G C C . E U M A R K E T S W A T C H J A N U A R Y 2 0 2 1

L A T E S T N E W S A N D M A R K E T I N T E L L I G E N C E O N T H ET A R G E T C O U N T R I E S F O R T H E G C C . E U N E T W O R K

I N D I A - M E X I C O - S O U T H K O R E A - U A E - U S A

GCC.euMarketsWatch

1

Voice of theIndustry

To offer consumers ever safer, more innovative and

sustainable products,

To develop the economy and employment in Europe in the

cosmetics sector,

For Europe to consolidate its position as a leader and

global benchmark,

Dear colleagues, dear friends,

As you probably know, Europe is the leading consumer

market for the cosmetics industry with €79.8 billion in 2019,

out of a worldwide turnover of €500 billion.

More than a market, cosmetics is a major industrial asset for

Europe. It generates nearly 2 million direct jobs. It invests in

research and innovation. It benefits from an exceptional

pool of talents and skills. It promotes international

expertise that places Europe at the forefront of the world.

Through the “Global Cosmetics Cluster - Europe” (GCC.eu),

Cosmetic Valley and its partners wanted to unite European

players in an increasingly competitive context, in a

changing world. Sharing best practices, pooling resources,

collaborating on innovation, jointly addressing major export

markets, are all wishes shared by the members of this great

network. A network fostering the development of your

business with the support of the European Commission.

GCC.eu is offering in 2021 a support program dedicated to

the internationalization of your business.

The GCC.eu teams are at your disposal to go international

and help you in the recovery of your activity.

CHRISTOPHE MASSONGENERAL DIRECTOR

COSMETIC VALLEY

2

G C C . E U M A R K E T S W A T C H J A N U A R Y 2 0 2 1

SpecialFocus

LatestNews

GoInternational

MarketData

P. 04

BEAUTY & PERSONAL CAREMARKET UPDATE

P. 13

TARGET MARKETS NEWS ONBUSINESS, INNOVATION,

TRENDS, REGULATORY & RETAIL

P. 17

BEAUTY & PERSONALCARE MARKET DATA ON

TARGET COUNTRIES

P. 24

FIND SERVICES & ACTIVITIESTO ENHANCE YOUR

INTERNATIONALISATION

Special FocusBEAUTY & PERSONAL CARE

MARKET UPDATE

Beauty & Personal CareMarket Update

Last months of 2020 reveals a general downgrade

in beauty for the year 2020, as the global economy

slips into recession and the overall industry

landscape remains unpredictable. The 2021

recovery is slated to be rosier than originally

expected, due to initial signs of successful mass

COVID-19 vaccination in a few countries, as well as

various business initiatives to stimulate demand

and the return to consumption.

The latest 2020 downgrade is further driven by the

new wave of lockdowns seen in several countries,

which continues to impact brick-and-mortar sales

as people are confined to their homes.

On the positive side, resilience is being seen in

categories aligned with enhanced self care

routines, wellness and preventative health

principles.

SOURCE: EUROMONITORBEAUTY & PERSONAL CARE: QUARTERLY STATEMENT Q4 2020

S P E C I A L F O C U S J A N U A R Y 2 0 2 1

5

Despite a number of operational challenges and

transformational consumer shifts, industry

sentiment remains upbeat and various

opportunities remain.

Skin care continues to be a bright spot, set to

grow twice as fast as colour cosmetics in all

scenarios due to its alignment with self care and

health. Though premium beauty has seen a

significant slump it is still projected to grow 3-6

times faster than mass beauty over the next five

years in all scenarios, led by Asia.

Digital acceleration continues, with a number of

players reporting double-digit growth rates for

their online sales for their last quarter.

All forecast scenarios anticipate the recovery of

the industry by 2022; however, further

downgrades to global economic forecasts could

potentially slow the pace.

While some positive signs of growth are starting

to emerge across isolated geographical and

category pockets, the industry will need to brace

itself for a continued battle to capture and

engage with more channel and brand agnostic

consumers as a “new normal” socioeconomic

reality unfolds.

S P E C I A L F O C U S J A N U A R Y 2 0 2 1

Under Euromonitor’s C19 pessimistic scenarios 1, 2, and 3, BPC is expected to decline by 3% globally in

2020, 25-57 basis points lower than our base case scenario. Global recovery is anticipated in 2021 under

scenario 1 (25-35% probability over a one year horizon), but under the other two scenarios a much slower

recovery is predicted, due to the potential for a third and possible fourth wave in 2021 and the later mass

roll-out of COVID-19 vaccines or treatments in 2022-2023.

