Source: China Cosmetics
Consumer demand is segmented, and domestic cleaning brands are rising.
In recent years, due to the improvement of Chinese residents’ income level, the pursuit of quality of life, the enhancement of health awareness, and consumption upgrades, cleaning products have begun to become an area of great concern to Chinese consumers. As the largest consumption of cleaning cosmetics and daily necessities in the Chinese cosmetics market, cleaning products still have great sales and development potential.
Ten or even five years ago, the largest share of the cleaning market was basically controlled by international daily chemical giants.
In early 2020, a sudden COVID-19 epidemic spread rapidly around the world. In response to the government’s call, the home quarantine method led to the rise of the live broadcast industry. The emergence of micro-businesses and e-commerce has caused the domestic cleaning market ecology to begin to change.
The development history and current situation of China’s hair care market industry:
The development of China’s hair care industry began in the 1960s and has roughly gone through four stages:
The first stage was the initial cleaning era. The national income level was low, the domestic consumer goods market was limited, and the shampoo and hair care industry did not receive public attention. In the early years, hair was cleaned with primitive products such as soap, soap and shampoo cream;
The second stage was the era of the emergence of hair care products. In the late 1970s, the separation of washing and care was advocated, and thus the first bottle of shampoo in China was born-Fenghua Shampoo;
The third stage was the era of rapid development of hair care products. International companies began to enter the Chinese market and quickly occupied the leading position. When the market share of international daily chemical companies increased year by year, domestic hair care market manufacturers realized the development of this industry and began to start slowly, but the gap was obvious;
The fourth stage was the era of comprehensive hair care. In order to meet consumer needs, major brands launched comprehensive hair care products that can meet consumers’ various needs from the perspectives of ingredients and efficacy. Since then, China’s hair care market has entered an era of comprehensive and vigorous development, and domestic brands have begun to move towards the mid-to-high-end market.
At the beginning of 2020, the hair care industry has entered a new era of development under the influence of the sudden COVID-19 pandemic. Local companies have gained more and more market share in the hair care industry by virtue of their e-commerce channel advantages and functional and technological innovations in product quality.
Secondly, as the post-90s and post-00s gradually enter the workplace and become the main consumers of the hair care industry. However, high-intensity work pressure and anxiety, irregular diet, staying up late and other habits have made consumers pay more and more attention to the safety and functionality of hair care products. Simple hair care combinations can no longer meet the needs of the younger generation.
- The scale of the industry has grown rapidly, and hair care products have dominated; consumer demand has been segmented, and domestic hair care industry brands have risen, and are currently in the rising stage of the mid-to-high-end
The increase in per capita disposable income has increased consumer purchasing power and promoted consumption upgrades. People have begun to pursue a higher quality of life, which has effectively promoted the development of China’s hair care market. In the current era of the economic effect of appearance, hair is also taken care of as a person’s “second face”, and consumers are paying more and more attention to their own hair quality and hairstyle.
In recent years, the scale of my country’s hair care market has continued to grow. According to JD.com data, the market size of China’s hair care industry in 2021 is about 50 billion yuan, and the annual compound growth rate from 2016 to 2021 is about 6%.
At present, shampoo and hair care products still occupy the vast majority of the market share in the domestic hair care market. Among them, shampoo products occupy the largest market share.
According to Sullivan Research, in 2021, shampoo products and hair care products accounted for about 40% and 34% of the Chinese hair care industry market respectively. The share of hair growth is relatively small, but in recent years, due to the pressure of fast-paced life, people have paid more and more attention to anti-hair loss, and it is expected that the market share will increase year by year in the future.
Source: Sullivan Research
In 2021, the market size of China’s shampoo products is about 20 billion yuan, and the market size has grown steadily year by year.
As the main product of the industry, shampoo is expected to maintain a stable market share and decline slightly in the future, because the market growth is mainly in the more segmented hair care and hairdressing products. The compound growth rate of the industry may fluctuate within 3% from 2022 to 2027, and the market size of shampoo products in China is expected to reach about 27 billion yuan in 2027.
Source: Sullivan Research
Due to the increasing popularity of the healthy separation of washing and care, consumers’ attention to hair care products has also increased year by year. According to Toubao data research, consumers’ consumption tendency for mid-to-high-end hair care brands is becoming more and more obvious. Since 2017, the import amount has risen rapidly, and by 2020, the import amount of hair care products will be nearly 900 million US dollars.
