Market Insight

ASEAN is ideal for catering to organic and natural demand, says expert

26-May-2015 - Last updated on 12-Jun-2015 at 14:28 GMT

Whether working out, meditating or making healthy purchasing decisions, consumers today are taking better care of their health. This shift in behaviour has impacted the cosmetics industry, particularly with organic or natural demand.

The demand for organic cosmetics has been especially robust in ASEAN as the raw materials that manufacturers need are easily available.

Ingredients like Moringa Oleifera for example, is used in various natural ingredients and widely cultivated throughout the region.

According to Future Market Insights, rising disposable income and financial freedom in recent years has allowed consumers to make healthy buying decisions, even if it means paying more for certain products.

Associate consultant Vipassa Kakroo told CosmeticsDesign-Asia.com that the retail sectors in Singapore, Thailand and Malaysia are particularly expected to increase the growth of premium and specialised organic cosmetics.

Demand for organic hair care

The organic cosmetics sector in ASEAN is anticipated to expand at 9.5% CAGR and reach US$ 4.4 billion by 2020.

In terms of market breakdown, Thailand and Indonesia are the most lucrative while demand for organic hair care products is anticipated to be the highest segment.

According to Kakroo, the organic cosmetics market in Thailand was valued at US$ 755 million in 2014 and is anticipated to be worth US$ 1.2 billion by 2020.

Meanwhile, Indonesia is anticipated to witness a CAGR of 9.2% through 2020 to reach a valuation of 1.06 billion.

"In terms of segments, hair care accounted for a market share of nearly 28% of the total organic cosmetics market in 2013 and is expected to be worth US$1.2 billion by 2020," says the researcher.

Key brands dominating this segment include Estée Lauder, L'Oreal, Weleda and L'Occitane, which are diversifying their product portfolios, especially with male care.

Opportunity still brings challenges..

While various opportunities are to come, there are a few key challenges to its growth...

Vipassa tells this publication that the high price of organic cosmetics can create challenges in terms of brand loyalty. Also, as organic cosmetics are devoid of any preservatives, they tend to have a short shelf-life.

"This can be another restraining factor for the widespread acceptance of organic cosmetics in the region," Kakroo concludes.