Source: Euromonitor Beauty and Personal Care Industry Forecast Dashboard, Updated November 2020

6

Hygiene-related categories have remained

resilient during the pandemic, and newly

established preventative health awareness and

habits are set to sustain growth moving forward.

Further opportunities exist in upscaling hand

hygiene offerings with a number of added

attributes, such as natural fragrances, skin

conditioning, moisturising and sustainable

packaging. Oral care, on the other hand, could

benefit from a more beauty-aligned positioning,

professional strength formulas and endorsing its

necessity as part of well-rounded self-care

routines.

Unsurprisingly, companies such as Unilever and

P&G are riding the wave of pandemic-related

consumption. Unilever reported 20% growth in its

cleansing portfolio in the Jul-Sep quarter and has

launched hand sanitisers in 65 new markets since

March. The company’s flagship brand Lifebuoy

became its latest EUR1 billion brand, and was

reported to have grown by 67% year to date.

P&G launched Safeguard hand soap and hand

sanitisers in North America and reported growth

of 30% in personal cleansing for its latest quarter,

with double-digit growth in every region.

S P E C I A L F O C U S J A N U A R Y 2 0 2 1

F R O M T H E E U R O M O N I T O R I N D U S T R Y F O R E C A S T M O D E LSoft demand drivers

C L E A N S I N G P R O D U C T S T OF L O U R I S H O N T H E B A C K O FI M P R O V E D H Y G I E N E P R A C T I C E S

I N V E S T M E N T I N D I G I T A L C O N T I N U E S T O P R O L I F E R A T E

S U S T A I N A B I L I T Y E F F O R T S S U P P O R T N A R R A T I V E S O FP U R P O S E A N D C O N S C I O U S B E A U T Y

Source: Euromonitor International’s Voice of the IndustrySustainability Survey, conducted in June 2020

7

USA saw a slight upgrade, as a result of a rise in overall retail spend (up by 7% in November

according to the US Census Bureau), stronger consumer demand and booming online activity

reported for the last quarter by major market players. A flat five-year forecast CAGR is expected,

as growth in skin care, bath and shower, and baby products is set to offset continued declines in

colour cosmetics and fragrances.

Conversely, Japan saw the largest downgrade in Q4 2020 versus Q3, with total beauty sales now

expected to dip by 7.9% in 2020 versus growth of 1.6% expected pre-COVID-19, due to weaker

than expected consumer sentiment with restrictions on movement and other measures being

strengthened on the back of rising cases. Softer in-store traffic, sharp declines in prestige sales

and a significant dip in inbound tourism have been largely to blame.

China continues its positive rebound trajectory, forecast to witness a CAGR of 8% over 2019-

2024, owing to burgeoning online sales (including new points of sale on social media and

livestreaming) and strong domestic spending, particularly in the area of prestige skin care and

make-up.

S P E C I A L F O C U S J A N U A R Y 2 0 2 1

I N D I A - M E X I C O - S O U T H K O R E A - U A E - U S A

About our target markets

M I X E D G E O G R A P H I C A L R E S P O N S E S I N Q 4 2 0 2 0

IndiaUSA

8

Most beauty categories saw a downgrade in

India, as the country continues to be plagued

by rising COVID-19 cases. Lack of stringent

safety advice and poor contact tracing

implementation from the government makes

home seclusion still a factor, which is heavily

impacting store-based retailers.

The pandemic has kickstarted the digital

shift, with beauty e-commerce expected to

grow by 35% in 2020. Online sales are not,

however, sufficient to fully mitigate the loss

of revenue from physical channels, as BPC

ecommerce is still in its infancy in India and

accounted for only 4% of value sales in 2019.

E-commerce sales have been supported by

the industry’s response to some of the

digital and delivery omnichannel initiatives

quickly dopted in other parts of the world,

such as kerbside pickup, livestreaming and

AR/VR, partly offsetting declines in offline

retail.

Euromonitor International’s Digital

Consumer survey 2020 indicates that 43% of

Indian consumers had used virtual reality in

the past year, versus a global average of

22%, giving ample opportunities for brands

to ramp up their digitalisation efforts.

