Goldman Sachs China Cosmetics Global Read-Across: 1Q26 Better China Performance, Premium and Online Remain Key Focus
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Goldman Sachs notes a discernible improvement in China's cosmetics market during the first quarter of 2026, with premiumization and online channels continuing to spearhead sector growth. While raw material expenses present a near-term headwind, the overall impact remains manageable across the industry. Global cosmetic conglomerates experienced divergent performance trajectories within China; established multinational leaders like L'Oreal and Estee Lauder demonstrated steady resilience. Concurrently, domestic brands Proya and Betaine captured significant market share through aggressive digital marketing and e-commerce penetration. Premium skincare and color cosmetics continued to secure market share, propelled by shifting consumer preferences toward efficacy-driven products. Live-streaming and social commerce platforms emerged as indispensable drivers for expanding online revenue contributions. To mitigate lingering cost pressures, multiple companies implemented strategic price adjustments alongside continuous product mix optimization. Although tourism retail is gradually recovering, Hainan duty-free sales still fall short of previous expectations. Japanese and Korean beauty conglomerates face mounting competitive pressures within the mainland. Goldman Sachs anticipates the Chinese cosmetics market will outpace global growth averages throughout 2026. The firm favors organizations equipped with robust brand equity and advanced digital capabilities, reiterating Buy ratings and target prices of EUR 450 for L'Oreal, $280 for Estee Lauder, RMB 180 for Proya, and RMB 220 for Betaine. Shiseido remains rated Neutral with a target price of RMB 5,000.
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