A Hong Kong-based private equity firm has purchased natural skincare brand Trilogy for $211 million, a move that is indicative of the fast-growing natural and organic cosmetics market in Asia, according to Ecovia Intelligence.
The recent acquisition by CITIC Capital China Partners reflects the growing importance of Asia in natural and organic cosmetics, Ecovia says, pointing out that Trilogy has a significant footprint in Asia (as well as in Australia, its home country, and the US). Natural and organic cosmetic sales in Asia increased by 21% last year, compared to single digit increases in Europe and North America. Asia has high growth potential, considering the market share of total cosmetics remains below 1% in almost all country markets, Ecovia says. China is already the number-one Asian market for some Western brands: the country represents over half of Asian sales of Jurlique, the leading Australian natural cosmetics brand, and L’Occitane has just announced that China is the second largest market for its natural-based cosmetic products.
Because the distribution infrastructure for the market is not as sophisticated as in Western markets, distribution has been a challenge. Brands are solving the challenge by taking a direct route and opening concept stores. Indian organic cosmetics firm Azafran Innovacion, for example, has an aggressive plan to expand its retail outlets from 1,500 to 10,000 this year, Ecovia says.
Standards are another major challenge for the Asian market. COSMOS and NaTrue are now established in Europe, but Ecovia points out that adoption rates in North America and Asia remain low.
Companies will also be looking to increase their use of ethical labeling. As consumers increasingly looking for certified products, it is highly likely that new labelling schemes will gain popularity in Asia. “With growing proliferation in standards and labelling schemes, a major decision for brands is not which ones, but how many to adopt,” Ecovia predicts.
Multinationals are also looking to expand their presence in the Asian market. P&G acquired the Snowberry brand of natural skincare products a few months ago. Unilever has purchased a brace of natural personal care brands in the last few years, including Schmidt’s Naturals, Sundial Brands, REN Skincare, and Seventh Generation. The company has also made investments in True Botanicals and Gallinée. Ecovia expects these and other multinationals to utilize their distribution networks to introduce some of these brands in Asia.
