The third-largest economy in Southeast Asia, after Indonesia and Thailand, Vietnam’s premium beauty market is seeing strong growth. With a population of 91 million and a concentration of urban consumers in the cities of Hanoi, Ho Chi Minh City and Da Nang, the country has seen a growth in urbanization. GDP growth reached 5.8 percent in 2011 and is expected to rise to 6.3 percent in 2013.

The beauty and personal care market there grew by 12.9 percent in 2011 to $716.3 million, according to Euromonitor. “There is all this talk about the BRIC countries, but look at Vietnam. Retail revenues are up by 30 percent in the first half of this year compared to the same period in the previous year and beauty sales growth is in double digits,” said Nguyen Cao, an independent analyst in Hanoi. “Vietnamese women are paying attention to how they look and taking care of themselves better. They want to be sure the brand delivers on the promise and prefer to pay more and go for premium brands,” he explained.

Part of this growth curve is also due to more prestige brands entering the market, as well as a strong play on advertising and marketing from brands that already operate in the country. In addition, increased purchasing power and growing retail have seen customers experimenting with beauty products in more categories. Patrick Chong managing director of Luxasia, one of the leading cosmetics and fragrance distributors in the country, explained: “In 2011 our company grew by 103 percent and almost doubled the number of counters in department stores, while our portfolio expanded from seven to 11 brands. Vietnamese consumers are more aware of luxury brands.”

However, in the past few months there has been concern about rising prices and whether the consumer’s buoyant spending will slow. Analysts say that recently there have been fewer shoppers in the country’s malls.

To read BW Confidential’s full report on the beauty market in Vietnam go to: