A recent report by global consultancy Kearney and Luxasia, a major distributor of luxury beauty products in the Asia Pacific, has identified Southeast Asia and India as the upcoming powerhouses in the luxury beauty market. Their joint whitepaper, “Unlocking hyper-growth in Asia’s luxury beauty landscape,” predicts a significant surge in these regions, with the market potentially reaching USD 7.6 billion by 2026. This would nearly triple its size within a decade, boasting a projected Compound Annual Growth Rate (CAGR) of 11% between 2021 and 2031.
What the research reveals is that Southeast Asia and India are on the cusp of a period of unprecedented growth in luxury beauty, signaling a new “gold rush” in the industry. In contrast to more saturated markets like China, Japan, Singapore, and South Korea, these regions have limited presence of international luxury beauty brands, as well as locally competitive options. As their economies continue to mature, it’s expected that the number of upper- and middle-class consumers will surpass one billion by 2026. Furthermore, a significant portion of consumers is anticipated to upgrade from mass-market products to luxury beauty.
This favorable market landscape has led to the emergence of local beauty brands, typically operating in the ‘masstige’ category. This leaves a lucrative opportunity for international luxury brands to step in and thrive. Luxasia highlighted this unique window of opportunity for luxury beauty brands to establish a strong foothold in these markets.
However, capitalizing on this growth is not without its challenges, given the diverse market dynamics in Southeast Asia and India. Luxury brands face six major obstacles in this fragmented region:
1. Multidimensional omni-retail networks
2. Heterogeneous local product preferences
3. Divergent marketing approaches
4. Challenging regulatory frameworks
5. Costly and idiosyncratic supply chain landscapes
6. Partner selection amid information asymmetry
The report underscores that there is no longer a uniform Southeast Asian or Indian consumer. Each consumer has become ‘glocal,’ meaning they are globally aware of a brand’s messaging in the US, Europe, and North Asia markets while being deeply rooted in their local preferences. This underscores the importance of presenting brands in an integrated global manner while remaining responsive to local trends.
To effectively tackle these challenges, the report outlines six key strategies:
1. Optimize the retail footprint to create multi-touchpoint experience hubs.
2. Leverage the continued e-commerce growth unique to each market.
3. Develop capabilities to ride the wave of social commerce acceleration.
4. Build deep local consumer understanding through data aggregation and analytics.
5. Utilize logistics partners to establish a robust and flexible network.
6. Collaborate with the right omnichannel brand-building partners.
In recent times, a growing number of international luxury brands have made significant strides in entering the Indian and Southeast Asian markets. Shiseido and Nars are just two examples of luxury players expanding their presence in these regions. The rapid growth of events like the Cosmoprof CBE ASEAN trade show, launched just a year ago, underscores the dynamism of these markets and the immense potential they hold for the luxury beauty industry.
