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© Euromonitor International >Cosmetics & Toiletries-Prospects
Global Cosmetics and Toiletries:
Industry Prospects for 2009 and
Beyond
August 2009
2
© Euromonitor International >Cosmetics & Toiletries-Prospects
Global Snapshot
Regional Overview
Category Review
Channel Analysis
Competitive Environment
Global Prospects
Appendix
3
© Euromonitor International >Cosmetics & Toiletries-Prospects
Buoyed by continued strong growth in emerging markets, the global cosmetics and toiletries market suffered
but a slight slowdown in 2008 despite a full fledged global recession by the end of the year.
The leading markets of the US and Japan saw declines that will persist over the forecast years. Elsewhere,
the effects of the recession on CT spend, will be far more evident in 2009. Growth of only 0.7% in real prices
is forecast for the global CT sector in 2009, driven by skin care and men's grooming products.
Consumers are sacrificing luxury brands for mass or masstige alternatives and premium cosmetics are
bearing the brunt of the economic downturn. In 2009, consumers globally are expected to reduce their
premium CT spend by 1.3%, while hair care will be the only category to see negative growth (-0.3%).
Against the backdrop of tightened consumer purses, resilient and dynamic sectors are being skin care (anti-
agers), men's grooming products (undeveloped sector with untapped opportunities), sun care (education and
rising awareness of anti-ageing benefits), baby care (high population growth and rising incomes in emerging
regions; unwillingness to sacrifice on baby needs by parents in developed markets) and deodorants (as
replacement for fragrances). By 2010, all categories as well as premium, will see renewed expansion.
Despite being less dynamic than other categories, hair care, fragrances and colour cosmetics, will be key
contributors to global absolute value growth over the forecast period, by virtue of sheer size. Skin care, on the
other hand, will be of critical importance, being both amongst both dynamic as well as the largest category.
The Asia Pacific region, excluding Japan, and Latin America are the key growth markets of the future,
particularly, BRIC countries, China, Brazil and India. Success strategies for international manufacturers will
need to incorporate geographic expansion and product share gains in key categories such as skin and hair
care markets and China and Brazil, while laying the seeds in "frontier" markets with highest potential.
The CT consumer base is increasingly sophisticated and global. It is both keen on preventing ageing through
scientific progress, and ethically and environmentally conscious. To succeed, manufacturers thus also need to
invest in efficacious, technologically advanced formulations, as well as be innovative in their
marketing/packaging, addressing consumer concerns and adding clear value/benefits to their purchases.
Global Snapshot
Key Findings
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© Euromonitor International >Cosmetics & Toiletries-ProspectsGlobal Snapshot
Key Industry Issues
Consumers are increasingly concerned about the safety and purity of products
they consume, as well as their effect on the environment. Products that have
claims of being "natural", "organic" and/or eco-friendly are growing in popularity
across regions, and becoming mainstream. Greatest impact is on baby and
body skin care, and bath and shower. The organics trend is also spreading to
products where efficacy has been a priority, such as facial skin care, hair care
and colour cosmetics.
Consumer perceptions of luxury are changing. Luxury
is an enriching personal experience and no longer a
premium price-tag. Beauty masstige items can now
become affordable luxuries (at "mass prices") in a
tough economic climate. They are positioned across
the whole product spectrum.
Demand is on the rise for technologically advanced
formulations that are positioned on the boundaries of
cosmetics and drugs (cosmeceuticals). These
products are often seen as alternatives to surgery
and include both facial anti-agers as minimally-
invasive treatments such as "Botox."
The economic downturn is making
shoppers more value conscious.
The "at home" beauty care market
is benefitting as a cheaper
substitute to costly out-of home
services such as salons/spas (hair
colorants, perms/relaxants,
depilatories, nail polish), or dentist
visits (teeth whitening and
professional oral hygiene kits).
Beauty is merging with health and
well-being and becoming more
holistic – not just internal
appearance but also physical and
spiritual well-being. CT products
are taking new forms – from jars to
foods. Interest in nutricosmetics
and functional foods is
complementing the traditional
beauty industry.
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© Euromonitor International >Cosmetics & Toiletries-ProspectsGlobal 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.
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Global CT Performance 2003-2008
Total CT Premium CT % CT growth % premium growth
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© Euromonitor International >Cosmetics & Toiletries-ProspectsGlobal 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.
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Global Sales by Category
Sales (2008, US$bn) % change 2007-08 % change 2006-07
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© Euromonitor International >Cosmetics & Toiletries-Prospects
Global Snapshot
Regional Overview
Category Review
Channel Analysis
Competitive Environment
Global Prospects
Appendix
8
© Euromonitor International >Cosmetics & Toiletries-ProspectsRegional 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.
