Market Research: Cosmetics Market In Indonesia (2007) part.2. Market Demand and Data

The market size for cosmetics in Indonesia was estimated at $1.06 billion in 2006, an increase of 6 percent from 2005. Domestic manufacturers supply most of the local demand. They are successful in the middle and low-end market segment. However, there is good acceptance for imported cosmetics in Indonesia. Imported cosmetics represent around 13 percent of the market. Most popular cosmetics brands have entered the Indonesian market and are enjoying growing sales. Major players in the imported cosmetics are the U.S., U.K., France, Germany, and Japan. U.S. cosmetics are well regarded in the high-end market, and are well positioned in the Indonesian market place.
People who can afford to buy imported cosmetics are high and mid level income groups, representing about 26 to 33 million people in Indonesia. Quality, trends and brand names play an important role in consumer choices. Distributors notice that products with labels printed “Made in USA” appeal more to consumers. Middle-aged consumers exhibit strong preferences and they tend to become loyal to one brand. Reputation and name recognition continue to be the driver in these groups’ cosmetics purchases. Young consumers are more inclined to shop around, use different products, and select from different brands. High-end consumers are willing to pay a higher price for well-known branded products, which convey higher social status. The middle and lower level income groups are very price conscious and susceptible to economic swings.
In the cosmetics sector, skin care products accounted for more than 20 percent of total imports. The U.S. was the top supplier in this category. Business sources predicted that the market size and sales for skin care products will continue to increase due to the growing awareness of the value of skin-care treatment for both males and females. An increasing number of men, as well as working women, are more concerned about their skin care. More people go to facial beauty parlors for skin treatment, stimulating the growth in sales for skin care products. More new upscale beauty salons and skin care clinics were opened in the upscale areas as well as shopping centers. Furthermore, the number of professional hair care salons has also increased for the past few years.
Spa businesses and related product lines have become popular in Indonesia, creating a new avenue for marketing products. Presently, local products dominate the market for skin and body care. However, there are increasing opportunities for spa aromatherapy supplies, because local producers lack the research capabilities to develop good quality products.
The potential for men’s cosmetics and toiletries is large. Business executives and celebrities are concerned about their personal grooming and they have a strong desire to look distinguished. Spas and salons offering treatment programs for executives and celebrities have increased in numbers. Men consumers utilize spa services after work for relaxation purposes. Men’s personal care segment, such as moisturizers and skin care products for anti-wrinkle protection has shown increased demand in recent years, a sign that this segment of the Indonesia cosmetics market is growing.

Industry sources estimate that the total market for cosmetic products in Indonesia increased 6 percent from $1 billion in 2005 to $1.06 billion in 2006. The cosmetics import market grew by 9 percent from 2005 to 2006. Total imports of cosmetics were valued at $125.3 million in 2005, and increased to $136.9 million in 2006. This increase was also driven by a change in the import tariffs from 0-5 percent resulting from AFTA (ASEAN Free Trade Agreement). This change has encouraged multinational companies, like Procter & Gamble and Johnson& Johnson, to restructure and relocate to find more economical ways to achieve efficient sourcing and supply systems. Industry sources predict that the market size for Indonesia’s cosmetic products could reach $1.3 billion in the near future. With an average growth between 5-10 percent, the industry is expanding in line with the strengthening economy.

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