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Euromonitor International
Beauty and Personal Care
2010 edition
MARIA ELVIRA NUÑEZ FORERO
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Euromonitor International
Annual Beauty and Personal Care Survey 2010 edition
Euromonitor International is currently updating its global survey of the Beauty and
Personal Care industries.
Our survey covers 80 countries and measures:
Market sizes
Value and volume sales in Retail and Manufacturer prices
Company and brand value shares
Forecasts to 2014
Data on distributor/wholesaler and retailer mark-ups
Retail distribution breakdowns by product category
With accompanying insights and quantitative and qualitative analysis
We would greatly appreciate you time and input into this year’s survey
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because…
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We value your expert opinion on the market
We want to ensure that you are accurately represented
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guidelines on anonymity
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dialogue on the industry, an exchange of opinions on data and insights
Our preference is always to build a long term relationship with all key opinion
formers as we consolidate our position of the leading authority on the industry at
global level
We are happy to follow up our discussion with a summary of key findings from
this year’s research
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Beauty and Personal Care: Key findings
Global Snapshot
Industry Growth Shielded from Late Arrival of Recession
Growth in the global cosmetics and toiletries market slowed to 5% in 2008, from 6% in 2007, on increased price
sensitivity among consumers. Already in 2008 there were sharp declines in selected leading countries and categories
such as North American fragrances and Japanese skin care and colour cosmetics. There was, however, offsetting
buoyancy in emerging markets due to their relative immaturity, and also because the effects of the global credit
crunch were felt with greater delay there than in developed markets.
The full brunt of the global recession will be felt from 2009 onwards. In many countries, media coverage of the
economic slowdown only gathered speed during the second half of the year, meaning that prior to that consumer
spending was largely in line with that of previous years. As the bear market mentality set in among consumers,
however, many beauty product manufacturers posted fourth quarter results that were far lower than those of the same
period the previous year. In 2009 the effects will be far more evident as growth of only 0.7% in constant terms is
forecast for the declines in premium sales. Western European premium sales (34% of global) grew by 3% in 2008
versus 5% in 2007, but they will fall by an estimated -0.3% in 2009. As a result, global premium CT sales are expected
to contract by -1.3% in 2009.
Global Snapshot
Categories' Resilience Varied Markedly Across Regions
Deodorants and baby care were the best performers globally in 2008 with growth rates of 8% and 7% respectively.
These two sectors, along with bath and shower, were also the only ones to outperform their percentage rise of the
previous year. Latin American's love for scents underpinned strong growth in deodorant roll-ons and sprays.
Unwillingness by parents to give up quality on their children's products together with increased purchases for adult
consumption (baby lotion) boosted baby-care products demand.
Premium cosmetics and toiletries bore the brunt of the impact of decreasing consumer confidence and disposable
income and rising unemployment rates. The category's growth rate more than halved to 2% in 2008, as consumers
sacrificed luxury brands for mass or masstige alternatives.
While global skin care spend slowed to 5.5% growth (7.1% in 2007), nourishers /anti-agers remained star performers,
expanding by 9.7% or only 0.6 percentage points less than in 2007. This adds substance to the belief that most
consumers will sacrifice on many other fmcg's before they will alter their facial care routines.
Other resilient sectors included under-developed men's grooming (-0.3 or +6.1% in 2008), and sun care that despite
declining 1.3 percentage points, remained the most dynamic sector over the 2003-08 review period. Though global
hair care spending decelerated by 1.3 percent points and was the slowest growing category, the sheer magnitude of
this relatively mature sector determined it was the second largest contributor to absolute value growth during the
review period.
Regional Overview
Leading Regional Markets in Retreat
Economies with advanced, integrated credit markets are suffering the brunt of the current economic downturn. It
is these countries that also enjoy the highest per capita consumption of cosmetics and toiletries, are mature,
sophisticated and price sensitive, and are being hardest hit, as consumers curtail overall expenditure.
Though Canadians showed unwillingness to cut back in their personal care regimens, the overwhelming
incidence of the US within North America, resulted in an estimated -2.4% decline in the region's CT market in real
terms (-0.4% in current prices) during 2008. Americans of all income levels began tightening their belts, leading to
massive discounting even in premium cosmetics (never seen before). The region's CT market is projected to
contract by a cumulative 1.7% over the next five years.