Western Europe
Asia PacificNorth America
Latin AmericaEastern Europe
Middle East and AfricaAustralasia0
20
40
60
80
100
120
-1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0
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08
US
$ b
illio
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2008-13 CAGRBubble size represents US$ value sales in 2008
CT Regional Performance
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© Euromonitor International >Cosmetics & Toiletries-Prospects
Asia Pacific will emerge the global driver of economic recovery. Excluding Japan, annual CT 2008-2013 sales
will grow 5.2% on average, spurred by brisk demand for skin care (and sun care), the largest and most
dynamic category, followed by hair care (2nd largest). CT sales in China and India (55% of AP-ex Japan),
have slowed but projected 5 year CAGRs are above 7%, offsetting weakness in Taiwan, and South Korea.
Latin America was the most dynamic market in the review period, contributing 30% of global absolute growth
in CT spend. Declines in hair care spend in the saturated markets of North America and Western Europe,
were offset by strong growth in Latin America thanks to increased penetration of conditioners and colourants
that are increasingly popular with teens and young adults.
CT value sales in several Eastern European markets should decline in 2009, however, the two largest, Russia
and Poland will expand by slightly over 1%, and the entire region begin recovery in 2010. Spend by category
is fairly spread in Eastern Europe. Skin care (20% of CT spend), hair care (18%), fragrances (17%), and
colour cosmetics (13%) are the key sectors by size and absolute growth. Russians are very designer oriented
in fashion, however, premium cosmetics spend that takes a greater share of CT spend in Eastern Europe than
in other emerging markets (14.9% CAGR 2003-08), is set to slow markedly.
Regional Overview
Emerging Economies Lead Industry Prospects
-202468101214
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Asia Pacific Eastern Europe
Latin America Middle East Africa
North America
Western Europe
% g
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$
Per Capita Expenditure by Region
Per capita CT spend (2008, US$)
% Change in CT Spend 2007-08
% CAGR in CT spend 2008-13
Note: 2007-08 % change figures are in current prices, whereas projected CAGRs are in real prices that exclude inflation. Eastern Europe, Latin
America and Middle East Africa's 2007-08 % change figures contain significant inflation.
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© Euromonitor International >Cosmetics & Toiletries-Prospects
Premium cosmetics grew by 2.2% in 2008 as they bore
the brunt of the effect of falling consumer spending. By
product, most growth was in baby care and sun care.
Three product segments make up a huge 84% of
premium cosmetics: skin care, fragrances, colour
cosmetics. By geography, growth focused on Latin
America and Eastern Europe. Two regions make up
65% of premium cosmetics: Western Europe, Asia. In
Asia, baby care grew 35% in 2008, but from a low
base.
Strikingly, sales already fell meaningfully in every single
product category in the US (incl. sun care) in 2008, and
further significant negative growth is likely in 2009/10.
Going forward, sector growth will be pressurised as
reduced disposable income leads consumers to trade
down to varying degrees. This will affect primarily basic
cosmetic and toiletries products, but will also affect the
premium market. Market leaders Estée Lauder and
L'Oréal will face an increasingly fierce competitive
environment across all premium product categories,
though certain lines should hold up better than others.
This is due to the fact that they are easier to market
and 'glamour' helps to justify a premium positioning:
skin care (even high-priced face creams should benefit
as 'eternal youth' is priceless), and sun care (sun
protection, cancer prevention, premature skin-ageing).
Brand loyalty is generally high in premium cosmetics,
though firm separation from the mass market remains
critical in order to preserve product pricing.
Premiumisation will continue to be an important global
trend over the longer term. Premium brand sales
constituted 22% of the global market in 2008. Key sector
drivers include improved wealth in developed and
emerging economies, a growing middle class in BRIC,
further value-adding product enhancements via R&D,
the launch of new and highly priced products (niche
markets, especially in Western Europe), and increased
availability through select mass channels.
Regional Overview
Premium Cosmetics: Time to Buckle Up
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
Premium Cosmetics % Growth by Region 2008
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© Euromonitor International >Cosmetics & Toiletries-ProspectsRegional 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).
-3-2-1012345
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2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
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North America and Western Europe Performance 2003-2013
NA WE % NA growth % WE growth
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© Euromonitor International >Cosmetics & Toiletries-Prospects
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
US and Japan: Erosion in Share of World Market to Accelerate
0 10 20 30 40 50 60
Germany
China
Brazil
Japan
USA
US
$ b
illio
n
Top Five by Market Size 2003/2008/2013
2013 2008 2003
Spain3% Italy
4%Russia
4%
UK5%
France5%
Germany5%
China5%
Brazil8%
Japan10%
USA16%
Rest of World35%
Top 10 % Value Share 2008
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© Euromonitor International >Cosmetics & Toiletries-ProspectsRegional Overview
A Diverse Environment in Asia Pacific
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Pe
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(U
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Ma
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US
$ b
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Developed Markets 2008
Market Size (US$ bn) Per capita C&T (US$)
In 2009, Asian economies (ex-Japan) will grow their lowest since 2001, nevertheless, above 5%. Public debt
has been reduced (excepting India) and foreign reserves are mostly ample. A more rapid recovery than in
other parts of the world, should thus be possible as governments are better able to cope with recession
through increased spending. The region remains dependent on and vulnerable to foreign investment flows.
