When French beauty brand L’Oreal reported its first quarter earnings earlier this month, it proved China’s ‘lipstick economy’ (口红经济) has strong momentum. That term – lipstick economy – refers to a changing pattern of consumption where large, conspicuous purchases (like handbags) are making way for smaller, yet similarly luxurious expressions of personal style and taste. If you’d like to find out more about where this is heading and what opportunities your brand might have, read on!
Lipstick is the fastest-growing category in China’s beauty market. According to Mintel, lipstick took up 22% of China’s color cosmetics market and is used by 95% of urban Chinese women. Mintel research also points to lipstick as the most important color cosmetic product for Chinese women – if given the choice of three cosmetic products, 63% of respondents would choice lipstick, followed by BB cream (49%), foundation (41%) and eyebrow definer (39%).
So what’s driving Chinese consumers’ love for lipstick? Here are a few things to note.
1. Celebrities and KOLs led to Popularization
Celebrities and KOLs have been influential in showing mainstream consumers that lipsticks aren’t reserved for special occasions. Celebrities frequently cast as confident lipstick-wearing professionals have led the way in ‘normalizing’ every day lipstick use. Of these, Chinese e-commerce giant Alibaba identified Chinese movie star Yang Mi, Chinese singer Li Yuchun and Chinese actress Tang Yan as among the most influential celebrities affecting shopping choices for lipsticks.
And it’s not just female celebrities who are influential. Male influencer Li Jiaqi is the hottest thing right now on Douyin, a popular short-video platform. He’s made around RMB10 million in the last year selling lipsticks online.
2. Lipstick’s Identity-Forming Role
For modern urban consumers, lipsticks are confidence-boosters on the dating scene or in the workplace. Over the last few years, lipstick shades that receive male attention have been labelled as “man-slaying shades” (斩男色). According to Gartner research, YSLs Glossy Stain in shade number 12 is widely known as the best example of a “man-slaying color,” while others include Armani’s Lip Maestro liquid lipstick in shade number 500 and the Dior Addict Lip Glow balm in shade number 001.
Lipstick also gives consumers the opportunity to be closer to figures they admire or like, and carry a piece of that identity in their pocket. In an interesting tie-up, MAC partnered with Tencent’s popular “Honor of Kings” video game to release five co-branded limited-edition lipsticks. The color of the lipsticks matched the shades in character art of key female characters. This proved a winner for MAC, who were able to take advantage of the game’s young, female-dominant user base. Consumers placed over 14,000 pre-orders across the three participating e-commerce platforms, and all five lipstick styles sold out across all sales channels within 24 hours of the launch.
Although not necessarily as conspicuous as a luxury handbag, lipsticks (especially limited edition varieties) send signals of elevated style and sophistication. For that reason, distinctive lipstick designs have proven successful in the China market. Late last year, lipstick designs inspired by objects in China’s Palace Museum became an overnight sensation. In the first night of sales, 1,000 orders were placed. In 2017, MAC’s distinctive “Bullet Head” lipsticks made up 87% of its sales on Tmall, according to Gartner. In each case, distinctive designs empowered female consumers to show their individuality and connoisseur-ship whenever they whipped out their lipstick.
3. Sales Are Concentrated In Affluent Cities, With Repeat Buyers Key
Although 95% of Chinese consumers across first, second and third tier cities own a lipstick, the biggest sales, however, still seem to be relatively concentrated in China’s more affluent cities. Alibaba, China’s e-commerce giant, the biggest spenders on lipsticks are in Beijing, Shanghai and Guangzhou. Importantly, repeat purchasers who are not just replenishing but also expanding their lipstick portfolio, are an important market. Alibaba identified that in 2017, more than three million woman – roughly the population of Mongolia – bought more than five lipsticks within a year.
That wraps up our quick take on China’s lipstick market!
Keep an eye on our blog and LinkedIn as we will also be publishing quick takes on our favourite product categories in the coming weeks!