Cosmetic OEM Market in Japan: Key Research Findings 2021
Cosmetic OEM Market for FY2020 Declined by 6.3% as COVID-19 Crisis Depresses Domestic Economy and Foreign Tourism Demand
Yano Research Institute (the President, Takashi Mizukoshi) conducted a survey of the domestic cosmetic OEM market and found out the current status, the trends of market players, and the future outlook.
The domestic cosmetic OEM market in FY2020 diminished to 93.7% of the size of the previous fiscal year, generating 314,000 million yen (based on the sales at the cosmetic OEMs). The sharp drop indicates how gravely the COVID-19 pandemic wounded the market.
The market expansion up to FY2019 was brought about by 1) the domestic OEM market being invigorated by enforcement of the revised Pharmaceutical Affairs Act, 2) increased consumption of Japanese cosmetic products by the ‘inbound tourist’ (foreign tourists visiting Japan), and 3) expanded demand for Japanese cosmetics distribution business overseas, i.e. outbound business, including cross-border e-commerce.
Nevertheless, the inbound tourism demand became sluggish in the latter half of FY2019 mainly due to China’s new e-commerce law, followed by the spread of COVID-19 in 2020, which dealt a huge blow to the domestic economy and general consumption, as well as reducing the foreign tourists demand. For these reasons, the demand for cosmetic products in and out of the country decreased considerably, which led the OEM market to take a downturn likewise.
Global Outbreak of COVID-19 Led to Substantial Decline in Inbound Tourism Demand
China's new e-commerce law that has taken effect in January 2019 caused a significant drop in inbound tourism demand since the latter half of 2019. Furthermore, as the COVID-19 spread globally in early 2020, leading individual countries to impose stricter border enforcement measures including travel restrictions, it had a major impact on the demand for Japanese cosmetic products.
Owing to the negative impact of COVID-19 since 2020, the domestic cosmetic OEM market size for FY2021 is forecasted to drop to 297,500 million yen (based on the sales at businesses), which is 94.7% of that of the preceding year.
Nevertheless, as vaccination coverage increases from latter half of 2021, restrictions on business activities at retail stores may be loosened and general consumption recovers as consumers gain opportunities to go out in town. The demand for cosmetics is expected to turn for the better from the end of FY2021 to early FY2022.
The cosmetic OEM market is projected to generate 315,200 million yen by FY2025, 100.4% of the size of FY2020.
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