Skin care is the key sector taking up 37% of CT spend, and the share is higher in mature markets. Catering to
Asian women's traditional preference for clear and pale skin, majors P&G, Amway, and L'Oréal launched
several new whitening skin care products during 2008. Products with whitening function are penetrating into
nearly every area of facial skin care - moisturisers, cleansers, toners, face masks, and even nourishers/anti-
agers - as manufacturers seek to add extra benefits to basic functionality. Sales will slow sharply but the high
importance of facial skin beauty will continue to make skin care the star performer of the Asia Pacific CT
market (37% of projected five-year absolute growth), followed by hair care (20% of absolute growth).
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© Euromonitor International >Cosmetics & Toiletries-ProspectsRegional Overview
China Sees Highest Absolute Growth Potential
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Developing Asian Markets 2008
Market Size (US$ bn) Per capita C&T (US$)
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.
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© Euromonitor International >Cosmetics & Toiletries-Prospects
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.
Russia47%
Poland16%
Ukraine9%
Czech Republic
5%
Romania5%
Hungary4%
Slovakia3%
Other11%
Eastern Europe CT Market 2008
Regional Overview
Eastern Europe: Nominal Growth Masking Sharp Deceleration
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Eastern Europe Market by Category
2008 (US$ bn) 2008-13 CAGR (%)
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© Euromonitor International >Cosmetics & Toiletries-Prospects
Skin care20%
Fragrances18%
Hair care17%
Colour cosmetics
14%
Men's grooming
9%
Oral hygiene
9%
Bath & shower
8%
Other5%
Russia CT Market by Category 2008Russian consumers stocked up on premium
cosmetics as the economic crisis intensified in
4Q 2008 and the rouble continued depreciating.
An acceleration of inflation supported another
year of strong growth (+12%, versus 13% in
2007) for Russia's beauty and personal care
market. In real, inflation-adjusted, terms,
however, unit prices came under pressure and
the value of CT sales slowed to a meagre 0.7%
for the whole of 2008 (4% in 2007), while
volumes drove market growth, with rises of
2.8% (3.4% in 2007).
During Q1 2009, consumer confidence was at a
10-year low, and various measures of
productive activity (industrial, natural gas, etc.)
suffered double-digit percent declines versus
the prior year. Spend in premium cosmetics
that had outpaced the overall CT market
through 2007, will now decline in 2009 hurting
perfumeries and smaller store-based beauty
retailers particularly, such as recently bankrupt
Arbat Prestige.
Regional Overview
Russia: Spend on Premium Cosmetics Set to Slow
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© Euromonitor International >Cosmetics & Toiletries-ProspectsRegional Overview
Russia: Direct Sellers Thrive in Recessionary Market
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Russia: CT Sales Evolution (Real Prices) 2004-2013
Total CT Premium Total % y-o-y growth Premium % y-o-y growth
With strong long-standing reputations, value-for-money images, and innovative marketing, direct sellers
flourished during 2008. Oriflame saw sales grow by 25% and staff by 50%. Amway saw another year of record
sales, up 32%. Avon launched Bond Girl 007 fragrance to coincide with the Quantum of Solace's movie
premiere, with a curvy, feminine-shaped bottle and high-tech metal top, even distributed at film screenings.
Active TV advertising—highly effective in Russian consumer choice—played a key role for direct sellers. It is
likely that buyers of premium cosmetics will look to direct sellers' masstige product ranges to reduce outlays.
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© Euromonitor International >Cosmetics & Toiletries-ProspectsRegional Overview
Japan: Pockets of Growth Overshadowed by General Declines
In Q1 2009, Japan's real GDP contracted by 4% quarter-on-quarter, the fastest decline since the 1974 oil crisis.
Japan's recovery will be slower than in its 1997-98 recession reflecting the more severe global economic downturn
currently, and Japan's reliance on exports to deliver economic growth.
Consumers' move away from premium to mass/masstige is the over-riding trend in Japan. Nourishers/anti-agers, sun
care, men's grooming, oral hygiene and organics should perform better than other sectors.
