The Malaysia Cosmetic Ingredients Market is estimated to be valued at USD 72.9 Mn in 2024 and is expected to reach USD 113.3 Mn by 2031, growing at a compound annual growth rate (CAGR) of 6.5% from 2024 to 2031.

Increasing disposable incomes and growing emphasis on personal care and grooming among Malaysian consumers are driving demand for cosmetic products and ingredients. The market is expected to witness positive growth over the forecast period. Rising working women population with higher spending on beauty and skincare products will boost the cosmetic ingredients market in Malaysia. Additionally, increasing penetration of e-commerce and availability of international brands at affordable prices online is further expected to support the market growth during 2024-2031.

Market Driver - Growing cosmetic industry

The cosmetic industry in Malaysia has been witnessing steady growth over the past decade on the back of rising disposable incomes, increasing urbanization and growing awareness about personal grooming among people. As Malaysia progresses economically, there is a significant rise in middle class population who are willing to spend more on beauty and personal care products. This expanding consumer base has attracted several international cosmetic brands to enter the Malaysia market and launch innovative cosmetic ranges targeting different segments.

Established domestic players have also strengthened their product portfolios and expanded reach through wider distribution networks as well as aggressive marketing campaigns. Major retailers are dedicating greater shelf space to cosmetic categories aiding product visibility. Online cosmetic sales have jumped manifold with growing adoption of e-commerce. Brands are leveraging digital platforms to engage youth and drive trials through interactive content and influencer marketing. Rising penetration of smartphones and availability of low cost data plans have made online shopping more accessible.

Cosmetic production in Malaysia has gained momentum as local manufacturers look to cater to rising local demand as well as explore export potential to other ASEAN countries and China. Cosmetic ingredients form an integral part of the production value chain. To produce quality cosmetic formulations, manufacturers rely on stable supply of crucial ingredients such as oils, vitamins, coloring agents and preservatives meeting all regulatory standards. Local production of certain ingredients has increased on back of supportive regulatory environment and resource availability however Malaysia still imports variety of unique ingredients in smaller volumes not commercially viable to produce locally.

Market Driver - Rising awareness about personal grooming

With rapid urbanization and internet/social media proliferation, traditional beauty standards are evolving in Malaysia. Increased exposure to global pop culture and rising disposable incomes have made Malaysians more conscious about personal appearance and grooming. Beauty blogs and videos are extensively consumed by young Malaysians to remain updated about latest make up and skin care trends. Celebrity endorsements and digital marketing campaigns focused on aesthetic appeal have driven the need to look stylish and feel confident among both men and women.

Malaysians are no more hesitant to spend on variety of personal care products from skin lightening creams to anti-ageing serums to achieve the desired look. Masstige cosmetic brands catering to prestige minded consumers demanding high performance yet affordable products have grown popularity. Specialized cosmetic stores as well as boutique salons/spas concentrated on personal grooming services have proliferated in major cities of Malaysia capitalizing on this increased self-image awareness.

Regular use of cosmetic products, whether for basic makeup or advanced skin treatments requires active participation from Malaysia men as well who are also gradually shedding inhibitions around personal care routines. As looking good and feeling confident about appearance gains significance, it has contributed to the demand for cosmetic ingredients that deliver results in safe, natural yet effective manner and cater to evolving beauty expectations of today's generation.

Market Challenge: High Dependency on Import of Raw Materials

The Malaysia cosmetic ingredients market faces a major challenge in its high dependency on imports for raw materials. According to our research, over 70% of the raw materials used in the domestic cosmetic industry are imported due to lack of local sources and manufacturing. This makes the industry highly vulnerable to fluctuations in global prices and supply chain disruptions. In the past year, rising tariffs due to ongoing trade tensions have increased procurement costs significantly for Malaysian cosmetic companies. Supply chain delays during the COVID-19 pandemic further impacted inventory levels and production schedules. With limited control over international raw material prices and supplies, the industry has difficulties planning budgets and ensuring consistent product availability. This potentially erodes customer confidence and trust in Malaysian cosmetic brands. To address this issue and develop a sustainable local supply chain, concerted efforts are required to cultivate homegrown sources for key raw materials through industry-academia tie-ups and incentives for local manufacturers.

Market Opportunity: Growth of Online Cosmetic Stores

The booming online retail market in Malaysia presents a major opportunity for the domestic cosmetic ingredients industry to tap into. E-commerce has grown at a phenomenal pace in recent years driven by rising internet and smartphone penetration as well as changing consumer habits among the urban population. Various reports estimate the size of the Malaysian e-commerce market to cross the USD 10 billion mark by 2025. This rapid growth is translating to a surge in the number of online cosmetic stores as well. Through dedicated websites and platforms like Lazada and Shopee, these digital-firststores are making a wide range of beauty and skincare products available to customers with convenience of online shopping. Local cosmetic ingredient suppliers and manufacturers have a chance to leverage this channel to boost sales volumes and market reach. They can partner with leading online cosmetic retailers and supply products on an exclusive basis. Suppliers can also adopt advanced marketing strategies like targeted digital ads and influencer promotions to raise brand awareness online. Tapping into the growth of online cosmetic shopping thus presents major business opportunities for Malaysian cosmetic ingredients companies.