S P E C I A L F O C U S J A N U A R Y 2 0 2 1

I N D I A - M E X I C O - S O U T H K O R E A - U A E - U S A

About our target markets

B I G U N C E R T A I N T Y S U R R O U N D I N G I N D I A ’ S R E C O V E R Y

India

F U R T H E R D O W N G R A D E I N I N D I A ’ S G D P T O P U S H B P C R E C O V E R Y T O 2 0 2 2

Pure play beauty e-tailers, such as Nykaa, are leading the digital shift with exclusive online tie-ups

with several foreign brands, as well as transparent genuine product guarantees to gain consumers’

trust. US-based Fidelity Investments has recently invested an undisclosed sum in Nykaa to ride on

the fast-growing beauty ecommerce market in India.

9

The need for clinical backing is no stronger than in results-driven categories such as acne

treatments, with a quarter of global respondents citing “efficacy” as the most desired product

feature.

At a time when people are wearing masks to protect others from COVID-19, many are exposing their

faces to more irritation than usual, which creates various skin issues, such as acne, rashes,

breakouts, blemishes and itchiness. Google trends show a sharp jump in searches for the term

“maskne” since May 2020, with a significant proportion coming from Singapore, Philippines and

Malaysia, given the tropical climate.

Asia presents the largest revenue potential for the category, followed by Western Europe, with

innovation activity and “maskne” product repositioning still mostly coming from Asia. The South

Korean retailer Peach & Lily has responded by creating a Maskne Essentials category on its e-

commerce platform, primarily for acne treatments. While the 15-29 age group is the key target,

there is ample scope for adult-positioned products which offer other attributes, such as radiance,

hydration and firming properties.

With skin sensitivity being a core concern and a key underlying factor in breakouts, several

ingredient manufacturers, as well as cosmetics ODM players, are investing in this space. Evonik is

targeting Asia Pacific with its natural skin sensitive active ingredient Rovisome Sensitive NG, while

Cosmax announced a new formulation free from fragrances, essential oils or surfactants, which can

be irritating to the skin.

S P E C I A L F O C U S J A N U A R Y 2 0 2 1

I N D I A - M E X I C O - S O U T H K O R E A - U A E - U S A

About our target markets

“ M A S K N E ” S O L U T I O N S I N C R E A S E G R O W T HP O T E N T I A L F O R A C N E T R E A T M E N T S

S. Korea

10

Fragrances have been one of the worst

causalities of the pandemic, with five year

forecasts across all regions bar Asia

remaining in negative territory. Our latest

quarterly update, however, indicates a

modest recovery in 2021 for countries

including the US, Russia, Germany and

Australia.

While the olfactory nature of fragrances and

their high dependence on trial makes it

difficult to succeed online, leveraging

subscription boxes could play a role in the

category’s recovery through sampling and

experience. 2020 has seen the rise in

adoption of beauty subscription services,

and a number of players, such as Lush and

Feelunique, have made a foray into this

space.

Digital sampling programme initiatives are

also underway. L'Oréal Luxe, for example

teamed up with Pinterest in November on

the Luxury Fragrance Finder, featuring a

custom landing page quiz that seeks to

match Pinterest users with their perfect

fragrances, which can then be purchased via

the L’Oréal Luxe e-commerce site.

As retail stores reopen, fragrance brands will

look to upgrade hygiene standards and

incorporate contactless testers at the point

of sale, with Natura’s latest partnership with

Noar tech start-up in Brazil being a case in

point.

S P E C I A L F O C U S J A N U A R Y 2 0 2 1

I N D I A - M E X I C O - S O U T H K O R E A - U A E - U S A

About our target markets

D I G I T A L T E S T I N G A N D S U B S C R I P T I O NM O D E L S T O R E V I V E F R A G R A N C E S

UAE Mexico USA

11

LatestNews

TARGET MARKETS NEWS ONBUSINESS, INNOVATION,TRENDS, REGULATORY & RETAIL

I N D I A - U S A - M E X I C OS O U T H K O R E A - U A E

B U S I N E S S - I N N O V A T I O NT R E N D S - L E G A L - R E T A I L

M A R K E T S T O P I C S

Latest News TARGET MARKETS NEWS ON BUSINESS,INNOVATION, TRENDS, LEGAL & RETAIL

L A T E S T N E W S J A N U A R Y 2 0 2 1

B U S I N E S S

UAE is a key economic partner of South Korea, and the value of their trade exchange exceeded

$12.5 billion in 2019, and over 200 Korean companies are currently operating in the UAE,

according to Kim Young-ju, Chairman of the Korea International Trade Association (Kita).