A distinctive feature of the Japanese market versus its AP developed peers, is the leadership of national champions
(Kao, Shiseido), though foreigners are making inroads with products that target untapped sub-sectors—such as Veet's
hair removers that helped Reckitt Benckiser make a 29% sales gain in depilatories in 2008—or by successfully
adapting top brands to local peculiarities such as L'Oréal (+17% sales gain in 2008) that successfully reformulated
Revitalift to suit the Japanese skin type.
With an ageing population and highly sophisticated Japanese consumer, new scientifically-based age-defying
products with increased efficacy, are the way forward for manufacturers. Segmentation and targeted marketing can
also bear fruit as the case with Shiseido's Elixir Prior that caters to the growing 60+ female group, with packaging for
easy handling, large labelling and easy-to-follow steps.
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Hair care Colour cosmetics
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Oral hygiene Skin care Anti-agers Premium CT
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Japan CT Market by Category
2008
2013
% CAGR 2003-08
% CAGR 2008-13
19
© Euromonitor International >Cosmetics & Toiletries-ProspectsRegional Overview
China and India Growth Engines of Asia Pacific
China's booming skin care market grew an average 18% pa over the review period, yet per capita spend on
skin care was a low US$5 in 2008 versus Taiwan's US$63 and HK China's US$76. The top five players,
foreign, had combined market share of 50%, and fueled value growth with diverse marketing campaigns and
introductions of high potency anti-ageing products, as well as through greater segmentation of the 25-to-35s.
Brands grounded in local traditions are capturing market dynamism: Shanghai Jahwa's new Herborist range of
TCM-based skin care products saw 67% growth in 2008. Three of the top five brands are from direct sellers
that gained share in 2008 as the economic slowdown increased jobless women-turned-direct sellers.
As wealth and infrastructure investment gradually reaches the highly rural Indian population, and incomes rise
in urban areas, much of the absolute growth in the Indian CT market has come from sectors that represent
basic necessities (bath & shower, hair care and oral hygiene) where consumers are switching from loose,
unbranded products to branded goods. The most dynamic sectors in the forecast period are forecast to be
fragrances (+17% CAGR) and colour cosmetics (+20% CAGR) as more young women join the work force.
China and India will account for 66% and 22%, respectively, of Asia Pacific's absolute value sales growth
between 2008 and 2013, thanks to projected CAGRs above 7%. Thailand, however, with similar consumption
patterns to China, will also be an important generator of CT absolute market growth (+US$820 mn).
0
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China India Thailand Philippines Indonesia Malaysia
% s
ha
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Category Share of Total CT Market 2008
Bath & shower Hair care Colour cosmetics Oral hygiene Skin care Premium CT
20
© Euromonitor International >Cosmetics & Toiletries-Prospects
Lack of a credit/debit culture shielded consumers in
MEA from the global credit crunch, and the pace of
growth in CT sales actually accelerated during 2008
to a nominal rate of 10%, from 8% in 2007.
The collapse of oil prices and global economic
downturn, 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 market, the smallest region, and
lowest average per capita spend (US$11.6).
Saudi Arabia and UAE are expected to fare best, as
surpluses from windfall oil revenues allow them to
withstand the crisis. Iran, however, is expected to
fare worst as reduced government subsidies (in fuel,
electricity and water) bite into discretionary spend.
Nigeria, with unofficial unemployment at 40%, will
see a sharp reduction in its share of the CT pie.
CT sales began decelerating in the mature MEA
markets during 2008. Israel (US$149 per capita
spend) slowed to 10-year low as discounting hit hair
care and fragrances, its largest sectors, and move to
masstige impacted skin care and colour cosmetics.
South African consumers will be recovering from
sharp increases in food, electricity and fuel prices in
2008, and CT spend will slow markedly.
MEA Major Market Performance
Sales
US$ mn
Growth %
2008/07
CAGR %
2003-08
CAGR %
2008-13
MEA - Total 13,736 9.6 7.7 2.4
South Africa 2,396 11.7 9.2 2.4
Saudi Arabia 2,174 11.2 9.2 4.4
Iran 2,045 6.6 6.8 -6.2
Israel 1,088 2.9 7.7 2.2
UAE 834 13.7 9.7 7.3
Egypt 600 8.8 9.7 1.4
Morocco 523 7.7 5.3 6.3
Algeria 327 7.9 7.2 4.4
Kenya 273 9.0 9.4 0.9
Nigeria 255 5.5 9.7 -1.4
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
Middle East and Africa: Resilient but Not Immune
21
© Euromonitor International >Cosmetics & Toiletries-Prospects
Fragrances (66% of which premium) was the most dynamic sector in MEA during 2003-08, accounting for
20% of the absolute increase in sales. The region benefits from a deeply-rooted fragrance culture that favours
premium and oriental products. Fragrances will be the largest contributor to regional sales growth during
2008-2013, followed by skin care (23% premium) and colour cosmetics (35% premium). Given tougher
economic climate, well-positioned and advertised masstige products show significant potential.
