Reformulating the home and personal care supply chain

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February 2020

Home and personal care (HPC) – the fastest growing segment in fast moving consumer goods (FMCG)

The rising affluence and growing young consumer population in Mainland China and ASEAN-4¹ will continue to propel the rising domestic consumption of home and personal goods, driving growth for local/regional brand owners². In addition, regional contract manufacturers also stand to gain from rising global cosmetic demand due to increased fragmentation and need for speed-to-market, strengthening the relationship between contract manufacturers and brand owners.

Key themes in Asia’s beauty industry

Millennials and Generation Z (Gen Z) currently account for 56% of the region’s key market. As a sizeable group of them becomes part of the global citizens, they will be a force in shaping the way HPC segment will evolve through their consumption behaviour and preferences. They are true digital natives. Their ease with the use of technology gave rise to the proliferation of e-commerce, using the internet and user-generated content for market research and product discovery, as well as personalised products and solutions.

The rise in the middle and affluent class of halal-conscious Muslim communities has also propelled the growth of the global halal cosmetic market. In Asia, Indonesia and Malaysia are the second and fifth largest halal cosmetic markets in the world. Growing awareness about health is driving young consumers to be more discerning about the products they use and consume. Sustainability commitments will help differentiate brands among the increasingly socially conscious young Asian consumers.

Asia will remain the hub of HPC manufacturing

Despite rising global trade tensions, Asia continues to provide a strong proposition as a hub for HPC manufacturing – both for integrated manufacturers and contract manufacturers. As HPC continues to be a category which requires nimble supply chains that can adapt to ever-changing consumer preferences, contract manufacturing will continue to grow.

UOB is a regional bank poised to serve the needs of the industry. Our deep expertise and experience in serving Asian markets, our regional footprint as well as our industry knowledge in the HPC manufacturing space provide a strong platform to serve the needs of contract manufacturers in this space. For more information on our customised solutions, please contact us here.

¹ ASEAN-4 comprises of Indonesia, Malaysia, Singapore and Thailand
² The current outlook is predicated on the COVID-19 outbreak being a temporal phenomenon; there would be downside risk to the assumptions if the outbreak prolongs for an extended period of time