AsianScientist (Feb. 9, 2016) – Unlike other industries buffeted by the winds of economic and socio-political change, the beauty and personal care industry has gone from strength to strength, earning it a “recession-proof” status. Nowhere is this more evident than in Asia, where sales are estimated to exceed US$150 billion as soon as 2017, according to data from market intelligence firm Euromonitor International.
Leading the way is beauty veteran Japan, with the highest per capital spending on skin care and beauty products as well as the highest sales figures. Taking second spot narrowly ahead of the US is China, which is expected to drive 40 percent of the absolute growth in skin care products in 2016.
Not only is demand in Asia growing, driven by a burgeoning middle class, Asia is now also the source of innovations spurring new demand. Although Asian consumers have traditionally favored Western cosmetics, Asia-led trends like the eye-raising snail cream have taken the cosmetic industry by storm and are increasingly popular in the West.
“Asians have a great appetite for new and innovative products, but they also demand a lot in terms of performance. The beauty industry in Asia has certainly risen to the challenge, launching new products at an unprecedented pace that would have been unheard of just a decade ago,” Mr. Joseph Listro, vice president of research and development, Procter & Gamble (P&G) Asian innovation centers, told Asian Scientist Magazine.
The demands of Asian skin and hair
Agreeing, Ms. Yuko Nakamura, global director of skin care R&D at P&G, said, “Asian customers are in fact the most discerning, paying a lot more attention to personal care and at an earlier age.”
“One of the biggest differences between Asian and Western consumers is that Asians, particularly the high end consumers, are a lot more category involved. What this means is that it is very common for a single consumer to use as many as six to ten products of any given skin care series, which is not very common for Western consumers. Asian consumers pay a lot more attention and prefer to have a specific solution for each step of their beauty regimen.”
In terms of skin aging, Asian and Western customers also tend to look at different signs as indicators of aging, Nakamura said. At age 20, both Asian and Western consumers are primarily concerned with dryness. However, as they move on to their 30s and 40s, Western women become more concerned about wrinkles, whereas Asian consumers pay more attention to skin unevenness. These preferences correlate with genetic profiling studies carried out at P&G, which show that Western women are more prone to wrinkles while Asians tend to have pigmentation issues.
“Over time though, wrinkles also start happening in Asian consumers and vice versa. Therefore, the technological inventions that we develop for so called ‘Asian’ or ‘Western’ problems eventually have a global applicability,” said Nakamura.
As in the case of skin aging, the differences in beauty practices and preferences that make Asians particularly demanding consumers are often driven by underlying biological factors.
“Asian hair is thicker and coarser, with a diameter that is roughly double the diameter of Caucasian hair. Coupled with the longer average hair length preferred by Asians, this results in Asian hair having three times the surface area as Western hair,” Nakamura shared.
The unique properties of Asian hair, as well as the hot and humid environment where a large number of Asian consumers live, means that Asian consumers have very high standards when it comes to what constitutes a good hair day.
“This makes Asians the most demanding consumers in the product category of haircare,” Nakamura told Asian Scientist Magazine.
In response to this demand, the Pantene range of conditioners and treatments have been developed in Asia for the last 15 to 20 years, designed specifically to cater to Asian consumers.
“This is an example of a trend driven by demand in Asia, but resulting in a technology that has been applied all around the world. Pantene is a global brand sold internationally; the Pantene conditioner that you can pick up in America, Europe or wherever you go, would have been developed right here in Singapore.”
SK-II, the quintessential Asian product
Apart from Pantene, another blockbuster product line from P&G is SK-II.
“SK-II is a great combination of Asian insights, designed for Asian consumers,” said Nakamura.
All SK-II products contain something called Pitera, a naturally-derived liquid produced through a fermentation process using a rare strain of yeast. It contains more than 50 micro-nutrients such as amino acids, minerals, vitamins and polysaccharides.
In vitro research has shown that Pitera is able to increase the production of hyaluronic acid as well as proteins important in cell junctions and skin barrier function. At the same time, it has also been shown to suppress oxidative stress and inhibit melanin transfer.
Pitera was discovered, so the story goes, when scientists observed that sake brewers had old and wrinkled faces but smooth and youthful hands. Surmising that the skin preserving effect was due to constant contact with the products of sake fermentation, researchers embarked on a quest to identify the active ingredient, finally isolating Pitera after testing more than 350 different strains of yeast.