Iran's stellar growth of 76% in colour cosmetics in 2003-2008 masks a mixed reality of high inflation and poor
border control. Smuggled and counterfeits account for 80% of the CT market. Rapid expansion of satellite TV
and outreach to small cities has brought Farsi channel advertising to Iran's growing youthful population,
spurring CT purchases. Colour cosmetics will continue to drive positive CT sales growth in current prices.
As the UAE struggles with oil price and property market collapses, it will see 7% average forecast growth
underpinned by high per capita income, a cosmopolitan population with over 60% under 25, and an expanding
retail landscape. Hair care is the largest and most dynamic sector, with climate and ethnic factors supporting
strong growth (+12% 08/13 CAGR) across most products.
Regional Overview
Middle East and Africa: A Region With Diverse Markets
Baby care
Bath and shower products
DeodorantsDepilatories
Hair careMen's
grooming products
Colour cosmetics
Fragrances
Skin care
Oral hygiene
Sun care
0%
2%
4%
6%
8%
10%
12%
-1% 0% 1% 2% 3% 4% 5%
CA
GR
% 2
00
3-0
8, cu
rre
nt,
U
S$
bill
ion
CAGR % 2008-2013, constant, US$ billion
CT MEA Growth by Category
Bubble size shows sector's share of cosmetics & toiletries market, ranged displayed: 1.20-19.3%
22
© Euromonitor International >Cosmetics & Toiletries-ProspectsRegional Overview
Saudi Arabia: Low Per-capita Spend in Select Categories
Over the next five years, Saudi Arabia is projected to create US$525 mn in new CT sales, the largest
contribution in MEA, to become the leading market by 2013. Though per capita CT intake of US$86 is high by
regional standards, it is still low relative to the region's mature markets UAE and Israel.
Strong underlying industry fundamentals include: high purchasing power by majority of Saudis, and steadily
rising incomes; youthful growing population (2.5-3% pa); thriving religious tourism; sizable expansion plans by
retailing industry; and, strong supplier-driven growth through aggressive advertising and value-enhancing
product introductions. Until present the latter have supported high unit price growth.
Unilever's launch of Clear for Men, capitalized on the strength of the global brand, targeting a dynamic
category - men's grooming products - with an aggressive advertising campaign and wide distribution strategy.
The shampoo, based on patented VitaAce that removes and prevents recurrence of dandruff, dramatically
boosted the growth of the market's shampoo sector (+12% in 2008), and ended P&G's decades'-old monopoly
in anti-dandruff shampoos (Head & Shoulders). In 2008, Unilever proceeded with the launch of Clear's Hair
Fall Defence For Men, treating dandruff and preventing hair loss (adding benefits), the first product of its kind.
0
10
20
30
40
50
Bath & shower
Hair care Colour cosmetics
Men's grooming
Oral hygiene
Fragrances Skin care Premium
US
$
Per Capita Expenditure by Category 2008
Middle East and Africa
Iran
Israel
Saudi Arabia
South Africa
United Arab Emirates
23
© Euromonitor International >Cosmetics & Toiletries-Prospects
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.
Regional Overview
Latin America Set to Weather the Economic Storm
Brazil55%
Mexico16% Venezuela
6%
Argentina6%
Colombia5%
Chile3%
Peru2%Other
6%
Share of Latin American CT Spend
0
5
10
15
20
25
0
2
4
6
8
10
12
14
16
% g
row
th
US
$ b
illio
n
Latin America Sales by Category
2008 2013 % CAGR 2008-13 % CAGR 2003-08
24
© Euromonitor International >Cosmetics & Toiletries-Prospects
Global Snapshot
Regional Overview
Category Review
Channel Analysis
Competitive Environment
Global Prospects
Appendix
25
© Euromonitor International >Cosmetics & Toiletries-Prospects
Consumers are far more willing to economise on toiletries than they are on cosmetics such as skin care and colour
cosmetics, however, in mature markets, the slowdown in toiletries' consumption has been moderate, and less intense
than that seen in value sales of cosmetics. Globally, cosmetics sectors outgrew their toiletries counterparts in 2008, as
they did throughout the review period 2003-08 across all regions. In 2008, however, there was a notable major
exception: Japan's cosmetics market took a sudden sharp turn, and both skin care and colour cosmetics spend
declined sharply. As Japan accounts for 51% of the Asian Pacific cosmetics sector, that region's overall toiletries
market outperformed that of cosmetics (5.2% vs. 3.8%). This is likely to continue as Japanese consumers are
expected to restrain their consumption of skin care and colour cosmetics products and continue switching down from
premium to mass and masstige alternatives.