U A E A K E Y E C O N O M I C P A R T N E R O F S O U T H K O R E A ( I N T E R V I E W )

Source & more information

The startup founded by Falguni Nayar, a former investment banker, is working with advisers to

prepare for the share sale in Mumbai.

B E A U T Y S T A R T U P N Y K A A P L A N S $ 3 B I L L I O N I P O T H I S Y E A R

Source & more information

13

Social distancing and remote work have lessened demand for make-up and led to store

closures. Travel restrictions have also cut off the flow of big-spending Chinese tourists and

individual merchants who buy tax-free goods

C O R O N A V I R U S H A S S L O W E D K - B E A U T Y ’ S B I L L I O N A I R E B O O M

Source & more information

L A T E S T N E W S J A N U A R Y 2 0 2 1

I N D I A - U S A - M E X I C OS O U T H K O R E A - U A E

B U S I N E S S - I N N O V A T I O NT R E N D S - L E G A L - R E T A I L

M A R K E T S

L E G A L - R E G U L A T O R Y

T O P I C S

Resilient beauty is a new trend set to emerge from the COVID-19 pandemic, according to

ingredient manufacturer DSM.

C O V I D - 1 9 C R E A T E S R E S I L I E N T B E A U T Y T R E N D A N D A C C E L E R A T E C L E A NB E A U T Y M O V E M E N T I N A P A C - D S M

Source & more information

Cosmetics manufactured in India, Middle East and US are the most susceptible to contamination

by aerobic mesophilic bacteria, yeast and moulds, according to new research.

C O S M E T I C S C O N T A M I N A T I O N : P R O D U C T S M A N U F A C T U R E D I N I N D I A ,M I D D L E E A S T A N D U S H A V E H I G H E S T L E V E L S O F M I C R O B I A LC O N T A M I N A T I O N

Source & more information

T R E N D S

The Indian government has decided to set up the first Central Cosmetics Laboratory and appoint

inspectors across states.

F U L L D E C L A R A T I O N O F I N G R E D I E N T S , N O T C O S M E T I C , M A D E M A N D A T O R Y

Source & more information

COVID-19 has wreaked havoc across all industries. Some saw its effects in the first months and

even weeks of the crisis. In other cases, the effects are just beginning to show. A latter example is

the beauty industry, which has noticed that the use of masks is not encouraging the purchase of

makeup.

S K I N C A R E , E - C O M M E R C E : B E A U T Y I N D U S T R Y L I F E L I N E S

Source & more information

14

It’s go-time for innovative beauty trends and beauty beyond boundaries to grow like never

before in India. With the global beauty industry being valued in the billions, India has begun to

take its place at the beauty table.

T O P T R E N D S R E F O R M I N G T H E I N D I A N B E A U T Y I N D U S T R Y

Source & more information

L A T E S T N E W S J A N U A R Y 2 0 2 1

I N D I A - U S A - M E X I C OS O U T H K O R E A - U A E

B U S I N E S S - I N N O V A T I O NT R E N D S - L E G A L - R E T A I L

M A R K E T S T O P I C S

R E T A I L

I N N O V A T I O N

Social distancing and remote work have lessened demand for make-up and led to store

closures. Travel restrictions have also cut off the flow of big-spending Chinese tourists and

individual merchants who buy tax-free goods

C O R O N A V I R U S H A S S L O W E D K - B E A U T Y ’ S B I L L I O N A I R E B O O M

Source & more information

The price of a lipstick can vary - sometimes even double - whether it’s purchased in Turkey, in

France or in Thailand. The British cosmetics comparison website Cosmetify has compared the

cost of five iconic beauty products in different countries worldwide.

G L O B A L C O S M E T I C B R A N D S A R E L E S S E X P E N S I V E I N C A N A D A A N D T H E U S AT H A N I N C H I N A

Source & more information

Unlike apparel, which will face a longer recovery, beauty could be back to 2019 levels by the first

half of 2021, according to McKinsey.

W I T H A N E N D T O P A N D E M I C S T R U G G L E S I N S I G H T , B E A U T Y L O O K S T O W A R DA P R E T T I E R F U T U R E

Source & more information

Customized beauty and AR try-on were hot topics at CES this year as beauty continues to make its

mark on the annual event.

