Cosmetic Market in Thailand 1. Market Overview
The overall growth rate of the cosmetic products market in Thailand in 2006 is expected to be at 12 percent, 3 percent more than the year before. The increasing growth is considered to be significant considering the continuing economic slowdown and the prolonged unstable political situation in Thailand. High quality, international branded cosmetic products are expected to do better and may have a growth rate between 15-20 percent due mainly to good brand image, brand loyalty and perception of good quality. Products from the United States are highly regarded and lead the imported market. Competition from France, Japan, the United Kingdom and Germany is getting stronger. Perfume from France remains the market leader in Thailand followed by perfume from the US. Hair care and make up products maintained a single digit growth, while skin care and perfume showed better growth at 17 and 15 percent respectively. The product lines that are considered a problem-solving cosmetic have good growth potential. They include products such as anti-wrinkle cream, anti-aging facial cream, and whitening facial and body lotion. More cosmetic products especially designed for men are becoming popular. Thailand remains a strong manufacturer and exporter of shampoos and other hair care products, color cosmetic and skin care products. Direct sales are the preferred distribution channel and account for 60 percent of the total market. The cosmetic products in Thailand are available at all levels, ranging from very highend international well-known brands to very low-end, low quality locally produced brands. Thailand is a major producer of cosmetic products, local production mainly concentrates on low to medium quality color cosmetics (make up products, especially lipsticks and nail polishes), skin care products (body lotion and soap, both bar and liquid) and hair care products (mainly shampoo and conditioners). Leading international companies that have production facilities in Thailand include Uniliver, Procter & Gamble, Colgate-Palmolive, and Johnson & Johnson. Over 60 percent of the imported cosmetic products are high-end facial and skin cream, mostly anti-wrinkle, anti-aging, and body and skin care products. The products from the U.S. dominate this subsector with approximately 32 percent share. Leading international brands include: Estee Lauder, Clinique, Shisheido, Christian Dior and Lancome, Olay, Eucerin, La Roche-Posay. Competition among the cosmetic suppliers and distributors is always fierce and strong. The prevailing economic slowdown makes the competition more severe, especially among medium to low quality body care, skin care and hair care products. The suppliers of these products always introduce new strategies not only to retain their existing customers but also to capture greater share and enlarge their customer base. All leading cosmetic companies invest heavily in promotional campaigns to keep their market share and to stimulate the market. High-end international brand cosmetic products use women’s magazines as their major advertising means to reach their potential buyers. Premiums and point-of-sale promotional campaigns are also used regularly to stimulate sales. Counter sales at major department stores are their main sales channel. The counter sales account for approximately 30 percent of the total cosmetic sales in Thailand. For low to medium quality cosmetic products, TV is
the main venue used for advertising campaigns. Sampling and giveaway are the two leading promotional strategies utilized to introduce new products and to stimulate the sales of existing products. Uniliver and Procter & Gamble are the leading advertising spenders in Thailand. Direct selling, discount stores, drug stores and convenience stores are the major channels of distribution for medium and low quality cosmetic products. The use of herbal supplement ingredient as a product selling point is increasing especially among the locally produced cosmetic products. It is an effective means to differentiate and adds value to the products. Among the many herbal supplements, green tea is the leading herbal recognized and used in various products. The inclusion of a whitening agent in the facial and body care products is widely accepted by the Thai buyers too. Most Thai have light brown complexion so cosmetic products with a whitening agent are very popular in this market. A whitening agent is popularly used as a marketing tool to promote the products. The emergence of spa treatment and its increasing popularity among locals and foreigners creates new demands for OEM contract manufacturing of cosmetics specially designed for spa consumption. The overall growth potential for the cosmetic products during the next three years (2006-2008) is optimistically expected to grow between 15-20 percent. With a total potential customers base of 18 million (women between the age of 15 to 50 years old), most of them salary workers, Thailand’s market for cosmetic products has a very strong group of potential buyers. Political stability after the general election due by or before the end of this year should bring back the consumers’ confidence. Consumer spending is expected to grow positively after a new government is formed. Market share by subsector: 2003 2004 Mil. US$ Mil. US$ Hair Care 2 65 29 0 Make Up 2 53 27 8 Skin Care 1 55 17 5 Perfume 22 27 Total 6 95 77 0 Exchange rate 41 40 Baht: 1 US$ Sources: Industrial Estimate.