In all, half of CT world sales are in leading markets that will contract or stagnate during the forecast period. CT
sales in Japan fell -1.4% in 2008 as consumers reduced premium cosmetics purchases. Japan accounts for 40%
of Asia Pacific's CT market, causing a sharp slowdown there over the next five years. For the largest five
countries that together account for three quarters of the West European market, CT sales will either contract or
come to a near stand-still over the forecast period.
Regional Overview
North America and Western Europe Suffer Hardest
The CT market in North America is forecast to decline by US$1 billion in 2008-2013, driven by US premium cosmetics
(-9%), fragrances (-17%) and colour cosmetics (-6%). The West European CT market will remain flat in 2009, though
France (17% share of regional CT sales) will fare worst, posting negative growth through 2011, and Germany (17%
share) is expected to grow a meagre cumulative 0.9% during the forecast period. Italy, Greece, Sweden and Portugal
will also decline in 2009, to recover in 2010, while the UK, the Netherlands, Spain, Norway, Finland and Turkey will
show healthy growth rates.
Private label has been a large beneficiary in the US (bath & shower, oral hygiene, baby and sun care) and in countries
such as Germany, Netherlands, France, Spain and the UK, where major retailers show increasing sophistication in
their private label offer and are expanding their ranges to include natural and organic products (Carrefour, Tesco,
Sephora, amongst others).
Major branded manufacturers are responding differently across countries and sectors, as price points fall with new
launches (US, premium cosmetics), or innovations in mature sectors such as hair care and skin care underpin unit
price growth in the Netherlands and Germany, or greater consumer segmentation reaps above-average value growth
in Spain (+5 % in 2008).
Regional Overview
US and Japan: Erosion in Share of World Market to Accelerate
The Japanese CT market is expected to contract by 5.1% or US$1.7 bn over the next five years, in constant value
terms. Although there are pockets of growth in 'preventive' products such as anti-ageing, oral care and sun care, as
well as depilatories, these are small in the overall context of the Japanese market. Consumers' trading down from
premium to mass and masstige products is affecting most sectors, but the bulk of the brunt is being felt in skin-care
(excepting nourishers/anti-agers), and colour cosmetics, that are also the largest sectors (42% and 20%, respectively,
of Japanese CT spend), where average unit prices are declining.
The US CT market is expected to be US$1.6 bn smaller by 2013, however, this will be a comparatively modest 0.6%
decline from 2008. The CT mix is less concentrated than in Japan as well as fragrances and men's grooming products
take a greater share of CT spend. Discounting and lower volumes in fragrances (80% are premium, and considered a
luxury) will reduce the CT market an estimated US$970 mn by 2013. The men's grooming sector will be a growth
driver in the US, as young men become more comfortable with grooming regimens and the idea of cosmetics lines
tailored for men becomes more mainstream.
Regional Overview
A Diverse Environment in Asia Pacific
In 2009, Asian economies (ex-Japan) will grow their lowest since 2001, nevertheless, above 5%. Public debt has been
reduced (excepting India) and foreign reserves are mostly ample. A more rapid recovery than in other parts of the
world, should thus be possible as governments are better able to cope with recession through increased spending.
The region remains dependent on and vulnerable to foreign investment flows.
Skin care is the key sector taking up 37% of CT spend, and the share is higher in mature markets. Catering to Asian
women's traditional preference for clear and pale skin, majors P&G, Amway, and L'Oréal launched several new
whitening skin care products during 2008. Products with whitening function are penetrating into nearly every area of
facial skin care - moisturisers, cleansers, toners, face masks, and even nourishers/anti-agers - as manufacturers seek
to add extra benefits to basic functionality. Sales will slow sharply but the high importance of facial skin beauty will
continue to make skin care the star performer of the Asia Pacific CT market (37% of projected five-year absolute
growth), followed by hair care (20% of absolute growth).
Regional Overview
China Sees Highest Absolute Growth Potential
Around half of CT purchases in developed Asia Pacific markets (per-capita CT spend above US$120) are premium
products, that will do poorly such as in Japan (US$252 CT per-capita spend) and Taiwan.
In contrast, countries such as China and India, where premium product penetration is low, will see premium products
outperforming mass even in the economic downturn. Broadly speaking, developing countries whose CT markets are
very large yet per capita CT spend remains low, will see the greatest absolute growth.
Regional Overview
Eastern Europe: Nominal Growth Masking Sharp Deceleration
The cosmetics and toiletries market in Eastern Europe
continued to grow a steady, rapid pace in nominal
terms, but significant rises in inflation sharply eroded
the real value of sales. Real growth of CT sales for
the largest 15 countries (97% of Eastern Europe's CT
spend) slowed to an estimated 0.9% in 2008 from just
over 3% in 2007.
