Market Overview

The cosmetics market saw a demand recovery in FY2022 as consumers gradually resumed their normal out-of-home activities. As the Japanese government eased tourism restrictions for individual tourists and lifted the suspension of visas in October 2022, the demand by foreign tourists in Japan (“inbounds”) have shown signs of recovery. As a result, the domestic cosmetics market size expanded for two consecutive years to reach 2,370,000 million yen (based on the shipment value at manufacturers).

In view of the cosmetics market in FY2022 by product category, skincare products represent the largest portion in the composition ratio, 47.3% (1,120,000 million yen), followed by haircare products 20.3% (481,000 million yen), makeup products 17.6% (417,000 million yen), men’s cosmetics 5.4% (129,000 million yen), and fragrance 1.2% (29,200 million yen).

Noteworthy Topics

Perspectives for Cosmetics Market in 2030

Although the market size for FY2022 have grown to 103.5% of the preceding fiscal year to 2,370,000 million yen, it is still in the process of recovery compared to pre-pandemic FY2019 level (2,648,000 million yen).

Cosmetics industry faced predicaments during the Asian currency crisis of 1997 and the Lehman shock of 2008. Nonetheless, after each of these crises, the industry experienced "market structure transformation" and "creation of new markets". For instance, from 1998 to 1999, brand manufacturers pursued M&A actively and reinforced overseas sales strategy (especially among large manufacturers), while "doctors' cosmetics" gained traction. Rise of online businesses (mail-order businesses) led to large-scale mergers among wholesalers. In 2009-2010, market players entering from other industries increased, while growing consumer interest in ethical consumption (making responsible and sustainable purchasing decisions considering the social, economic, and environmental impact of the products and services consumed) gave a major rise to natural and organic cosmetics. The television-based home shopping grew, and the entire industry accelerated expansion to China.

It is assumed that the spread of COVID-19 and resulting economic fallout will trigger another "market structure transformation" and "creation of new markets". Propelled by the digital transformation, the domestic cosmetics industry is projected to transform significantly by 2030, in 5 ways in particular: 1) Further merger of digital and real-life experiences, 2) a rise of D2C brands, 3) an increase of brands targeting Generation Z, 4) significant growth in exports to ASEAN region (by export value), and 5) intensification of competition in the domestic market led by growing imports from emerging Asian countries.

Future Outlook

Domestic demand is expected to continue the recovery trend FY2023 onwards, as the negative influence of the novel coronavirus on economy (such as activity restrictions and restraint for shopping) fades. Additionally, unit prices will rise against the backdrop of soaring raw material cost and development of products with greater value. As the number of tourists visiting Japan (inbound tourists) gradually increases, so will their demand. Taking these variables into account, size of the domestic cosmetics market for FY2023 is forecasted to grow to 103.4% compared to the preceding fiscal year to 2,450,000 million yen (based on the shipment value at manufacturers).

Research Outline