Although the leading hair care brands are still overseas brands, domestic brands are gaining momentum. Relatively speaking, domestic manufacturers are more aware of Chinese people’s habits, skin conditions and product demand tendencies, thus laying a good foundation for the development of the domestic functional hair care product market.
According to TouBao data research, nearly 40% of consumers are more inclined to buy domestic brands in 2021, and the proportion of consumers with a strong intention to buy imported brands is declining year by year.
Under the combined influence of internal factors such as anxiety, stress, greasy diet, staying up late, and external factors such as frequent dyeing and perming, insufficient care, consumers’ hair and scalp health are affected to varying degrees, making dandruff, itchy scalp, hair loss, oily hair, dry and split ends and other problems the most common hair problems.
What followed was that consumers had more diversified demands for washing and care products, from the initial basic cleaning ability to today’s washing and care products with different additional functions, such as oil control, anti-hair loss, fullness and fluffy, softness, anti-dandruff and anti-itching, soothing, scalp care, and lasting fragrance.
Therefore, the attractiveness of ordinary washing and care products to consumers began to decline, and consumers were more inclined to buy mid-to-high-end functional washing and care products to meet their specific needs.
Mid-to-high-end washing and care products are a subdivided product area that has been further improved in addition to basic cleaning capabilities. The difference between them and mass washing and care products is not just the price difference. The high-end nature is mainly reflected in the optimization and innovative design of product quality, ingredient addition and packaging.
According to preliminary data statistics, since 2017, the domestic washing and care industry market has shown a clear trend of consumption upgrading, consumers have improved their ability to purchase mid-to-high-end washing and care products, and their demand for product grades has increased.
Among them, the growth rate of the high-end washing and care market scale is about 20%, and the growth rate of the mass shampoo and hair care market scale is relatively slow, but the market scale still maintains a stable growth trend. Although the scale of both has declined under the influence of the epidemic in 2020, it is expected that the growth rate of the mass shampoo and hair care market product scale in 2021 may reach about 8%, while the growth rate of the high-end shampoo market product scale may be about 24%.
Source: Sullivan Research
According to the “2022 Personal Washing and Care Trend Report” released by JD.com, consumers have a clear trend of purchasing high-end brands, with product sales increasing by more than 90% year-on-year, and the sales speed of high-end lines even reaching 114%. Among them, one month after Kerastase entered JD.com, the search traffic and recommendation traffic of its self-operated official flagship store quickly ranked among the top levels.
Second, consumers’ demand for cleaning products is no longer limited to traditional basic cleaning. Affected by consumption upgrades and demand segmentation, functional cleaning products that can solve multiple skin problems are favored by consumers, and the consumption ratio has increased significantly, with a growth rate higher than the overall daily chemical cleaning market. The market has a good future development prospect.
Functional cleaning products are cleaning products that add certain specific ingredients to ordinary cleaning products to help solve specific problems of hair or body skin. China’s functional cleaning industry has a history of more than 40 years since its inception in 1980. It has gone through four major stages, namely the budding stage, development stage, shock stage and mature stage.
The budding stage was around 1980. Many time-honored brands on the market were born in this period, such as Fenghua and Meijiajing, but most of the functional cleaning products in the budding stage are low-end products. The influx of many international daily chemical enterprise brands has squeezed the market share of local brands and caused them to go bankrupt.
The market then entered a development period and a shock period, during which the market characteristics were that domestic brands were the mainstream of the market and overseas brands occupied the leading position for local development.
Since the beginning of the 21st century, the functional hair care industry has entered a mature period. At this stage, affected by the refinement of consumer demand, a variety of emerging products such as scalp cleaning care, scalp essence and other functional products have begun to appear one after another.
With the improvement of living standards, the increase in consumer disposable income has promoted consumption upgrades, and ordinary hair care products have become less attractive to consumers. Hair and scalp problems have begun to emerge frequently, such as oiliness, hair loss, frizziness, dandruff, etc. Consumer groups are more inclined to choose hair care products with specific functions that can solve their own needs, mainly focusing on functional products such as oil control, anti-hair loss, smoothness, repair, and moisturizing.
