MILANO – In Chinese a small alarm bell rings for the giants of the beauty sector. Thanks to the economic slowdown but above all to a change in consumer behavior towards local brands, which are more attentive to the specific needs of Chinese citizens, the accounts of the big cosmetics companies are destined to feel the pinch. This is what the Reutersciting an analysis of the company Jefferies showed that sales in China in the first half fell 8% for ‘s beauty division LVMHwhile the sales of Estee Lauder Companys, which relies on China for a third of its business, fell 12% in the same period.
Negative numbers also for Shiseidowhich reduced its profit forecast for the full year due to slowing demand in China, and which – remember Reuters – was also hit by a boycott by some consumers of Japanese products following the release of treated radioactive wastewater in August.
China, deflation alarm is growing: prices down by 0.5% in November 09 December 2023
Negative numbers also calibrated on an already very negative 2022, with the cosmetics and skin care markets losing 9.5% in China, according to Euromonitor data. The response of the large multinationals for the moment has been to implement massive discounts and promotions during peak shopping moments, such as the so-called singles day, a strategy which so far does not seem to have paid off
“Chinese consumers are still willing to spend on high-efficacy products,” William Lau, chief executive of the multi-brand beauty retailer, told Reuters Bonnie and Clyde, which sells international luxury brands such as Chantecaille and 111skin. “We are seeing a downgrading of luxury and premium brands, she added.
China, deflation alarm is growing: prices down by 0.5% in November 09 December 2023
However, it is not just a choice to save money. The most striking case is that of Winona, the sensitive skin care brand from Botanee Biotech. The brand is positioned in a similar price range to big brands such as L’Oreal, and is known for combating facial redness, a problem that affects two-fifths of women according to marketing company iResearch. Analysts at CMB International estimate Botanee’s revenue will grow nearly 18% this year to 5.9 billion yuan ($824 million), with Winona responsible for most of these gains.