C E S R E P O R T : B E A U T Y - T E C H T R E N D S T O W A T C H I N 2 0 2 1

Source & more information

The Middle East is defined as one of the world’s fastest-growing beauty markets, buoyed by

strong purchasing power and high international brand engagement, but what names are ahead of

the pack?

T O P B E A U T Y B R A N D S I N T H E M I D D L E E A S T

Source & more information

15

Market DataSPECIFIC CATEGORIES OF BEAUTY & PERSONAL CAREANALYSED AND COMPARED IN OUR TARGET COUNTRIES

Market Data

Retail Value

Sales Performance

Sales by Categories

SPECIFIC CATEGORIES OF BEAUTY & PERSONAL CAREANALYSED AND COMPARED IN OUR TARGET COUNTRIES

Claims most used

Distribution Chanels

Brands Shares

M A R K E T D A T A J A N U A R Y 2 0 2 1

CategoryAbstract

ConsumerObserver

SKIN CAREIN THIS EDITION

UAE Mexico India

S. Korea USA

In this section of the newsletter a quantitative analysis of each of our target markets for a specificcategory can be found.

Each edition of the newsletter will focus on a different category and will analyse the performance ofthese markets from two different perspectives.

On the one hand we will focus on the category itself with the "Category Abstract" in which you will beable to analyse the size of the market, the sales performance both overall and by subcategories.

On the other hand, we will have the "Consumer Observer" where we will have a point of view closer toretail with data such as the most used Claims, the distribution channels and their evolution and thedistribution of the market by brands.

17

SKIN CARE

India

M A R K E T D A T A J A N U A R Y 2 0 2 1

CategoryAbstract

ConsumerObserver

CLAIMS MOST USED IN THIS MARKET2019 - TOTAL SKUS: 157.876

IN THIS EDITION

Retail Value RSP 2020 - EUR million

1885,5

18

Mexico

SKIN CARE

M A R K E T D A T A J A N U A R Y 2 0 2 1

CategoryAbstract

ConsumerObserver

CLAIMS MOST USED IN THIS MARKET2019 - TOTAL SKUS: 110.080

IN THIS EDITION

Retail Value RSP 2020 - EUR million

1862,4

19

S. Korea

SKIN CARE

M A R K E T D A T A J A N U A R Y 2 0 2 1

CategoryAbstract

ConsumerObserver

CLAIMS MOST USED IN THIS MARKET2019 - TOTAL SKUS: 1.386.343

IN THIS EDITION

Retail Value RSP 2020 - EUR million

5636

20

UAE

SKIN CARE

M A R K E T D A T A J A N U A R Y 2 0 2 1

CategoryAbstract

ConsumerObserver

CLAIMS MOST USED IN THIS MARKET2019 - TOTAL SKUS: 115.006

IN THIS EDITION

Retail Value RSP 2020 - EUR million

287

21

USA

SKIN CARE

M A R K E T D A T A J A N U A R Y 2 0 2 1

CategoryAbstract

ConsumerObserver

CLAIMS MOST USED IN THIS MARKET2019 - TOTAL SKUS: 329.039

IN THIS EDITION

Retail Value RSP 2020 - EUR million

18.815

22

Go InternationalFIND SERVICES & ACTIVITIES TO ENHANCEYOUR INTERNATIONALISATION

In the framework of the Global Cosmetics Cluster - Europe, SME will have available an AccelerationProgramme that integrates several sets of supporting activities that allows promising companies

not to only access but also boost and maximize this access to international markets and

development.

Targeting in priority the 5 selected countries, South Korea, Mexico, Emirates, USA and India, the

project will offer 4 areas of supporting activities:

Go International FIND SERVICES & ACTIVITIES TO ENHANCEYOUR INTERNATIONALISATION

G O I N T E R N A T I O N A L J A N U A R Y 2 0 2 1

Acceleration Programfor SMEs internationalisation

24

EUROPE.COSMETICSCLUSTERS.COM

25

L A T E S T N E W S A N D M A R K E T I N T E L L I G E N C E O N T H ET A R G E T C O U N T R I E S F O R T H E G C C . E U N E T W O R K

I N D I A - M E X I C O - S O U T H K O R E A - U A E - U S A

GCC.euMarketsWatch

G C C . E U M A R K E T S W A T C H

1

W W W . E U R O P E . C O S M E T I C S C L U S T E R S . C O M

YOUR PARTNERS