World spending on fragrances accelerated over the past five years, outpacing both toiletries and cosmetics in 2007
and in 2008, but consumer spending patterns varied across regions. Latin America, Eastern Europe, and Middle East
Africa (a combined 40% of global spending on fragrances) saw double-digit growth in both mass and premium
products. Mass fragrances in Latin America (20% of the global fragrances market) rose by nearly 15% in 2008. At the
other end, North America (16% of world fragrance sales) saw a 4% decline, that region's worst performing sector due
to record discounting across both mass and premium fragrances.
Category Review
Cosmetics Surpass Toiletries, Fragrances Post Varied Results
0% 25% 50% 75% 100%
Fragrances
Cosmetics
Toiletries
Regional Shares of Major Category Groups 2008
AP AU EE LA MEA NA WE
-202468
10121416
World AP AU EE LA MEA NA WE
% C
AG
R
Regional 2003-08 CAGR (%)
Toiletries Cosmetics Fragrances
26
© Euromonitor International >Cosmetics & Toiletries-Prospects
The world skin care market advanced by 5.5% to
US$75.8 billion in 2008 (vs growth of 7% in 2007).
Although skin care has enjoyed the highest 5-year
average growth rate (after sun care), its 2008
growth rate lagged deodorants (7.6%), baby care
(6.7%), sun care (6.6%) and men's grooming
products (6%).
Skin care, the largest CT category (23% of total
retail value), still grew faster than the US$333 billion
CT market, which rose by 5% in 2008. The key
driver behind skin care growth was nourishers/anti-
agers, which were up 10% in 2008 (2007: +10.3%)
and defied the trend for trading down in skin care.
Asia continues to account for a massive 39% of
world retail sales (followed by Western Europe,
28%), aided by premium skin care, but the highest
growth rates are in Latin America and eastern
Europe.
Skin care growth is expected to hold up well in
2009, with anti-ageing and nourishing products in
the facial care segment seen as primary drivers
(along with firming & anti-cellulite body care
products). Higher demand from ageing baby
boomers and new technological advances will drive
value growth while non-essentials (toners) will likely
suffer.
Category Review
Skin Care Dominates Global Cosmetics Market
-4
-2
0
2
4
6
8
10
12
14
16
0
10
20
30
40
50
60
70
80
90
2007 2008 2009 2010 2011 2012 2013
% y
-o-y
ch
an
ge
US
$ b
illio
n
Global Skin Care Sales by Region 2007-2013
Asia Pacific Australasia Eastern Europe
Latin America Middle East/Africa North America
Western Europe AP % change AU % change
EE % change LA % change MEA % change
NA % change WE % change
27
© Euromonitor International >Cosmetics & Toiletries-ProspectsCategory Review
Skin Care: Anti-agers Surpass Other Category Performance
0
2
4
6
8
10
12
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
% y
-o-y
va
lue
gro
wth
Skin Care Growth by Category 2004-2013
Skin care Facial care Nourishers/anti-agers Body care Hand care
Anti-ageing products continue to become increasingly specialised and segmented by age group, gender,
combination products, as well as targeting different parts of the body – eye, neck, face, chest, the whole body.
L'Oréal for example has developed different anti-ageing products for each generation of women, and its
website advises on which product to choose for their age group.
Nourishers/anti-agers will be the growth stars of skin care as consumers clearly prioritise age prevention. To
succeed, manufacturers will need to bring to bare technological advances and innovative marketing to tap into
consumer interest in scientifically-proven age prevention methods, together with holistic approaches to beauty
that stress inner health and wellbeing and the use of natural ingredients.
Turning masstige items into affordable luxuries in a tough economic climate characterized recent new
products by Beisdorf and Procter and Gamble. Age-defying cosmeceuticals with high-tech formulations at
affordable prices were: 1) Beiersdorf's Nivea Expert Lift, which comes in a novel and more mature purple
colour packaging, is formulated with Bioxilift ingredients, shown to increase the connective activity of collagen;
and 2) Procter & Gamble‟s Olay Regenerist promises 'dramatic results without drastic measures'.
28
© Euromonitor International >Cosmetics & Toiletries-ProspectsCategory Review
Skin Care: Merger Between "Inner Beauty" and Science
Some scepticism remains over the efficacy of both cosmeceuticals and nutricosmetics, however supplements
alongside topical products (such as Nivea GoodBye Cellulite) are gaining appeal. Ferrosan's orally taken
Imedeen supplement that is patented with biomarine complex to optimise skin health, has clearly succeeded
in Western Europe. Q10 is both popular as a supplement and contained in skin care products. Natural
ingredients of sea kelp and red ginseng for example are being added to some premium cosmetic brands.
