B y ZHOU Fangying
As late spring gives way to early summer, domestic beauty companies that have weathered the winter have released their 2022 and Q1 2023 earnings reports.
Local beauty companies Proya Cosmetics and Botanee Bio-Technology Group which specialize in effective skincare, grew strongly against the trend.
In 2022, Proya’s revenue increased by 37.8 percent year on year to 6.4 billion yuan (US$920 million), and net profit increased by 41.9 percent to 817 million yuan. Botanee’s revenue also grew by 24.7 percent year on year to 5 billion yuan, with net profit increasing by 21.8 percent to 1 billion yuan.
Proya and Botanee are the first emerging companies to break the 5-billion-yuan threshold after Shanghai Jahwa, and both rely on a single brand.
Although Botanee maintained double-digit growth in 2022, growth has noticeably slowed. Apart from 2020, Botanee’s revenue and net profit growth rates have been above 30 percent for five years.
The impact of the pandemic on local beauty companies in 2022 was very pronounced, with revenue falling by as much as 26 percent.
Guangdong Marubi Biotech blamed the transformation of online channels and expansion of online business which led to increased expenses, which affected profits. Marubi’s revenue fell 3.1 percent last year, with net profit falling by 29.7 percent, while expenses increased by more than 100 million yuan. Revenue of the main brand fell by 12.3, an obvious drag on performance.
The problems of most companies are the weakness of their main brands, combined with lethargy in coming up with new brands.
Shanghai Chicmax saw three main brands account for more than 90 percent of the group’s performance, but sales of all three fell 20-30 percent.
Old players are expanding into segmented areas with new brands, while new companies are still in the market cultivation stage. Proya and Botanee are trying to establish a second growth point. New brands cover everything from low to high-end, from personal care to mother and baby care, and most have yet to establish identity and loyalty.
TIMAGE, a Proya brand, made 500 million yuan in 2022, maintaining double-digit growth for two years, but there is still a considerable gap compared to Proya’s 5.2 billion yuan.
Botanee launched the high-end anti-aging brand Aoxmed in 2022, trying to fill the gap in the high-end field for the group beyond the mass- market-priced Winona.
Good news came in Q1 of this year, as various major beauty groups returned to growth. The overall data indicate that the beauty industry is recovering.
Retail sales of cosmetics in the first quarter reached 104 billion yuan, a year on year increase of 5.9 percent. In March, sales hit the highest level in nearly five years.
