The cosmetics market in Indonesia is considered a highly competitive place. Hence, the creation of a strong brand through promotion is recommended for substantial entry into the market. Nowadays Indonesians are more conscious to personal image and fashion than before. In all cosmetics categories such as hair care, skin care, makeup, fragrance and hygiene products, 75% of Indonesian women prefer beauty products made with natural ingredients. Indonesian customers in general are also more attracted to those brands of foreign and foreign-like than locals.

In Indonesia, personal care and cosmetics are sold through various channels that include specialty stores, drug stores, department stores, supermarkets, direct marketing (MLM), skin care clinics, and beauty salons. But recent trend shows that Indonesian cosmetic products marketed through social media grab significant amount of market share. There is also a trend by producers to make their products appear and feel more premiums for consumers. This product is targeting the masstige (“mass” and “prestige”) market which is the largest cosmetics market zone in the country and is anticipated to maintain strong growth. Masstige product refers to those of “more expensive than mass-produced products, but more moderately priced compared to prestige products.”  


Imported cosmetics mainly target middle-to-upper economy class population and are dominated by products from Europe, Japan, South Korea and the United States. Products from Thailand, South Korea and Malaysia, meanwhile, target specifically the middle-class ones. As for the products produced in Indonesia, they are made to meet domestic demand but are also subject to export with destinations in ASEAN, African and Middle Eastern countries. Some local manufactured brands now are attempting to reach Australia and Latin America.  


The fruitful cosmetics business in the archipelago has been enjoyed by some national brand players such as Mustika Ratu, Wardah and Sariayu Martha Tilaar. Besides these, there are also international brand who are invested in local factories such as Unilever, Mandom and L’Oréal. Other famous international brands that have entered and are distributing their products in Indonesia include those from Europe, America, Japan and South Korea in alignment with Indonesian consumers’ tendency in preferring global brand or popular culture trends. Smaller local brands like Make Over, PAC, Polka, Rollover Reaction, BLP, Mizzu, ESQA Cosmetics and Mineral Botanica also showed promising sales which means that Made-in-Indonesia brands can strive in the fierce competition and have succeeded in grabbing their portion of the emarket share, especially in the make-up sector.  


Great opportunity exists in the Indonesian cosmetics sector due to the country’s huge and growing domestic market, competitive cost of manufacture and consumers’ preference in both international brands and made-in-Indonesia products. Nonetheless, challenges in this sector still remain such as the existence of Illegal products, the mandatory halal certification rule and other technical constraints that include  infrastructure readiness for verification, synchronization with international standards and certification bodies and the lack of skilled workforce.





According to report by the Euromonitor International, Markets of the Future: ASEAN in 2020, Indonesia is also named as the Asia’s quickest-growing beauty market for beauty in terms of compound annual growth rate. Total domestic sales of beauty products in the country is IDR 11 trillion or USD 818 million in 2015 based on data from the Ministry of Industry. Meanwhile, as reported in Eurocham position paper 2018, Indonesia cosmetic industry has been increasing in terms of value from around IDR 15 Trillion in 2008 to IDR 35.4 Trillion in 2017.  



Average Revenue per Capita in Cosmetics & Personal Care Segment


Source: Statista (2020-2023 are prediction)


The average revenue per person in the market for Cosmetics & Personal Care amounts to USD 16.29 in 2019. Skin Care USD 6.21, Personal Hygiene USD 1.63, Hair Care USD 3.42, Fragrances USD 1.46, Oral Care USD 1.72. It is worthy to note that cosmetics online sales in the country are rather minor compared to conventional offline distribution. Nevertheless, the number is estimated to keep growing, with an estimated 17% of all overall revenue of the Cosmetics & Personal Care market to be generated through online channels by 2023. 

In the following years, based on data from the Central Statistics Agency (BPS), Indonesia imports even more. By 2017 the value of imported cosmetics and toiletries (including beauty, skin-care, manicure/pedicure equipment) jumps to USD226.74 million (IDR 3.29 trillion using exchange rates of IDR 14,500 = USD 1). Such number is a significant increase of almost 30% from the 2016 record of USD 175.48 million (IDR 2.54 trillion). 


In accordance with the Harmonized System (HS) of classification, the seven cosmetic products and their derivatives that most frequently enter Indonesia are lip makeup (HS code 3304100), eye makeup (HS code 3304200), manicure / pedicure (HS code 3304300), beauty / makeup powder (HS code 3304910), anti-acne cream (HS code 3304992), face / skin creams and lotions (HS code 3304993), and other lotions and creams (including sun screen) with HS code 3304999. 





Despite various monumental efforts to minimize illegal cosmetic products in the country, Indonesia National Agency of Drug and Food Control (Indonesian: BPOM) still found illegal products to be present in the domestic market. One of the legal excuses used by importers to import counterfeit and illegal cosmetic products is the Head of BPOM Regulation No. 13 of 2015 which exempts imported cosmetic products from compulsory verification. 


