sixth in A.T. Kearney’s list of the world’s most attractive retail markets (GRDI – global retail development index).
The demand for natural cosmetics has increased from spas (about 2,000 spas open in Vietnam each year) and individuals (both women and men).
A report from Mintel shows that the value of the cosmetics market may reach $2.35 billion by 2018. Noting that the figure was $1.78 billion, Vietnam has had the highest growth rate in the cosmetics industry.
Vietnam is expected to have 33 million middle-income earners by 2020, based on the facts that Vietnam’s GDP will grow by more than 6 percent per annum.
Aware of the great potential of the domestic cosmetics market, Vietnamese companies have poured money into production projects. However, Vietnam-made products are still unpopular.
Foreign brands are dominating the cosmetics market, especially the high-end market segment. A report found that 90 percent of the revenue of the cosmetics market goes into the pockets of foreign manufacturers, especially South Koreans.
Vietnamese brands hold a tiny market share and their products can be sold only in the low-end market segment which bring modest profits. With limited financial capability, Vietnamese companies don’t have a budget for R&D, advertisement and marketing.
A representative from the Essential Oil – Fragrance – Cosmetics Association said that domestic enterprises have high quality products but don’t know how to do branding.
Local brands’ strong points are in products for the face, skin and hands. Vietnamese customers choose foreign brands if they want other products.
A survey by Ilahui found that Vietnamese companies are not manufacturing full sets of products, but specialize in certain products only, which is a weak point.
Source: VietNamNet
