Market Overview

Despite the continuance of COVID-19 situation, the market showed a recovery trend in FY2021 as stores remained open even during the state of emergency declaration, and consumers went out more often than in the previous year. Size of the domestic cosmetics market rose to 2,290,000 million yen, 102.5% of the previous fiscal year (based on the shipment value at manufacturers).

In view of FY2021 cosmetics market by product category, skincare accounted for the largest portion in the composition ratio, 47.9% (1,960,000 million yen), followed by hair care products 20.3% (465,000 million yen), makeups 17.0% (389,000 million yen), men’s cosmetics 5.5% (125,000 million yen), and fragrances 1.2% (26,800 million yen).

Noteworthy Topics

Industry Trends for “With Corona” and “Post Corona” Eras

As in-person sales in stores continued even amid the state of emergency declaration and other COVID-related restrictions, and as consumers went out more compared to the previous year, the cosmetics market showed signs of recovery in FY2021. However, the market has not returned to the pre-pandemic level. 

In retrospect of the changes in the cosmetics industry after the Asian Financial Crisis in 1997 and the ‘Lehman Shock’ in 2008, in either case, "reform of the market structure" and "creation of the new market" were witnessed afterwards.

Similarly, the economic crisis by the pandemic is forecasted to trigger major transformation in the cosmetics industry, including "reform of the market structure" and "creation of the new market”. Three trends are anticipated: (1) Acceleration of digital transformation/integration of digital business to physical business, (2) rise of D2C brands and brands targeting Generation Z, and (3) significant growth in exports of Japanese cosmetics to the ASEAN region.

Future Outlook

On an assumption that the pandemic subsides from the second half of FY2022, and the domestic demand for cosmetics will recover gradually, the cosmetics market in Japan is projected to reach 2,355,000 million yen in FY2022, 102.8% of the previous fiscal year (based on the shipment value at manufacturers). Moreover, as the number of tourists visiting Japan (inbound tourists) increases eventually for years to come, the demand for cosmetics among inbound tourists is expected to edge upwards. 

Research Outline