With the rapid development of skin care market, a single skin care ingredient presents the characteristics of “life cycle”, and all brands realize “cycle leap” through “four strategies”. Skin care ingredients are the core components of skin care products and cosmetics. A single skin care ingredient presents obvious life cycle characteristics. According to the market status of ingredients, the life cycle of skin care ingredients can be divided into four cycles: germination period, development period, maturity period and recession period. For cosmetics companies, crossing the “ingredient cycle” is an important prerequisite for realizing the continuation of product heat and maintaining the vitality of the brand. We believe that at present, cosmetics companies at home and abroad are leaping over the “ingredient cycle” through the “four strategies”. The specific manifestations are as follows: 1) large single products continue to carry out technical iteration, and the classical cognition closely follows the technical trend. 2) Add new formula and new efficacy in time to rejuvenate the old products. 3) Starting from the core components, carry out multi category expansion. 4) Distinguish the texture and use scenarios, and accurately touch the target consumers.
Skin care products have advanced from “ingredient 1.0 era” focusing on single addition to “ingredient 2.0 era” focusing on formula. With the deepening of consumers’ awareness of ingredients, the “ingredient party” has also advanced from 1.0 to 2.0, that is, from the original single pursuit of the concentration and type of skin care products to the pursuit of matching system and technology. According to cbndata, 73% of consumers pay attention to the ingredient ratio / formula, and more than 40% of consumers pay attention to the production technology and relevant research background of ingredients.
Under the upsurge of consumer “ingredient demand”, Chinese brands seize the market with their core formula. Head domestic brands actively face market changes and improve market share through strong R & D strength. For example, Winona launched a patented formula to seize the efficacy skin care market by extracting and processing plant ingredients Proya Cosmetics Co.Ltd(603605) gain a place in the field of anti-aging through the large single products of early C and late a Bloomage Biotechnology Corporation Limited(688363) through the upstream production advantage of hyaluronic acid, the skin care business is developed rapidly, and the active ingredients are compounded to achieve a breakthrough in product upgrading. In the past few years, domestic products have complied with the changing trend of consumers, achieved breakthrough development in composition and efficacy, and the market share has continued to increase. Euromonitor data show that the market share of domestic functional skin care brand CR3 increased from 10% to 27.3% from 2014 to 2019, and its influence has gradually increased.
The strong supervision of cosmetics has been opened to accelerate the process of skin care products 2.0 era. Since 2021, cosmetics related policies have been issued frequently, and the supervision has been gradually increased. Cosmetics are subject to more restrictions on the marketing of product efficacy. With the gradual implementation of the new regulations, the gap between powerful leading enterprises and small enterprises in the industry will become more obvious, and brands with R & D ability, brand effect and a large number of talent reserves will get more opportunities. In the future, cosmetics will not be allowed to exaggerate their efficacy ingredients. All claimed efficacy must be assessed by relevant competent departments. Efficacy skin care products will be more professional and the formula will play a more significant role. With the implementation of the new regulations, in the future, head brands will rely on R & D advantages to obtain greater market share.
Investment suggestion: we believe that under the trend of composition upgrading, domestic brands with R & D and product quality strength still have great development space, and head companies with R & D strength will benefit from the background of the new regulations. We mainly recommend high-quality domestic cosmetics brands such as Proya Cosmetics Co.Ltd(603605) , Yunnan Botanee Bio-Technology Group Co.Ltd(300957) , Bloomage Biotechnology Corporation Limited(688363) , Shanghai Jahwa United Co.Ltd(600315) .
Risk warning: the risk of intensified industry competition and the risk that the marketing model cannot adapt to market changes
