MANILA, Philippines — Singapore-based global distribution company Luxasia sees huge growth potential in the luxury beauty market in the Philippines, driven by a rising middle class and young population.
In a media roundtable Tuesday, Luxasia chief executive officer Wolfgang Baier said the Philippines is poised to be a growth pillar in the Asia Pacific region in terms of beauty product sales.
Baier said the Philippine ranks sixth or seventh among Asia Pacific countries where the company has presence.
“The increase of the middle class and the channel shift in consumer preferences from mass to premium are driving growth,” Baier said.
“But it is a difficult market, with complex regulations and a very fragmented consumer landscape, and it needs a very localized approach,” he added.
The Asia Pacific market currently accounts for 51 percent of the company’s global beauty sales.
“The Philippine luxury market grew by 40 percent between 2013 and 2018 and most of them belonged to domestic sales, while in the whole of the Asia Pacific, beauty sales have been growing by six percent annually since 2014 and its growth is projected to outpace the rest of the world,” the company said.
Luxasia primarily distributes its products in the country by partnering with department stores such as SM Malls, Rustans, Robinsons and Landmark.
Baier, however, emphasizes there is now a need to look at retail networks – which types of stores work for which product.
“It has become more expensive because you need to distribute much more widely,” Baier said.
“Previously it was about the top three department stores in each large city, but now it is about department stores, chain stores, brand boutiques and online platforms,” he added.
Despite the growing consumer market online, Baier emphasized that outside of China, 90 percent of the beauty business is still done offline.
“And that means you need to invest much more in consumer experiences,” Baier said. “Asian consumers, including Filipinos, want an experience because there is so much on offer that they are overwhelmed with.”
As part of boosting consumer experiences, Baier said Luxasia does 200-300 pop-ups a year.
“In the Philippines, Luxasia no longer simply makes brands and products available,” Baier said. “It shapes the market through novel consumer engagements in physical and digital spaces, bringing in new luxury brands regularly to inject excitement and variety into the local scene.”
Luxasia country manager for the Philippines Ma. Cristina Sabarre identified the country’s predominantly young market who are also digital natives, as another potential driver of growth for the country.
She added that the company continues to work with distribution partners such as Lazada and Zalora to reach a wider market especially in areas outside Metro Manila.