Total Market Size Total Local Production Total Exports* Total Imports* Imports from the U.S.*
2005 Mil. US$ 3 05 2 97 2 05 31 8 38 39
2 004 77 0 99 2 40 3 18 1 47
*The Thai Customs Department, Ministry of Finance Exchange rate THB39: US$1
Growth (Over 2004) % 5 7 17 15 9
2 00 5 8 38 1,200 5 72 2 10 46
Share (2005) % 36 35 25 4 10 0
2006 (Estimated) 93 5 1,380 68 6 24 1 53
2. Import Regulations and Import Duties
Importation of cosmetic products is controlled by the Thai Food and Drug Administration of the Ministry of Public Health. A product registration is required prior to the actual importation and marketing of the cosmetic products. The registration process is not complicated, but may take one to two months time. The basic documents required by the Thai FDA include: 1) a notarized Certificate of Free Sale or a Certificate of Manufacture issued by the manufacturer in the manufacturing country (United States) and notarized by a Notary Public in the U.S., and 2) a full ingredient/composition listing issued by the manufacturer and notarized by a Notary Public. Both documents have to be legalized either by the Thai Consulate in Washington, DC or the American Embassy in Bangkok, Thailand.
Import Duty HS Code No. 33 03 33 04 33 05 33 07
Descriptions Perfume Make Up Products & Lotion Hair Care Products Shaving Products and Deodorant
Duty Rate (%) 30 30 20 20
Contact information at the Thai Food and Drug Administration office: Mr. Pongpraphan Susantitpong – Director Cosmetic Control Division Food and Drug Administration Ministry of Public Health Tivanon Road Muang, Nonthaburi 11000 Thailand Tel: 662-590-7169 Fax: 662-591-8468 E-mail:
[email protected] 3. Best Prospect:
Best prospects for cosmetic products from the U.S. include: -
anti anti-a -agi ging ng fac facia iall trea treatm tmen entt wrink rinkle le free free eye eye tre treat atm ment ent white hiteni ning ng faci facial al trea treatm tmen entt whit hitening ning body body lotio otion n highigh-eend body body lotio otion n high high-e -end nd make make-u -up p and and skin skin care care medicated sh shampoo high-end perfume b o d y s pr a y cosm cosmet etic ic prod produc ucts ts for for men men
4. Distribution Channel:
Cosmetic products in Thailand are distributed through three major channels: Direct sales (60 percent) - direct selling has been very popular for a number of years and is expected to continue as a major marketing channel for cosmetic products in Thailand for many years to come. Direct selling is the most effective way of introducing new medium and low-end cosmetic products to the market. In a direct sales sector, price is more sensitive than product quality. Some international directsale companies that operate in Thailand include: Amway, Avon, Herbal Life, Nu Skin, Nu Life, Nature's Best, NutriMetic. Counter sales (30 percent) - this is a standard venue for marketing high quality/high price and internationally well-known brands of cosmetic products. There are 108 department store locations concentrated in major cities including Bangkok, Chiangmai, Cholburi, Nakornratchasima, and Songkhla. Major department stores include: Central Department Store Department Stores (17 stores), Robinson Department Store (18 stores), The Mall Department Stores (6 stores), Emporium (1store), Siam Paragon (1 store), Imperial Department Stores (2 stores), ZEN (1 store), Tang Hua Seng (1 store) Hanging sales (10 percent) - this channel is directed toward young buyers and the mass market for medium and low-end cosmetic products. Major players in this sector include: Boots, Watson, Red Earth, TOPs Supermarket, Big C, Carrefour, Testco Lotus. Major brands of cosmetic include: Mary Kay, Maybelene, Oil of Olay, Johnson & Johnson. 5. Contact Information at Post:
Mrs. Ann Bacher Bacher – Commercial Commercial Counselor Counselor Mr. Nalin Phupoksakul – Commercial Specialist U.S. Commercial Service American Embassy 3rd Floor, Diethelm Towers A, Room 302 93/1 Wireless Road Pathumwan, Bangkok 10330 Thailand Tel: 662-205-5090 Fax: 662-255-2915 E-mail:
[email protected] or
[email protected] Dr. Pakdee Phothisiri Secretary General Food and Drug Administration Ministry of Public Health Royal Thai Government Tivanont Road Muang, Nonthaburi 11000 Thailand
Phone: 662-590-7001, 590-7003 Fax: 662-591-8636