The repercussions of the global credit crunch were felt
fully in 1Q 2009 with collapsing commodity prices,
exports and credit access. The region's economy is
expected to contract by 4%, with slight recovery in
2010 (+0.8% real GDP growth). The downturn will be
sharper in CIS states including Russia, the Baltics and
Hungary. The region's recovery is constrained by
inflated fiscal budgets and in some cases large
current account deficits, requiring financial rescues by
the IMF and government donors.
In 2008, CT markets contracted in Ukraine (-0.4%),
Czech Republic, Hungary and Latvia, while Russia
slowed down sharply. Poland, stands out as a bastion
of stability, with steady, even if, low growth (+2%
2008). Romania's CT market also did well (+4%
2008).
For the region as a whole CT sales will grow a
modest 1% in constant prices in 2009, recovering
over the forecast period, driven by Russia, Ukraine
and Poland. Annual growth will average 2% over the
next five years, one of the lowest amongst emerging
market peers.
Regional Overview
Middle East and Africa: Resilient but Not Immune
Lack of a credit/debit culture shielded consumers in MEA
MEA Major Market Performance
from the global credit crunch, and the pace of growth in
CT sales actually accelerated during 2008 to a nominal Sales Growth % CAGR % CAGR %
rate of 10%, from 8% in 2007. US$ mn 2008/07 2003-08 2008-13
The collapse of oil prices and global economic downturn, MEA - Total 13,736 9.6 7.7 2.4
will reduce 2008-13 growth to 2.4% vs 1.8% globally. CT
sales of US$13.7 billion are only 4% of the global South Africa 2,396 11.7 9.2 2.4
market, the smallest region, and lowest average per
capita spend (US$11.6). Saudi Arabia 2,174 11.2 9.2 4.4
Saudi Arabia and UAE are expected to fare best, as Iran 2,045 6.6 6.8 -6.2
surpluses from windfall oil revenues allow them to
withstand the crisis. Iran, however, is expected to fare Israel 1,088 2.9 7.7 2.2
worst as reduced government subsidies (in fuel,
electricity and water) bite into discretionary spend. UAE 834 13.7 9.7 7.3
Nigeria, with unofficial unemployment at 40%, will see a
Egypt 600 8.8 9.7 1.4
sharp reduction in its share of the CT pie.
CT sales began decelerating in the mature MEA markets Morocco 523 7.7 5.3 6.3
during 2008. Israel (US$149 per capita spend) slowed to
10-year low as discounting hit hair care and fragrances, Algeria 327 7.9 7.2 4.4
its largest sectors, and move to masstige impacted skin
care and colour cosmetics. Kenya 273 9.0 9.4 0.9
South African consumers will be recovering from sharp Nigeria 255 5.5 9.7 -1.4
increases in food, electricity and fuel prices in 2008, and
CT spend will slow markedly. Tunisia 150 11.0 7.0 6.4
Cameroon 78 4.7 6.2 2.0
Other MEA 2,992 11.8 6.4 3.7
Regional Overview
Latin America Set to Weather the Economic Storm
After the region's 2002 financial crisis, most countries
(except Argentina, Venezuela) followed orthodox policies,
thus Latin America is well placed to withstand the global
economic downturn. Brazil, will contract in 2009 on external
demand factors, but swiftly return to growth in 2010.
Mexico's reliance on the US (76% of exports) will slow its
economic recovery.
Latin America's CT market grew the fastest globally in 2003-
08 (12.3% CAGR), and in absolute terms (US$23 bn to
US$52 bn). Hair care continued to dominate CT spend (23%
of total).
The hair care market, is relatively mature and slowing in the
recessionary environment. In Brazil, rising use of
progressive blow-dry in beauty salons, that requires reduced
frequency of hair washing to achieve smooth and straight
hair, is dampening demand for shampoos, conditioners and
colourants (an estimated 65% of Brazilian women have curly
or afro hair type).
The increasing quality of mass fragrances (86% of total),
climate and cultural factors, and innovative marketing and
segmentation, will drive fragrance sales in 2008-13. In 2009,
specialist retailer O Boticario, successfully launched
Capricho Day&Night targeting teen girls with two fragrances
that create a third when mixed, and introduced a winning
Capricho cosmetics range. Direct seller Avon has developed
two skin care ranges to target low-income women (Ageless
Results), and middle-to-high income (mainly older) women
(Avon Renew Ultimate), while adding nourishing/anti-ageing
benefits to its colour cosmetics ranges.
