Reasons to Grow Your Haircare Brand in Indonesia

Adinda Kartika Putri

Haircare Market Overview

Haircare is a science that studies how to care for hair and scalp, to choose cosmetics according to hair type, climate and treatment techniques. In hair care, many beauty experts recommend ways to treat hair, which are grouped into (1) Daily haircare by washing hair using shampoo, conditioner, and dry treatment (2) Periodic care with cream baths and masks (3) Special treatment for hair after straightening (rebonding). In response to hair problems and current trends, there are many salon services for haircare, starting from basic treatments such as haircuts, cream baths, hair masks, and hair coloring to hair straightening and hair extensions. The increasing variety of salon services and professional products for haircare is predicted to drive the haircare market until 2028. However, the high price of services and haircare products is a major issue in this industry.

Haircare Market in Indonesia

The Indonesian haircare market is growing due to several market-driving factors, one of which is the increasing consumer awareness of hair needs. Haircare has become a necessity in urban environments, particularly in polluted cities where hair loss, thinning hair and dandruff are common. This is what then pushes the growth of Indonesia’s haircare market share.

According to 6Wresearch, the Indonesian haircare market is expected to grow in 2022-2028. Increasing product awareness, financial independence among female consumers, and considerable attention to male grooming are the main drivers of this expected growth. In addition to that, digital penetration has also increased rapidly, which in turn improve the e-commerce infrastructure, making haircare products more accessible for consumers.

The following are leading haircare companies in Indonesia with the most sales both in the marketplace and e-commerce:

1. L’Oreal
   This beauty company from France has been present in Indonesia since 1979. L’Oreal has always demonstrated its commitment to the growth of the beauty industry through various sustainable investments focused on innovation, digitalization, education and human resources. As is well known, haircare services and haircare products are two of the categories of the beauty industry, and based on the report from the Databoks Katadata official website, L’Oreal had revenues of US$ 33.4 billion in 2020, which made L’Oreal the highest-grossing beauty product manufacturer in the world in 2020.
2. Makarizo
   Makarizo develops various haircare products that benefits customers. Various kinds of hair problems can be overcome by applying haircare products offered by Makarizo. This brand has the opportunity to become a trend center for haircare products in the future with more intensive promotions and additional product innovations tailored to market demand.
3. Pantene
   Pantene is a haircare product that has survived for decades and dominates the Indonesian market share. Pantene is one of the products produced by PT P&G Indonesia, which has been marketed since 1947 in Europe. Since its first marketed product, Pantene has continued to innovate to meet its customers’ needs and wants, especially those related to haircare. As reported on the Compas official website in 2022, Pantene was ranked third as the best-selling shampoo product brand in Indonesia during the second quarter of 2022, and based on research conducted by the Compas Team, there were approximately 32.3 thousand transactions of Pantene products in one quarter only from its sales at Shopee.

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Haircare Product Sales Opportunities in the Indonesian Market

Taking into account the description of the haircare market in Indonesia as described above, companies intending to enter the haircare industry have a great opportunity to run their business in the Indonesian market. This great opportunity is not only due to relatively high consumer demand in Indonesia but also due to the development of haircare products in Indonesia which are produced by considering the importance of healthy and natural hair. In addition, the online sales market or e-commerce which keeps developing today enables haircare companies to easily distribute their products to Indonesian consumers as they are more accessible in the market. Multinational companies that capitalize on the cosmetics and personal care market such as LO’real, Unilever and P&g will create profitable growth opportunities for the global cosmetics industry by penetrating into the Halal cosmetics and personal care market to meet the high demand for Halal cosmetics products. 

Currently, the haircare market in Indonesia focuses on health and care products with Halal certification. Indonesia as the number one country with the largest Muslim population in the world allows profitable growth for halal haircare and cosmetic products. The increasing preference of Muslim consumers for the consumption of halal beauty products according to Islamic law has driven the growth of the haircare market in Indonesia in recent years. In addition, the rising incomes of the middle-class Muslim community along with strong cultural and ethical beliefs have also driven interest in haircare, halal beauty products and cosmetics. Based on  Case & Fair theory of consumer behavior, income is an important aspect for consumers in purchasing decisions for a product. Purchasing decisions by a Muslim are based on the concept of Islamic utility, where preferences in consumption activities are not only guided by human instincts but also by Islamic law. One of the Islamic consumer behaviors is shown from a Muslim’s purpose of buying or consuming goods, namely to get falah  (success (especially from self-improvement), happiness and well-being in Islam) to balance self-desires and social interests through the allocation of income that does not waste resources. These factors enable global brands and online retailers to expand their offerings to meet the high demand for Halal-certified products in the region.

Source: https://www.mordorintelligence.com/industry-reports/halal-cosmetic-products-market

Haircare products have occupied a dominant position in the implementation of Halal cosmetics for many years because of the interest and desire for healthy hair and hair styling, especially among Muslim women. The chart below illustrates these trends, which show that the haircare segment is gaining a large market share, and is expected to remain the same during the forecast period. 

The Beauty Care segment is expected to grow at the highest CAGR of 6.6% during the forecast period.

Source: https://www.alliedmarketresearch.com/halal-cosmetics-market

Haircare Marketing Strategy for Haircare Products in Indonesia

Below are some strategies that haircare companies can implement to enter and develop their business in the Indonesian market.

• Market Research
  Conduct extensive market research on the Indonesian haircare market, including consumer behavior, market trends, and competition. The results of this research will help companies determine their target consumers and the types of products they need to produce.
• Product Development
  Develop haircare products that meet the needs of Indonesian consumers. Products must be formulated to meet the unique hair needs of Indonesians by also taking into account factors such as climate and water quality.
• Distribution channel
  Identify the most effective distribution channels for products, such as online or offline retail stores. In this regard, companies must also ensure that distribution channels comply with Indonesian government regulations regarding the import and distribution of cosmetic products.
• Regulatory Compliance
  Comply with Indonesian cosmetic regulations i.e., the applicable regulations require that all imported cosmetics must be registered with the Food and Drug Supervisory Authority (“BPOM”) before being distributed or sold in Indonesia.
• Local Partnership
  Consider partnering with local businesses in Indonesia to expand market reach. Local partnerships can provide valuable insights into local markets, cultural differences and regulatory compliance.
• Marketing and Promotion
  Establish effective marketing and promotion strategies to attract and retain customers. This can include targeted advertising, influencer marketing and partnerships with beauty salons and spas.
• Competitive Price
  Offer competitive prices to compete with local and international brands in the Indonesian market. The pricing strategy must consider the costs of production, distribution and regulatory compliance.

In conclusion, entering the Indonesian haircare market requires extensive market research, product development, identification of distribution channels, regulatory compliance, local partnerships, marketing and promotion, and competitive pricing. By following this strategy and complying with relevant regulations, a haircare company will be successful in expanding its business in Indonesia.

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Legal Basis

1. Law Number 8 of 1999 concerning the Consumer Protection;
2. Law Number 36 of 2009 concerning Health as partially revoked by the Government Regulation In Lieu of Law of the Republic of Indonesia No. 2 of 2021 (“Perpu 2/2021“);
3. Law Number 33 of 2014 concerning the Guarantees for Halal Products as partially revoked by Perpu 2/2021;
4. Government Regulation No. 39 of 2021, concerning the Implementation of Halal Product Guarantees; and
5. Minister of Health Regulation No. 1176/MENKES/PER/VII/2010 regarding the Cosmetic Notification.

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