Five years of debt nearly ten million! Another local cosmetics brand announced "closure" [with cosmetics industry market analysis]

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Recently, Fomomy Fuqi, a new local cosmetics brand, released a closing and clearance announcement titled "Not Marketing, We Are Really Closed" in its official flagship store of Tmall. The announcement said that the brand was established in 2018, and in 2021, it sought transformation and launched a unique "Mustang Series"; In 2022, new products such as chessboard series were also launched. Among them, chessboard series also won the Top 1 cosmetics sales list of Xiaohongshu, Tmall and other platforms.

However, in the first half of this year, the brand faced operational difficulties. The nearly eight digit debt made the brand unable to continue to support the cosmetics business, so it finally declared bankruptcy.

(Data map)

The closure of local cosmetics brands is only part of the transformation of China's cosmetics market. In recent years, the competition in China's cosmetics market has become increasingly fierce, and the entry of international brands to compete for market share has put great pressure on local brands. In addition, consumers' requirements for quality, innovation and brand awareness have also improved, which is a big challenge for local cosmetics brands. The failure of a brand is often due to problems in product quality, marketing strategy, etc.

However, this does not mean that local brands have no opportunities. By improving product quality, innovative research and development and marketing, local cosmetics brands still have the opportunity to make a figure in the market.

——Analysis of China's cosmetics market scale

With the upgrading and change of mass consumption concept and aesthetic concept, more and more consumers begin to pay attention to their own external image, and makeup is becoming more and more important. Consumers begin to pursue "fashion" and "personality". In 2022, the size of China's cosmetics market will reach 71.595 billion yuan, with a year-on-year growth of 9.05%.

——The competition of enterprises in China's cosmetics market is fierce, and the competitiveness of domestic enterprises is improved

The competition in China's cosmetics industry is fierce, not only among local enterprises, but also from large international enterprises. With the rise of domestic cosmetics brands, the concentration of China's cosmetics industry is high. In terms of enterprises, L'Oreal Group will occupy the largest market share in China's cosmetics industry in 2021, accounting for 27.1%, followed by Louis Vuitton, accounting for 11.2%, Estee Lauder, accounting for 9.5%, ranking third. It is worth noting that Guangzhou Yixian E-commerce Co., Ltd., the parent company of Perfect Diary, and Zhejiang Yige Enterprise Management Group Co., Ltd., the parent company of Huaxizi, were established in 2016 and 2014 respectively, with a short development time, but their market share increased rapidly. The former has a market share of 1.7% since 2017 and 7.6% since its development. The latter has a market share of 0.3% since 2017 and 6.8% since its development.

Note: As of January 4, 2023, Euromonitor has not released data for 2022.

——Perfect Diary and Huaxizi achieved explosive sales growth

In 2021, Huaxizi will have the highest market share in China's cosmetics market with a market share of 6.8%, and Perfect Diary will take the second place with a market share of 6.4%. It can be seen that domestic brands are getting more and more attention in China's cosmetics market. Perfect Diary and Huaxizi, as two shining stars in the domestic cosmetics market, are both new Chinese brands emerging in recent years, With the full application of new media marketing means, the proficiency of e-commerce operation mode, and the emphasis on product differentiation, the two companies achieved explosive sales growth.

Note: As of January 4, 2023, Euromonitor has not released data for 2022.

At present, the domestic cosmetics market has bid farewell to high growth, and the domestic cosmetics brands are in the stage of reshuffle. How to improve product strength and retain consumers, The promotion from online celebrity brand to evergreen brand has become the key to break the situation for domestic cosmetics brands.

According to the research report released by BOC Securities, in recent years, the scale of the cosmetics industry has grown steadily, and domestic brands have performed well. The local cosmetics products tend to be localized and high-end, and the trend of subdivision is differentiated. In addition, cosmetics e-commerce channel sales grew rapidly, online channel investment increased significantly, and celebrity endorsements promoted the fan economy. China's cosmetics industry has maintained high growth, and the rise of domestic cosmetics brands is expected in the future.

Prospective Economist APP Information Group

For more research and analysis of this industry, see the Analysis Report on Market Demand and Investment Planning of China's Cosmetic Products issued by the Prospective Industry Research Institute.

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