Beauty or Make Up Preparations,

Beauty or Make Up Preparations,
Soap and Preparations for the Care of Skin




1. Industry Overview

The cosmetics industry is one of the fastest growing sectors not only in Thailand, but the entire Asian region as well. The year 1997 saw the fastest growth period in the cosmetic industry, with a growth rate of 20 percent. Although the economic crisis has had a negative impact on consumption levels, results during 1999-2000 show the cosmetics industry’s growth rate is at 15 percent with an average market value of approximately 10,800 million Baht.

During the initial stages of industrial development, there were very few manufacturers of cleansing and skin-care cosmetics. Most manufacturers were foreign companies who established a production base in Thailand. The majority of cleansing, skin-care products, and cosmetics that were distributed to the market were imported. The only customers who had the means to afford these products were the upper-class who had a high degree of purchasing power. The high price of imported products was a weakness as they were too expensive for middle and lower class customers. However, this lack of affordability presented an opportunity for investors to establish a cosmetics production base in order to meet the desire of those less affluent customers. In this way, the production of cleansing and skin-care cosmetics in Thailand has expanded and developed continually.

2. Production

In 2000 current figures released by the Thai Cosmetic Association has shown that the cosmetic industry in Thailand is composed of 300 factories. For the medium factory, the capacity stands at 50 tons/day while for a small factory, the capacity is 10 tons/day. For the large manufacturers, mostly supported by foreign capital, their capacity is between 100-200 tons/day.

The current situation regarding the production of cleansing and skin-care cosmetics is as follows:
• Cleansing and skin-care products have traditionally come from two sources: local production and imports from overseas
• Leading imported brand manufacturers were very interested in the development of a production base in Thailand, with the objective of distributing the products domestically as well as exporting to foreign countries
• The development of a production base in Thailand by brand leaders encouraged Thai personnel to improve their knowledge and skill in production and management
• The current main target market for imported products are upper-class customers followed by middle-class customers who have increased their purchasing power
• The current main target market for locally produced products with Thai brand names are middle-class and lower-income customers

Industrial production of cleansing and skin-care products is closely monitored by The Food and Drug Administration, Ministry of Public Health under the law of cosmetics as outlined in the legislative act of 1992 (Thai year 2535). As for production quality control, product quality and standard of products accepted by customers in the market, all must be in accordance with the details of the legislative act of cosmetics which manufacturers must abide by, as follows:

• Readiness and suitability of officers involved directly and indirectly with the production of cosmetics
• Readiness and suitability of plant location, production equipment especially in the case of specially controlled cosmetics production
• Quality of raw material used for production
• Quality of containers for products
• Clear explanation of label as prescribed by the Ministry

With the establishment of a production base in Thailand by brand leaders, a great revolution of industrial production occurred in the field of cleansing and skin-care cosmetics, and the number of new competitors increased for both importers and manufacturers. This market expansion led to the continual development among manufacturers who had their production base in Thailand. Some good quality products were distributed locally while some manufacturers had the ability to develop their products for export.

The five largest cosmetic and skin care manufacturers include:
1. International Laboratories Corp., Ltd.
2. U.B. Chemical Industry Ltd.
3. Rubia Industries Ltd.
4. Navasri Manufacturing Ltd.
5. Inchcape Manufacturing Co., Ltd.

3. Domestic Markets

The Thai domestic market was a principal market for manufacturers. All customers were somewhat highly sensitive to price. The expansion of the market depended on the overall economic situation, expanding when times were good, contracting when the economy soured. In the highly competitive market, most manufacturers not only tried to improve product quality and develop a variety of product types, but also sought to use pricing as their principle tool for competition.

Domestic markets for cosmetics are divided into make up and skin care products with a total market value of 9,000 million Baht. The total market value is expected to increase by 10 percent per year. Consequently, entering this industry appears to be a very attractive option for a number of new investors, both local and international alike. For the most part, Thai manufacturers have focused more on natural products, while international manufacturers have their own brand name. Sampling tests have been used to spur demand in the market, especially to increase consumption among teenagers and male consumers.

For cosmetic products, the majority of consumers are female (97 percent) who are over 18 years of age. It is estimated that 15 million Thai people apply cosmetic products regularly and spend 10-20 percent of their monthly income on cosmetics.

In 2000, the value of imports increased 31.4 percent or 2,158.7 million Baht. The major importing markets include the United States, Japan, France, the United Kingdom and China, accounting for 35.5 percent, 15.9 percent, 13.9 percent, 7.0 percent and 6.8 percent respectively of the total export market.