Exploring Malaysia's D2C Beauty And Personal Care Landscape

Actionable Insights

• Malaysia's beauty and personal care market is expanding.

• Key trends include growing share of online sales, and rising interest in clean beauty.

Industry Background

Large And Growing Market

Malaysia's beauty & personal care market is large and growing. Valued at around USD 2.7 billion, Malaysia is the fourth biggest market in Southeast Asia and the market is forecast to grow at around 4% between 2022-2026.

Malaysia's imports of cosmetics and skin care products by volume (in terms of weight) have doubled during 2011-2021 according to data from UN Comtrade. In 2021, the United States accounted for the biggest share of Malaysia's cosmetics and skin care product imports, followed by Indonesia, China, France, and Thailand. The U.S. also led the way in terms of value with USD 70 .3 million worth of imports in 2021, followed by Singapore (USD 68 million), South Korea (USD 49 million), and France (USD 31.6 million).

Several growth drivers could propel the market in the coming years, notable drivers include include rising incomes, premiumization, and growing female labor force participation.

Growing Consumer Purchasing Power Driven By Rising Incomes

With a per capita income of USD 11,3871 as of 2021, Malaysia has the third highest per capita incomes in Southeast Asia. The country is pushing to reach high-income status by 2030.

Rising incomes could support support market growth through greater penetration as well as through premiumization. While further market penetration may be relatively limited in Tier 1 cities (such as Selangor, Kuala Lumpur and Penang) where incomes are higher, lower Tier cities where incomes are lower but rising (such as Negeri Sembilan) may offer better opportunities for penetration growth.

Premiumization opportunities are likely to be higher in upper tier cities which offer a combination of high incomes and strong growth. Notable cities include Selangor (the Malaysian state with the largest economy and among the highest ranked in terms of per capita GDP, and among the fastest growing with a growth rate of 5% in 2021), and Penang.

Malaysian Women Encouraged To Enter The Workforce, A Positive Long Term Trend

At 38.5% of the labor force, Malaysia's female labor force participation is about the same as neighbors such as Indonesia (39.6%) and and Philippines (39%), however its is low relative to developed countries such as the United States (46%) and Germany (47%). The figure is gradually increasing however (it stood at around 36% a decade ago in 2012) and could increase further with the Malaysian government actively encouraging greater women to enter the workforce. More women gaining paid employment could give a boost to the country's demand for beauty and personal care products.

Furthermore, Malaysia's gender wage gap is quite large (the largest in Southeast Asia but nevertheless has greater equality compared to countries such as China and Japan) and the gap has unfortunately been widening (reaching 0.75 in 2021, from 0.82 in 2012, with a score of 1 being absolute parity and a score of 0 being absolute imparity). Part of this however may be due to the nature of jobs being taken up by women as they increasingly enter the workforce. Although Malaysia's 2.476 million female graduates have been narrowing the unemployment rate gap with their male counterparts over the past three years, much of that has been due to lower-level diploma jobs with female degree holders registering a jobless rate of nearly 5% in 2021 (nearly 2% higher than their male counterparts) in stark contrast to female lower-level diploma holders who registered a 3.5% unemployment rate (compared to 5% for their male counterparts).

Malaysia however has been making efforts to help women break the glass ceiling and towards higher-paying, upper level management positions. Malaysia was the first country in the region to set a 30% gender diversity target for PLC boards back in 2012, and a decade later, Malaysia was found to have the highest percentage of women board members in Asia at 26%, and ahead of the global average of 19.6% according to a Deloitte study. As more women gain employment and climb the income ladder, their growing financial independence presents a positive trend for the country's beauty and personal care market.

Trends

Increasing Share Of Online Sales

Online's share of Malaysia's beauty and personal care revenues have been steadily creeping up and this trend was accelerated by the 2020 covid pandemic, a boon for D2C brands. Online sales made up about 10.1% of Malaysia's beauty and personal care product sales in 2021, up from 4.7% in 2017. Statista forecasts this share to rise to 19.7% by 2025.

Clean Beauty Gaining Popularity

Following a trend seen in other countries such as India, and Singapore, clean beauty is on the rise in Malaysia as well, with the country seeing a number of homegrown D2C brands catering to this need with plant-based, toxin-free products. Khléan Beauty, Claire's Organics, and Mangosteen Organics are notable players.

Competitor Landscape - D2C Brands

Lips Carpenter

Homegrown Clean Beauty Brand Offering Natural, Personalized Products

Homegrown D2C brand Lips Carpenter is another player in Malaysia's burgeoning clean beauty space. Their differentiation however is with their personalized services, whereby customers can order lipsticks tailored to suit their needs, be it in terms of color and scent, or lipstick casing and name engravings.

Rawganics

Homegrown Natural, Vegan, Cruelty-Free, Handmade Skincare Products Player

Homegrown D2C clean skincare player Rawganics offers vegan, natural, cruelty-free skincare products with a key differentiation being the products are handmade.

Hello Natural

Homegrown Natural Personal Care Brand

Hello Natural is another notable D2C player in Malaysia's clean beauty and personal care space. The company has an extensive range of natural, plant-based personal care products including masks, shampoos, lip balms, and deodorants.

Hajarose

Homegrown D2C Halal-Certified Haircare Products Player

Hajarose focuses on hair care with their product range comprising halal-certified shampoos, conditioners, hair serums, hair mists and detanglers for women, men, and kids. Their differentiation appears to center largely on their market segmentation, with their products, branding, and marketing messages resonating very well with Malaysia's Muslim consumers.

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