More importantly, Indonesia, which represents the largest Muslim population in the world, passed a regulation in 2015 that obliges all cosmetics products to be labelled as Halal by 2020. The Law on Halal Product Assurance (Halal Law) was introduced back in 2014. However, the government has still not issued any implementing regulations. Nevertheless, based on a circulated draft, the upcoming government regulation clearly stipulates that halal certification will become mandatory for cosmetics products within the year following the introduction of such certification within the food-and-beverage sector. As with pharmaceutical products, this new legal framework will have a significant impact on cosmetics products. 


Additionally, around 90% of the raw materials used in cosmetics distributed in Indonesia are still imported. This leads to uncertainty in the country’s capacity to verify the halalness of the product. In the future, there will be considerable complexity involved in the verification of raw materials under the new framework of local content regulation. This complexity will also become an issue when auditors need to certify production facilities across several locations and/or countries, as no halal certification recognition scheme is currently available. Enforcement of this provision then will undoubtedly prove to be a significant challenge both for government and business players and will require a large number of resources.  


Currently there is no international agreement on halal standards, halal guarantee systems, and the acknowledgement of finished halal products or such. Therefore, a product which is labelled either halal or non-halal in one country cannot be instantly recognized as such in another country. This could become an additional barrier to trade. Furthermore, worldwide halal-certification institutions are at the moment mostly focused on food and beverages. It is also likely that a number of countries lack a halal-certification institution capable of cooperating with Indonesia’s certification institution in order to reach mutual agreements on halal certification, especially in terms of non-food-and beverage products. 


Meanwhile, companies face another challenge: there is a huge shortage of talents in middle to top management positions, needed to be filled with seasoned professionals who have higher level of expertise in some very specific areas. These ones are not digital natives, less connected and, most of the time, under the radar. 


Companies will need to attract new talents, but it is not enough to recruit them. They will need to train, develop and retain the new and existing ones as well. As more and more opportunities will be introduced to these very connected and agile local talents, a real strategy of Talent Development needs to be put in place. Firms need to develop career growth plans for their employees, and incorporate them into their strategy, as talent centric organizations. 




Indonesia's cosmetic industry remains attractive for foreign and domestic investors. With its population expected to reach 270 million in 2020, the prospects for the cosmetic industry in Southeast Asia’s largest economy is still very bright for the coming years. The reasons, among others, are that Indonesians are becoming more and more aware of their well-being with cosmetics increasingly becoming a part of that Indonesian wellness lifestyle. The Ministry of Industry forecasts that the value of the Indonesian cosmetic industry will soon reach IDR 100 trillion from IDR 46.4 trillion recorded in 2017. 


The biggest consumer of cosmetic products in Indonesia is the people who live in big cities, but those in rural areas also have also showed higher enthusiasm in cosmetic products. Indonesia has a big population that is seeing its per capita GDP rising, thus there is a rising number of mid-income and affluent consumers. Seeing the potential of the domestic cosmetic industry, the Indonesian government placed this industry among its priority industries in its National Development Plan for Industry up to 2019. Hence, cosmetics have been given an important role in the economic development of Indonesia. This involves the development of import-substitution industrialization (currently most raw materials for the cosmetic sector still need to be imported), with goals to generate plenty of employment opportunities for local workers. Foreign and domestic capitals are encouraged greatly in this sector.  


For its vast population with relatively good purchasing power, Indonesia has been one of the most targeted countries for export. Recent studies show that in the next decade, Indonesia is expected to be in the top 5 or even 3 of the greatest market in the Asia-Pacific region. Not only should it be a good market place for imported cosmetics products, the Indonesian Government also wants Indonesia to be a good place to manufacture them. It is indeed the case where some giant national/international manufacturers exist in the country such as PT L’Oréal Indonesia, PT Mandom Indonesia Tbk., PT Paragon Technology and Innovation, PT Martina Berto Tbk., PT. Mustika Ratu Tbk. and PT Unilever Indonesia Tbk.. For some years now, the government has been implementing various incentives to increase the exports of cosmetics particularly to its ASEAN neighbors, Middle Eastern countries, Africa, Latin America and even down under to Australia. 


The positive prospect of Indonesia's cosmetic industry has resulted in a rising number of local brands entering the market, thus resulting in a much tougher competitive landscape. But it is interesting to note that most Indonesian consumers like to try new brands, especially foreign ones (or at least sounds/looks like foreign brands). Therefore, companies are recommended to innovate and strategize with this aspect in mind in order to boost their market share.  


To deal with the rise of imported cosmetic products, local cosmetic companies have been aggressively educating consumers that foreign cosmetics are not necessarily suitable for the tropical climate. In addition, local cosmetic manufacturers have begun to improve their product packaging and design, as well as the distribution process, which is one of the key weaknesses of domestic cosmetic industry.  


The Halal industry in Indonesia has been seen as a gold mine for many investors. A total of 14% of the world’s Muslim population are indeed Indonesians. Among its 265 million people, approximately 88% of them are Muslims. As of 2017, 1.8 billion Muslims have taken over 24% of the global population. This is the fastest growing population of a major religion. 


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