According to Toubao data research, the scale of China’s functional hair care market may reach an annual compound growth rate of about 5% during 2016-2020. It currently accounts for a large global market share and is still growing steadily. As the COVID-19 pandemic is well controlled and the domestic economy begins to recover, the functional hair care industry may usher in a second rapid development in the future.
Secondly, with the increase in economic income and education, the Chinese female consumer group has become an emerging force in the consumer industry.
According to statistics, about 60% of Chinese online functional hair care product consumers are female consumers, and their male consumption performance is also relatively impressive. According to Ali Health data and Toubao research, male anti-hair loss consumption has the fastest growth rate. When purchasing functional hair care products, female consumers are more concerned about the packaging appearance, innovative design, etc., which is one of the important factors in their decision-making whether to buy.
According to Toubao Research Institute data, functional hair care products can be divided into two categories: hair cleaning products and scalp care products.
Hair cleaning products occupy the main sales force in the hair care market, and the overall demand is relatively universal. Products with functional effects such as anti-hair loss and hair growth, anti-dandruff and anti-itching, scalp anti-aging, and damaged repair have a good growth trend, responding to the needs of young people who are under pressure and stay up late to “prevent hair loss and hair growth, moisturize and soothe”, and become hot-selling products.
The scalp care market is relatively small compared to the shampoo market, but according to Toubao data, its annual growth rate is the fastest. Scalp care is a new concept product in recent years, mainly for the conditioning of scalp skin rather than the improvement and repair of hair quality. Its product diversity reaches all aspects, such as scalp cleaning, scalp activation, balanced flora, nutritional care and other products.
Under the cultivation of washing and care products, in order to pursue the trend and keep pace with the times, the scale of hairdressing products is also expanding year by year, and the distribution of hairdressing people is wider and more diverse. Whether it is older or young consumers, covering the problem of gray hair and hair loss, and the demand for fancy hair dyeing.
However, hair dyeing products are the main ones, and under the influence of the epidemic, home hair dyeing has set off a wave of enthusiasm, and consumers’ enthusiasm for doing it themselves has increased.
According to the JD report, the transaction volume of hair dyeing products accounts for about half of the dyeing and perming wig market in 2021. At the same time, the social media volume of “home hair dyeing” has increased by nearly half. Among them, products with natural and safe plant ingredients that do not hurt hair, are mild and non-irritating, and have the function of dyeing and protecting are favored by consumers; on this basis, products with optimized experience and convenient operation are chosen by more people.
Factors driving the development of China’s functional hair care market:
Increase in purchasing power and consumption upgrade:
The increase in per capita disposable income has increased consumers’ purchasing power and promoted consumption upgrades, thereby promoting the development of China’s functional hair care market. From basic cleaning functions to the current “skin care” hair care model. Comprehensive care has become the choice of more and more consumers, and care from scalp, hair roots, hair ends to hair color cannot be wrong.
The rise of health awareness of hair care and the diversified demand for hair care products:
With economic growth, health awareness of hair care continues to increase, and China’s per capita expenditure on hair care products has steadily increased.
According to data from Toubao Research Institute, about 90% of consumers believe that hair care should be the same as skin care, using hair care products with corresponding functions for different hair types. At present, driven by the needs of Chinese consumers, in addition to the mainstream functions of deep cleaning and strengthening hair quality, stabilizing the scalp, protecting and preventing hair loss, soothing and repairing, and oil control are new segmented functions derived for this purpose.
Rapid growth of e-commerce and digital marketing:
With the development and expansion of different sales channels, various types of hair care products are more easily recognized by consumers across the country, and the frequency of product consumption has increased.
The universality of the Internet by Generation Z has accelerated the promotion of digital marketing activities, which has promoted the development of the functional hair care market. Traditional sales channels (KA channels, specialty store channels, etc.) are and will continue to be important sales channels for hair care products (especially high-end hair care products).
Technological innovation and enhancement:
Advanced technology is crucial to the upgrading and innovation of hair care products.
For example, mature technology has made products such as scalp essence and anti-aging care rich in style and effective; the way products incorporate nutritional elements such as plant extracts and expensive medicinal materials is increasing day by day. As more and more consumers choose to use professional hair care products, the rapid growth of technology supports the continued development of China’s overall functional hair care market.
Future development trends of China’s functional hair care market:
Product functions for specific consumer segments:
Under high-intensity work pressure and fast-paced lifestyle, consumers’ hair loss and baldness are more prominent.