Given tighter consumer purses, it is likely the threshold for success of cosmeceuticals will be raised, and only
products that deliver the promised benefits will succeed. Cosmeceuticals contain biologically active
ingredients such as retinoids and hydroxy acids, or have trans-dermal properties that for example infuse
collagen into the skin, or use nanotechnology. Cosmetic-savvy women that recognise these scientific
properties have driven demand, despite some uncertainty as to their benefits, but they are increasingly
sophisticated and broadly speaking all consumers are more discerning and informed.
USA, 53%
Russia, 2%
Norway, 2%
South Korea, 2%
Japan, 34%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
0 100 200 300 400 500
CA
GR
20
08
-20
13
Size 2008 (US$ million)
Top Five Co-enzyme Q10 Countries
Bubble size shows country share of the global CoQ10 sales in 2008
29
© Euromonitor International >Cosmetics & Toiletries-Prospects
Depilatories, the smallest category in the CT sector,
grew by 5% to US$3.8 billion in 2008 (Western
Europe 39%, North America 33%). Women's razors
and blades is the biggest market, constituting 53%
of sector sales.
The strongest growth impulse was seen in women's
razors & blades, where there was buoyant demand
growth across all regions (especially Middle East
and Africa), followed by hair removers/bleaches,
where growth was firmly propelled by Latin America
and Eastern Europe, which showed very strong
growth across all product segments.
In Latin America, growth was driven by Brazil, which
expanded by 13%. Extensive advertising campaigns
and improved product positioning on shelves
stimulated hair removers sales. Hair removers
/bleaches posted robust value growth of 24% in
2008. Procter & Gamble remains market leader with
48% market share, though this slipped 100 bp, while
Church & Dwight strengthened its #2 position after
gaining 220 bp to 17.5% after investing in hair
removers products. Latin America is expected to
show the strongest regional growth pace in 2009-13,
driven by Brazil, and especially in the hair
removers/bleaches category.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Depilatories by Category and Region 2008
Western Europe
North America
Middle East and Africa
Latin America
Eastern Europe
Australasia
Asia Pacific
Category Review
Depilatories Dominated by Razors and Blades
30
© Euromonitor International >Cosmetics & Toiletries-Prospects
In Russia, sales grew 16% in value terms in 2008
(48% of Eastern Europe sales), with pre-shave
growing fastest (21%). Key drivers are a vastly
(supermarkets, pharmacies), growing advertising
under-developed market, expanding retail
infrastructure and consumer education on the
benefits of using depilatories, and rising
popularity of electrical epilators. Russian growth
rates will likely diminish – and Procter & Gamble's
47% market share feel pressure -- going forward
given a challenging economy, new competitors
entering the market and a growing number of
clinics and salons offering laser treatment. Note
that the bulk of annual sales occur during 3-4
months of the year.
Category Review
Depilatories: Buoyant Growth in Russia
-5
5
15
25
35
45
2004 2005 2006 2007 2008 2009
% g
row
th
Depilatories Performance 2004-2009
World Eastern Europe Russia
-5
5
15
25
35
45
2004 2005 2006 2007 2008
% g
row
th
Russia Depilatories by Category 2004-2008
Depilatories Pre-shave
Razors and blades Hair removers/bleaches
31
© Euromonitor International >Cosmetics & Toiletries-ProspectsCategory Review
Hair Care Hit Hardest After Premium Cosmetics
Hair care (the third largest CT category) grew by 3.6% in 2008 (5% in 2007), marking the lowest growth rate in
the CT sector after premium cosmetics (2%). Sales growth was held back by a 1.6% fall in North America and
just 1% growth in Western Europe (together represent 44% of world hair care market), which was sufficient to
overshadow strong growth in Eastern Europe (8.8%) and Latin America (7.8%).
In North America, all product categories (except perms & relaxants, colourants) saw declines, particularly the
dominant salon hair care segment, that takes 26% of hair care spend. Home colourants should thus receive a
boost from the recession.
The BRIC hair care market continued to perform strongly, with India up 11% to US$1.3 bn in 2008 (drivers:
styling agents, salon hair care, colourants), followed by China (+10%) and Russia (+9%). Brazil grew a
modest 3% to US$6.8 bn (vs 12% in 2007), hurt by a fall in colourants.
-4
-2
0
2
4
6
8
10
12
14
0
10
20
30
40
50
60
70
2007 2008 2009 2010 2011 2012 2013
% y
-o-y
ch
an
ge
US
$ b
illio
n
Leading Hair Care Markets 2007-2013
Western Europe
North America
Latin America
Asia Pacific
AP % change
LA % change
NA % change
WE % change
32
© Euromonitor International >Cosmetics & Toiletries-ProspectsCategory Review
Further Innovation to Sustain Growth Levels
Hair care sales are expected to cool further in 2009 driven by discounting, promotions and weak demand in
the US as consumers trade down from premium-priced salon hair care products to cheaper brands and private
label products.
