The potential for development in the cosmetics manufacturing industry in Vietnam – Opportunities for domestic and foreign investors
The cosmetics market is currently very vibrant, not only in Vietnam but also globally. The demand for cosmetics is increasing, with both men and women showing significant interest in beauty products, which is clearly reflected in the market size.
Mục lục
Overview of the Cosmetics Market
International Cosmetics Market Size
The size of the pharmaceutical market is estimated to reach USD 180.67 billion in 2024 and is expected to reach USD 248.70 billion by 2029, growing at a CAGR of 6.60% during the forecast period (2024-2029).
Countries such as the United States, Canada, the United Kingdom, Germany, and other European nations hold a prominent share in the global cosmeceutical market. China, India, and Vietnam present significant growth opportunities for market participants, primarily due to the increasing population of younger generations.
Size of the Vietnamese Cosmetics Market
The cosmetics market in Vietnam has experienced significant growth in recent years. According to statistics, from 2022 to 2023, the proportion of women using cosmetics increased to approximately 90%, and the annual growth rate of the cosmetics market is projected to continue at 15-20%. This is a noteworthy figure, indicating the development potential of the domestic cosmetics industry.
The potential for development in the cosmetics manufacturing industry in Vietnam
There is an increasing demand for beauty products
During the period from 2018 to 2022, the proportion of Vietnamese women using beauty products increased from 76% to 86%, and the annual growth rate is expected to continue at 15-20%.
The demand for beauty and cosmetics products among Vietnamese people is also on the rise. With a population of around 100 million, ranking 12th globally, Vietnam presents an attractive market that offers numerous opportunities for businesses in the industry.
The cosmetics market is experiencing high growth.
According to a survey by EuroMonitor International, the size of the Vietnamese cosmetics market is increasingly expanding with an average growth rate of 6% per year, rising from USD 2 billion in 2016 to nearly USD 2.7 billion in 2021. It is projected that by 2026, the total revenue of the cosmetics industry will reach USD 3.5 billion.
The cosmetics market in Vietnam is becoming a highly promising and attractive market. Additionally, the growth trend for men’s products and natural/organic products presents opportunities for businesses to target new customer segments.
Wide-ranging international opportunities
By participating in free trade agreements such as TPP, EVFTA, and CPTPP, businesses in the cosmetics industry in Vietnam will have more opportunities to access various markets, increase product exports, and boost international trade.
Abundant raw material sources at low costs
Vietnam, as a tropical climate country, possesses abundant potential for cultivating various herbs and plants essential for the cosmetics industry such as coconut, turmeric, green tea, and aloe vera. This abundance provides a cost-effective local source of raw materials, enabling businesses to develop production chains for natural and organic origin products domestically.
Establishing production chains in Vietnam also provides a significant competitive advantage in terms of cost. The difference between value-added tax (around 10%) and import duties on cosmetics products (ranging from 10% to 27%) creates favorable conditions for local production.
The cost of living in Vietnam is steadily increasing.
From a low-income country to a middle-income nation, Vietnam’s cost of living has been steadily increasing each year. As a result, Vietnamese consumers are increasingly interested in personal care and beauty products.
According to research, an average middle-class female consumer in Vietnam spends approximately 450,000 to 500,000 Vietnamese Dong per month on makeup and skincare products.
A favorable business environment
The Vietnamese government has implemented various policies and measures to encourage the development of the domestic cosmetics industry. Creating a favorable business environment, supporting research and development of products, categorizing “cosmetics manufacturing” as a conditional business sector, and promoting exports are part of efforts to enhance the competitive capacity of Vietnam’s cosmetics industry.
In addition, the Vietnamese government has signed the ASEAN Mutual Recognition Arrangement on Cosmetics Control (MRA), which provides a good opportunity for businesses in the industry.
The demand for contract manufacturing of cosmetics under private labels by businesses
Domestic small and medium-sized enterprises (SMEs) aspire to create their own private-label cosmetic products. However, they often lack the resources and capabilities to establish their own manufacturing facilities, particularly those meeting GMP (Good Manufacturing Practice) standards. Consequently, partnering with contract cosmetics manufacturers has become an increasingly popular trend in Vietnam, offering a viable solution to minimize initial investment costs and leverage the expertise of established producers. This trend also presents promising opportunities for investors seeking to capitalize on the growing demand for private-label cosmetics.
If investors are interested in the cosmetics manufacturing sector, please contact VKI for further advice on investment procedures and project implementation locations. Specifically, VKI will provide detailed analysis on industry development prospects and government regulations related to this sector.
VKI – Industrial Park Investment Advisory & Connection
- Hotline/Zalo: 0967 413 186 hoặc 034 640 6222 (Ms. Khanh)
- Mail: contact@vki.vn
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