According to data from the National Health Commission, there are about 250 million people with hair loss in China, of which about 160 million are men, accounting for about 65% of the hair loss population, and the hair loss population is getting younger. The Chinese people’s awareness of protecting their hair volume through upgraded washing and care has promoted the development of the anti-hair loss shampoo market. A variety of anti-hair loss and hair growth washing and care products have been derived under the huge demand for anti-hair loss.
According to Toubao data, the annual compound growth rate of the Chinese minoxidil market size from 2016 to 2020 was as high as 20%. The continuous growth of the minoxidil market size proves the continuous increase in the number of people with hair loss in China.
According to JD Supermarket data, in terms of washing and care efficacy, blue ocean anti-hair loss washing and care products have become one of the main consumption trends, and the number of anti-hair loss products and sales have increased rapidly year-on-year.
Improvement of consumer safety awareness:
The frequent occurrence of consumer product safety issues has made consumers pay more attention to the added ingredients in products in recent years, and most people are afraid of “chemicals”. Therefore, products containing natural ingredients (plant extracts) and silicone-free oils are increasingly valued by consumers, driving the development of the functional hair care market.
According to Toubao Research data, among the top 5 natural ingredient types of Chinese hair care products, sulfur and sea salt are ranked the top two natural ingredients favored by consumers. Secondly, according to JD.com data, hyaluronic acid and plant extracts (plant extracts) have become one of the main consumer trends, and the sales volume of soothing and scalp anti-aging products has increased significantly year-on-year.
In addition, among shampoo products, the top three sales are also shampoo products containing hyaluronic acid and plant extracts. Finally, silicone oil usually refers to dimethicone, which is mainly used as a sealant. Although it can play a role in smoothing hair, this chemical substance can cause serious harm to hair loss.
Therefore, according to Toubao data, many hair care brands have launched silicone-free hair care products.
Prefer comprehensive hair care product matrix:
With the development of the hair care industry, comprehensive hair care products (including basic and professional hair care products) will continue to increase.
Hair care products are expected to be more diversified, innovative and upgraded in the future. Providing 2-3 kinds of hair care products and a set of one-wash and one-care products is already a routine operation. Consumers will also need multi-effect all-in-one hair care products to effectively prevent and treat hair loss, scalp aging and other problems, which is also conducive to the development of leading companies with strong R&D capabilities and industry experience.
The rise of domestic brands and diversified channels:
Under the influence of the epidemic, the emergence and rapid development of e-commerce and live shopping have driven the rise of domestic brands, and consumers have more diversified choices.
The penetration rate of high-end hair care products in specialty stores and comprehensive trade has also increased year by year, thereby expanding the diversification of hair care market channels. Leading domestic hair care brands understand the demand trends of Chinese consumers better and provide a suitable price range, which can help them establish stronger market competitiveness.
- The supervision of the new policy of the washing and care industry will also be more stringent and standardized in the future, enhancing consumer confidence and purchasing power
The upgrade of the supervision of the washing and care industry not only reflects that an industry has become gradually standardized and mature, but also provides the necessary basis for the development of the industry. It also means the continuous innovation and enhancement of technical strength and the continuous improvement of technical standards, which enhances the consumer’s consumption motivation and security in the washing and care market, and also lays a good foundation for future development.
The “List of Carcinogens of the International Agency for Research on Cancer of the World Health Organization” issued by the State Food and Drug Administration points out that dioxane is classified as a Class 2B carcinogen and has the possibility of causing cancer to humans. The safety of the product must be ensured, and dioxane is not contained.
In 2020, the State Council passed and promulgated the “Regulations on the Supervision and Administration of Cosmetics” and it will be implemented in January 2021. Article 16 of Chapter 2 of the “Regulations” clearly classifies special cosmetics and ordinary cosmetics, while ordinary cosmetics such as shampoo and hair care products usually only achieve basic effects such as cleaning and increasing the smoothness of hair, and do not have therapeutic effects on symptoms such as hair loss and hair growth.
In 2021, the National Medical Products Administration issued and implemented the “Regulations on the Management of Cosmetic Labels”, which clearly stipulates that cosmetics shall not use medical terms or words describing medical effects and results in their promotion, such as stopping hair loss and promoting hair growth, killing bacteria and inhibiting bacteria, and ancient Chinese medicine recipes.