“Globally, a certain percentage of consumers very much prefer natural ingredients; I would not say that Asians prefer natural ingredients more than others. That said, Asian consumers do very much believe in the efficacy of Asian- specific ingredients, such as Pitera,” Nakamura said.
Besides the popularity of Asian-specific ingredients, Nakamura also observes that there is a trend towards beauty products tailored to individual needs.
“In the category of personal care, consumers are becoming a lot more diverse, and there is increased demand for personalized solutions. How do we make sure that we understand the problems of consumers at the individual level yet provide a simple and easy solution? That is something that we have tried to pursue with SK-II’s latest innovation, the Magic Ring.”
The Magic Ring is a counselling or diagnostic tool based on imaging systems used by dermatologists to assess skin conditions. Using high definition digital imaging, the small, portable device analyzes skin based on five dimensions as determined by a longitudinal facial study conducted between 1999 and 2010.
“Using this holistic picture of skin’s condition, SK-II beauty counsellors help women to better design a personalized skincare regimen. This way, we don’t have to provide the wrong product to the customer, but only what she really needs.”
Although fundamental understanding of biological processes is crucial, it is not sufficient to develop a great product, Nakamura stressed.
“Consumers don’t want to buy our scientific understanding; consumers want to get a solution. Therefore, we need a whole range of scientific innovation, what we call end-to- end innovation.
“We begin with technology development, for example, a new molecule that solves a specific problem, but innovation does not stop there. Formulation, which can be either a combination of technologies or providing a sensorial feel which consumers enjoy, or packaging innovations, which a product easy or fun to use, are also important steps in product development.”
In tune with Asia
As part of P&G’s commitment to scientific innovation, a US$200 million research facility was set up in early 2014 in the heart of Biopolis, Singapore’s premier research and development destination.
The Singapore Innovation Center (SgIC) hosts 500 research scientists working on fields of study spanning engineering, materials sciences and biochemistry for P&G’s hair care, skin care, home care, personal health care and grooming categories. Research conducted at the SgIC has been designed to cover the entire innovation value chain, including in context consumer research, new technology development and packaging and device design.
“There were a number of factors that made Singapore the ideal choice for our newest innovation center,” said Listro.
“Firstly, Singapore is well situated in Asia, offering access to two thirds of the world’s consumers within a six hour flight. Singapore itself has a cosmopolitan population comprised of diverse ethnicities that are representative of the region.”
“P&G and A*STAR have signed a Master Research Collaboration Agreement with Singapore’s vast network of research, medical, and educational institutions for five years and up to S$60 million in joint research. In addition, many global supplier and innovation partners are located in Singapore.”
“Last but not least, it gives us the opportunity to tap into the pool of Singaporean talent, across the fields of biology, chemistry, materials science and engineering. It’s important that the diversity of talent we have reflects the diversity of the consumers we serve, to continue to ensure our innovations are relevant to consumers everywhere.”
However, multinational consumer companies face stiff competition from local Asian manufacturers. Earlier this year, US cosmetics company Revlon and L’Oréal cosmetics brand Garnier announced their exit from the US$22.8 billion Chinese beauty market, citing the inability to compete with smaller, more agile local companies who were able to offer sophisticated products at lower prices.
In Korea, smaller companies are riding high on a wave of disruptive innovations such as the previously mentioned snail cream trends, while larger companies seem to struggle to keep up with fast-moving beauty trends.
“I would not try to compete with them directly,” said Nakamura. “Those products tend to be niche or short-lived; unless they truly solve the needs of the consumer, the consumer will not continue to purchase them.
“I think P&G’s strength is that we are very much a global company, with over 8,000 researchers and 1,000 PhD-level scientists. With our excellent and diverse team of scientists and engineers, we believe we should do better R&D research. Furthermore, we have very strong innovation partners, not only in universities but also global suppliers.
“All these factors allow us to go both deep and broad with our research. The deep insights we develop in each scientific area can be applied across the multiple product categories. For example, we can reapply some of the learning from oral care to skin care, or incorporate our integration of chemistry and substrate.”
High quality scientific research is clearly an important determinant of success in the beauty industry. The next step of translating the latest developments into the next blockbuster product requires a comprehensive understanding of what consumers really want, as well as the ability to respond quickly to new developments, Nakamura said.
“Sometimes ideas travel from West to East or East to West. Being open to new ideas and having a good understanding of what’s happening will help us find good solutions. That’s our formula for success,” Nakamura concluded.
This article was first published in the print version of Asian Scientist Magazine, October 2014.
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