Global Prospects
Masstige Beauty Will Continue to Accelerate
Key Issues Future Impact to 2013
As growth in the industry's largest markets of the US and Japan is unlikely to rebound until 2013, focus will
remain on the BRICs. However, with Russia's economy being severely hit by the recession and the BRIC's
personal care market expected to expand at a much lower pace than seen in the past, company
investments need to be more focused and targeted.
The most prominent growth potential will be in the rapidly expanding skin care market in Asia (China's
premium skin care is set to increase by 11% by 2013), fragrances in Latin America (Brazil is expected to
Resilience account for over half of the global absolute growth, an additional US$ 2.6 billion in the next five years), and
to hair care in China, India and Brazil, contributing with a combined extra revenue of US$ 2.9 billion by 2013,
recession nearly a third of global absolute hair care growth.
Sun care will continue to align itself with beauty, as many skin care operators venture into this segment
with particular focus on anti-ageing benefits. The category's growth dynamics will remain largely
unscathed, with sun protection in North America and Asia posting highest revenue gains
The only regions to show sustained growth in premium cosmetics in 2009 and most dynamic CAGR for the
category by 2013 will be Latin America and the MEA (the latter should contribute with over half of total
absolute growth in premium fragrances).
As consumers increasingly look for better value, acceleration in masstige beauty (particularly successful in
anti-agers) will continue, while companies focus on investing in more sophisticated formulations
Consumers will continue to trade up from mass to more specialised, but slightly more expensive brands,
as well as trade down from department stores to the upper end of mass to benefit companies, such as
The rise of P&G and Beiersdorf. While many are opting for lower priced brands, high quality and novelty continue to
'masstige‘’/ be a key factor. The most successful brands will be those that offer something unique, but also put extra
focus on emphasis on value, while preserving the 'functional' benefits and a luxury status.
value The price points on certain premium products may need to come down in order to retain the mid-luxury
market, as already evidenced by heavy discounting and promotional activity in the luxury arena.
The interest in masstige alternatives to replace premium products will depend on the depth and length of
the current recesssion. In many emerging markets, the current halt of the premiumization trend is likely to
prove temporary as economies rebound.
Global Prospects
Demand for Both Natural and Scientific Beauty Set to Thrive
Key Issues Future Impact to 2013
The trend towards high-tech formulations and improved product efficacy will continue to spiral, many
consumers will opt for cheaper alternatives to cosmetic surgery procedures and salon beauty
treatments. As concerns with health and ageing become increasingly prominent, medical-grade
efficacy and a doctor's seal of approval will become a key factor in purchasing decisions.
The rise of At -home treatments are surging as consumers are tightening their belts. The expected rise in DIY
cosmeceuticals beauty treatments and devices, now spanning across not just luxury and doctor brands, but also
more mainstream masstige offerings, will herald the evolution of cosmeceuticals.
There is a backlash emerging against product inefficacy and safety, that can be constraining. As the
distinction between drugs and cosmetics becomes more ambiguous the formulations of cosmetics
will be under closer scrutiny and products are likely to be treated as strictly as pharmaceuticals.
The convergence between beauty and food will maintain its momentum. This will present further
scope for development for both cosmetic and food/dietary supplement manufacturers.
However, beauty foods require strong credibility for success. Ingredient formulations in drinks and
Ingestible foods with beauty enhancing properties must be convincing and marketing should clearly
beauty communicate the exact benefits and efficacy of products (particularly in Europe and the US, which
are still lagging behind Asia).
With footfall in department stores and high-end outlets falling, distribution and pricing strategies of
such products may have to be readdressed to ensure returns.
Demand for natural/organic beauty products will continue to boom, as consumers become more
focused on safety and well-being, as well as more educated about product claims and labelling
While a strong industry-wide impact will not be felt in the short term, certain categories, such as
Demand for baby care, deodorants and mineral make up have shown resilience in demand for natural product
natural, organic lines and look set to remain strong despite the recession. As more retailers tap into this trend and
products branch out into natural cosmetics distribution through more mainstream outlets is bound to increase,
fuelling further demand.
However, the lack of a unified global standard for natural cosmetics will continue to be a hindrance
to growth and increasing consumer product awareness.
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