A local perfume brand showcases its products at a beauty bazaar in South Jakarta on March 22, 2025. - The Jakarta Post/ANN
JAKARTA: Sluggish household spending has weighed on Indonesia’s retail sector, with estimated growth below 5 per cent in 2025, but the beauty industry continues to post solid gains and is projected to keep expanding in 2026, supported by steady demand across physical and online channels.
While food and beverages (F&B) remains the largest retail segment in the country, beauty recorded the strongest growth last year, according to the Indonesian Retail and Tenants Association (Hippindo).
“In terms of percentage growth, [beauty retail] is the highest,” Hippindo chairman Budiharjo Iduansjah said.
“Beauty growth is in double digits. If other categories grow at around 5 to 10 per cent, beauty can reach 12 to 15 per cent annually. That is same-store growth,” he told The Jakarta Post on Dec 30.
The resilience of beauty product sales also reflects in online transactions, with personal care products including cosmetics and bodycare items continuing to rank among the most frequently purchased goods through online shopping platforms in the third quarter of 2025, Statistics Indonesia (BPS) data show.
According to the Indonesian E-commerce Association (idEA), the beauty and personal care segment was “a favourite” for online shoppers throughout 2025, alongside other strong segments.
While global brands continued to dominate the premium segment, consumer behaviour in 2025 indicated a greater openness to domestic brands, particularly outside the premium price range, idEA secretary-general Budi Primawan told the Post on Dec 30.
“In beauty, local brands had a strong year. Many domestic cosmetic brands grew faster than global players, particularly in the mass and mid-range segments,” he said.
“They connect well with local consumers, from understanding skin needs and price points to halal positioning and social-media storytelling.”
The association expects e-commerce growth to accelerate, with repeat-purchase categories continuing to underpin transactions.
“Beauty, fashion basics and everyday essentials are likely to remain key drivers. The focus will be less on heavy discounts and more on trust, content and consistency. Brands that feel familiar and genuinely useful in daily life will stand out,” he added.
Coordinating Economy Minister Airlangga Hartarto commended the national cosmetic industry’s performance in a market he said generated revenue of around Rp 35.6 trillion (US$2.1 billion) in 2025 and was projected to grow at 4.73 per cent annually.
“This indicates strong interest and purchasing power for clothing and personal care products,” he said in Jakarta on Dec 4.
The personal care, skincare and make-up segments, he added, remained the main contributors, in line with increased consumer awareness of self-care and product quality.
Beyond cosmetics, household spending in clothing, footwear and personal care services also supported economic growth in the third quarter of 2025.
Airlangga pointed out that young entrepreneurs were using social media for promotion and business development, contributing to the emergence of new beauty start-ups and a growing number of local brands, including those targeting male consumers as an indication of broader segmentation within the domestic cosmetics market.
Big home market
On the production side, the Food and Drug Monitoring Agency (BPOM) and the Indonesian Cosmetics Companies Association (Perkosmi) reported that the number of cosmetics companies in Indonesia reached 1,500 as of October 2025, up from 1,292 in 2024.
Eighty-seven per cent are small and medium-sized enterprises (SMEs).
The Industry Ministry has noted that sales of locally produced cosmetics in both domestic and overseas markets continued to grow, supported by an increasing number of SME products registered with the BPOM.
As of October 2025, the number of registered cosmetic products rose by 50,275 in 2025, bringing the total to more than 343,000 registered products nationwide.
Despite this growth, trade data indicate that Indonesia remains a net importer in certain cosmetic product categories.
In the first 10 months of 2025, exports of essential oils, fragrances and cosmetics reached $97.8 million, while imports stood at a higher $147.7 million, BPS data show.
The government has highlighted regulatory measures aimed at strengthening the position of local manufacturers, such as mandatory halal certification for cosmetic products, which will take effect in 2026 under Law No. 33/2014 on halal product assurance and Government Regulation No. 39/2021.
Industry Minister Agus Gumiwang Kartasasmita said the policy was intended to improve trust in and the competitiveness of Indonesian cosmetic products in the international market, particularly in Muslim-majority countries.
“Cosmetic SMEs are able to highlight local heritage and traditional Indonesian beauty practices and natural ingredients as a distinctive appeal for both domestic and international consumers,” Agus said during the opening of the ministry’s Cosmetic Day expo in Jakarta on Nov 5.
On a separate occasion, Airlangga said Indonesia, with 75 million Generation Z consumers as a key target group for cosmetic products, offered significant beauty market potential.
He added that the government encouraged the use of domestic natural resources, including essential oils, seaweed and herbal plants, to support the downstream production of beauty products and create opportunities for growth in plantation-based and marine-related sectors across the country, including in Aceh, Central Java and Central Sulawesi.
Trade diplomacy
In 2025, Jakarta and Brussels concluded decade-long negotiations paving the way for the Indonesia–European Union Comprehensive Economic Partnership Agreement (IEU-CEPA), which Airlangga said included discussions on market access for beauty products. “I think through our cosmetic diplomacy, we can sign this EU agreement.
I remember the deal maker of this was derived from substantive and deep discussions about cosmetics,” Airlangga said in September at the signing ceremony for the trade deal set to take effect on Jan 1, 2027.
The EU is currently the world’s third-largest importer of Indonesian palm oil, which is used mainly in the biofuel, F&B and cosmetics industries. - The Jakarta Post/ANN