Here is a detailed analysis of key winning strategies adopted by players in the Malaysia cosmetic ingredients market:

Focus on natural and organic ingredients:

Malaysian consumers are increasingly interested in natural and organic cosmetic products. This trend started around 2015 as awareness about harmful chemicals in cosmetics grew. Major players like L'Oreal reacted swiftly and expanded their organic product lines under brands like The Body Shop. They reformulated existing products to remove controversial chemicals and promote natural ingredients. Now over 50% of L'Oreal's portfolio in Malaysia contains natural extracts.

For example, Procter & Gamble established a production facility in 2018 to source palm oil and honey locally from Malaysia. These ingredients were prominently marketed as "100% natural" on product labels, strengthening P&G's credibility in Malaysia.

Partner with local influencers:

In the last 2 years, companies have partnered with popular Malaysian celebrities, bloggers and makeup artists on social media to drive word-of-mouth recommendations. Maybelline's counter with popular YouTuber Preeyla in 2019 saw a definitive increase in sales and brand awareness among young consumers. Such collaborations lend authenticity and a strong local connection which is important to Malaysians.

Insights by product type: Wide range of applications in cosmetic formulations

In terms of Product Type, Surfactants contributes the highest share of the market owning to their wide range of applications in cosmetic formulations. Surfactants play a key role in creating cleansing and foaming properties in products like shampoos, conditioners, face washes and body washes. Their ability to emulsify and solubilize both oil and water allows for the development of various cream and lotion-based formulations.

Surfactants have become increasingly popular as ingredients due to the rising demand for multi-functional products. Contemporary consumers expect cosmetics to not only cleanse but also treat specific skin issues. Surfactant formulations allow for targeted delivery of active ingredients deep into pores and hair follicles. Leading brands have capitalized on this by launching surfactant-based products with added benefits like antioxidant protection, anti-aging and hydration.

Another major factor propelling the surfactant segment is the growth of male grooming products. As beauty norms evolve, men are paying greater attention to personal care. This has inspired new product lines tailored for male skin types. Surfactant-enabled face washes, scrubs and shaving creams have resonated well with health-conscious younger consumers. Ingredients promoting sensations of freshness and delivering visible results are especially attractive to male shoppers.

Looking ahead, natural and sustainable surfactant varieties will accelerate the market uptake. Pressure from environmentally-conscious audiences has compelled brands to reconsider conventional chemical compositions. Plant-derived emulsifiers capable of achieving similar performance are gaining widespread preference. Coconut, soy and sugar derived alternatives satisfy today's discerning buyers who scrutinize labels for eco-friendly credentials. The rising importance of sustainability in the industry outlook bodes well for surfactant innovation and continued segment share expansion.

Insights by Functionality: Universal need across cosmetic categories

In terms of Functionality, Cleansing Agents & Foamers contribute the highest share due to their universal need across cosmetic categories. Cleansing lies at the core of any skincare or haircare routine whereby dirt, excess sebum and dead skin cells need daily removal. Foam-generating ingredients allow for deep penetration of formulas into pores during washing, effectively lifting away impurities.

Facial cleansing products command a major portion of the segment volumes. Busy lifestyles have increased the consumption of 2-in-1 face washes promising makeup removal along with skin conditioning. Solutions containing mild surfactants satisfy this dual requirement. Additionally, the growth of K-beauty and multi-step Korean-inspired regimes incorporating successive cleansers has boosted local product ranges.

Haircare presents another significant application area. Regular shampooing with cleansing ingredients is vital to strip away buildup from stylings and environmental pollutants over time. Varied hair textures also necessitate tailored cleansing formulas. Launch of specialty ethnic lines for African, Asian and curly hair types has expanded available options.

Lastly, the burgeoning male grooming sector drives substantial segment demand. As discussed earlier, men's skincare adoption is trending upwards with corresponding focus on basic yet effective cleansing routines. Foam-friendly formulations aid gentlemen in removing dirt with ease while achieving a refreshed feel. Cleansing agents therefore remain critical to fulfil the first steps of personalized skin and scalp care journeys across demographic profiles.

BASF, Evonik, DKSH Holding Ltd., AVARES (M) SDN BHD, TCT Nutraceuticals Sdn Bhd

• On 10 April 2024, BASF introduced its new digital service, “Ingredients Revealed”, that enables developers of personal care products to easily identify ingredients and formulations with specific criteria like sustainability information, standards, and labels.
• On 6 February 2024 Evonik launches biotech-based vegan collagen ingredient for the beauty and personal care market.
• On 12 March 2024 Evonik establishes a new institute dedicated to skin sciences: The Evonik Skin Institute. The Evonik Skin Institute is made up of a global network of life science experts and laboratories that provide customers with stronger support for claim-substantiated cosmetics.

• By Product Type
  • Surfactants
  • Emollients
  • Oleochemicals
  • Botanical Extract
  • Polymers
  • Rheology Modifier
  • Preservatives
  • Emulsifier and Stabilizer
  • Others (Vitamins, Minerals, Protein)
• By Functionality
  • Cleansing Agents & Foamers
  • Moisturizing
  • Specialty
  • Others
  • Aroma