Nail Cosmetic Potential in the Indonesia and Vietnam Markets

 

Southeast Asia is one of the potential continents for the beauty & cosmetic market, especially for nail products. According to Istrata.co, Southeast Asia’s revenue in the Beauty and Cosmetics segment amounted to US$ 25.449 billion in 2020. Meanwhile, the revenue for the nails market was US$ 0.64 billion and is expected to grow annually by 4.6% CAGR during the 2020-2023 period.

 

Although the total import value in Southeast Asia has decreased, there are 2 countries out of the top 5 nail importing countries in Southeast Asia that have actually experienced an increase in CAGR in the last 5 years, namely Indonesia & Vietnam.

 

Picture 1: Import Value of Nail Cosmetic in Southeast Asia (ASEAN)
Sources: Hebronstar Analysis

 

 

Overview of Nail Cosmetic Market in Indonesia & Vietnam

 

1. Overview of Indonesian Market

 

In 2020, Indonesia was the 2nd biggest nail cosmetic importer among Southeast Asian countries, and 2.46% of the imported nail cosmetic products were coming from South Korea. In terms of market value, nail cosmetic products became the fourth largest market shareholder with 17.6% from the total Indonesian cosmetic market revenue in 2020. The value of nail cosmetic market in Indonesia was US$ 245 million in 2020 with CAGR at 2% during the 2016-2020 period.

 

Currently, Indonesia is experiencing a growing middle to elite income class. Their average expenditure per purchase of skincare and cosmetics which includes nail products are ranged from $ 4 – $ 35. Therefore, it gives an opportunity for middle to premium products to enter the Indonesian market.

 

Picture 2: Indonesia Cosmetic Market Revenue
Sources: Hebronstar Analysis

 

 

Indonesian Competitive Landscape

 

According to the Head of BPOM Regulation No. 34 of 2013, nail products in Indonesia are included in the cosmetics product category, with a total of 4 categories, namely; based/top coat nail, nail polish, nail polish remover, and nail extender/nail elongator (press on nails).

 

Based on the analysis of the top 8 Indonesian e-commerce, the best-selling nail cosmetic is nail polish with Enamel type, followed by Lacquer type, and Gel type of nail polish. Meanwhile, colored (plain) press on nail is the best seller of press on nail type in Indonesian market.

 

Picture 3: Market Size of Nail Cosmetic Products Based on Indonesian Top E-commerce Sales
Sources: Hebronstar Analysis

 

 

In terms of key players, there are similarities between the key players of the Base/Top Coat Nail, Nail Polish, and Nail Polish Remover in the Indonesian Market. Most of the key players has product lines in those 3 nail cosmetic categories. The key players are Inglot (Poland), Madame Gie (Indonesia), Miniso (China), O.P.I (USA), Innisfree (Korea), and Brasov (Indonesia). Meanwhile, the key players of Press on Nail category are Eze Nails (Indonesia), Justice Girl (USA), and Tone (Indonesia).

 

Picture 4: Perceptual Maps of Nail Cosmetic Key Players in Indonesia
Sources: Hebronstar Analysis

 

 

Indonesian Market Opportunities and Challenge

 

The high preference for global cosmetic brands and the proliferation of nail salons/nail art services in big cities are some of the key opportunities for foreign nail cosmetic brands to enter Indonesian market. Nowadays, nail art services have started to become a trend, and shops or nail salons that offer these services are rapidly increasing among big cities in Indonesia. Some of the services that receive a lot of interest from consumers at nail salons are manicure and pedicure. In addition, nail art and nail spas are also in great demand by Indonesian consumers on holidays or on wedding days.

 

However, as a country with the majority being Muslim, the Muslim population in Indonesia is expected to grow at a rate twice that of the rest of the world by 2050. Further, the marketing of cosmetics in the country is closely tied to the directives of the BPOM (National Agency of Drug and Food Control), the state authority that regulates the importing and sales of food, pharmaceutical and beauty products including nail cosmetics. The BPOM plays a strategic role in the development plans of multinational companies that wish to export to Indonesia. Nonetheless, the severe standards that must be met for nail products to be considered ‘halal’ often slows the normal flow of commerce. This is therefore a formidable challenge for the ‘non-halal’ nail products sellers.

 

 

2. Overview of Vietnam Market

 

In 2020, Vietnam was the 5th biggest nail cosmetic importer among Southeast Asian countries. What’s more, the imported value of nail cosmetic products coming from South Korea took the 2nd largest share with 18.2%. In terms of market value, nail cosmetic sector is expected to have the fourth largest market share with 14.4% within the total Vietnam cosmetic market revenue in 2020. The value of the nail cosmetic market in Vietnam is forecasted to reach US$ 74 million in 2021 with the CAGR being 4.18% during 2021-2025 period.

 

Picture 5: Vietnam Nail Market Revenue & Share
Sources: Hebronstar Analysis

 

 

Country of origin, ingredients and safety are key factors that effect the decision of consumers when purchasing cosmetic products. The average monthly spending for makeup of HCMC is higher than other cities. Vietnamese spending for makeup products also increases with income. The younger generation contributes a higher ratio to the monthly spending, and it is considered to have an upper trend.

 

 

Vietnam Competitive Landscape

 

According to the Official Dispatch1609-QLD-MP under Vietnamese law, nail products are included in the cosmetics product category, in which there are 4 types, namely based/top coat nail, nail polish, nail polish remover, and nail extender/nail elongator (press on nails).

 

The best-selling nail cosmetic type based on the analysis of the top 3 Vietnam e-commerce platforms is Nail polish, followed by Nail polish remover, Press on nail, and Nail Base/Top coat. There is one main pattern that can be seen in the perceptual map. For the key player of press on nails products, the prices are around $0.6 – $10.9 per product for the top brands: Kiss and O.TWO.O. However, the other nail products have different ranges of pricing areas.

 

Picture 6: Perceptual Maps of Nail Cosmetic Key Players in Vietnam
Sources: Hebronstar Analysis

 

 

Young women preferred buying cosmetics online more than any other demographic groups, which strongly supports the assumption that consumer favorites on e-commerce platforms reflect the general favorites of customers. Based on that assumption and the analysis on top key players of press on nails, it is analyzed that among the 7 hot trends for nail art in VN, nude is the color that is mostly preferred by young women, followed by simple style and ombre nail.

 

Picture 7: Nail art trends in Vietnam
Sources: Hebronstar Analysis

 

 

Vietnam Market Opportunities and Challenge

 

The high interest in Korean products, the increasing demand for cosmetics, and the high influence of Korean entertainment in Vietnam are some of the key factors that can lead to a big opportunity for Korean nail products in the Vietnam market. Nowadays, the country of origin is one of the most important factors when buying cosmetic products in Vietnam, and most Korean products are considered to have superior quality over products of other countries. In addition, the large population in urban cities, in which numerous cosmetic shops and stores locate, is also a factor that can lead to the large demand of nail cosmetic products in the future.

 

However, nail cosmetic products will face some challenges when entering Vietnam market. First, there are many competitors in the market such as large cosmetics companies. Second, competitors from China which dominate the market, provide affordable prices & satisfactory quality for their products. Third, competitors have existing distributing systems and partners in the Vietnam market. Lastly, nail products are strictly controlled by the government, and according to the law, cosmetics products including nail care need to have a Cosmetics Proclamation Dossier (CPD) for custom purposes before entering the territory of Vietnam.

 

 

Hebronstar Strategy Consultants
Arvito Muhammad / Associate Expert
Le Huy Tien / Associate Expert