Better insulated segments include naturally positioned hair care products, while added benefits such as anti-
ageing, doctor brands or UV protection may help maintain average unit prices.
-10
-8
-6
-4
-2
0
2
4
2007 2008 2009 2010 2011 2012 2013
% y
-o-y
ch
an
ge
US Hair Care Market by Value (Real Prices) 2007-2013
Shampoo 2-in-1 products Conditioners Styling agents
Perms and relaxants Colourants Salon hair care US hair care market
33
© Euromonitor International >Cosmetics & Toiletries-Prospects
Oral hygiene is amongst the most commoditised
segments of the CT market. Segmentation,
consumer education and rapid product development
are supporting the global oral care market in the
short term, but price pressure, mass market
imitators and a lack of room for innovation are
making market development ever more exhausting
for producers.
The key to sustained growth will be consumer
education. This could drive consumption of floss and
mouthwashes, for example, but private label and
new entrants will present stiff competition.
In toothpaste, there is still significant room for further
development of natural ingredients and organics.
Category Review
Oral Hygiene: Multinationals Well Placed in Growth Markets
Oral hygiene grew by 4 % to US$34 billion in 2008 (vs 5.5% in 2007), consistently growing slightly slower than the
cosmetics and toiletries market over the past five years. Toothpaste rose by 4% to US$17 billion, now
representing a massive 51% of the oral hygiene market. The most dynamic segment with the fastest growth for a
third consecutive year was mouthwashes/dental rinses, expanding by 7% to US$3.5 billion (vs 10.5% in 2007)
and growing across all regions (low world consumption rates of such products and growing professional
recommendations for increased oral hygiene continues to unlock new growth potential, especially in Latin America
and Europe). In contrast, despite a bounce in 2007, tooth whiteners fell by 3% (competition from whitening
toothpaste) while mouth fresheners fell by 4 %, marking a fifth year of market decline.
Manual toothbrush sales accounted for 69% of segment sales and expanded by 4% whereas power toothbrushes
grew by 5.3%. Overall, the US$9.3 billion toothbrush market grew by 4.6% in 2008, and there was positive growth
across all regions. Western Europe kept its market share leadership with sales up by 3.5% to US$2.6 billion,
followed by Asia Pacific where sales came to US$2.2 billion (+3.9% in 2008).
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2003 2013
Oral Care by Category 2003/2013
Toothbrushes
Tooth whiteners
Dental floss
Mouth fresheners
Denture care
Mouthwashes/dental rinses
Toothpaste
34
© Euromonitor International >Cosmetics & Toiletries-Prospects
Colour cosmetics, worth US$43.5 billion,
slowed their growth to 4.4% in 2008 (vs. 5.8%
in 2007). A growth thrust from Latin America
(10.9%) and Eastern Europe (10.1%) was
offset by weak sales of just 1.1% in North
America (lip products, facial make-up) and
2.7% in Asia (mainly facial make-up).
Emerging markets mostly maintained their
rapid pace of expansion, substantially better
than developed regions. Latin America saw
double-digit growth in all sub-sectors except
nail products (-2.8%). China (+12%) and
India (+29% from low base) saw the highest
growth amongst BRIC countries. Brazil
remained the largest BRIC market with a
value of US$2.2 bn, however saw lower
though respectable growth of 9.4% in 2008.
The long-held 'lipstick effect' theory is not
holding up quite as well as in past recessions,
with both high-end and mass products being
affected. Colour cosmetics will grow below
the overall CT market; Asia Pacific (mainly
China) and West Europe will produce the bulk
of absolute growth and Latin America will
come in a close third value creation.
Category Review
Colour Cosmetics: Strong Growth Dynamics in India and China
-4
-2
0
2
4
6
8
10
12
0
5
10
15
20
25
30
35
40
45
50
2007 2008 2009 2010 2011 2012 2013
% y
-o-y
ch
an
ge
US
$ b
illio
n
Global Colour Cosmetics by Region 2007-2013
Asia Pacific Eastern EuropeLatin America Middle East and AfricaNorth America Western EuropeAP % change EE % changeLA % change MEA % changeNA % change WE % change
35
© Euromonitor International >Cosmetics & Toiletries-ProspectsCategory Review
Colour Cosmetics: Product Innovation Critical
Weaker economic growth, rising cost of living and lower household income will lead consumers to trade down
and make fewer purchases (lipsticks, eye-shadows, blushers), especially in mature western markets, despite
colour cosmetics tending to be small-ticket items.
Producers are responding with smaller packaging and compact versions that effectively raise unit prices, and
with 'better value' deals, but pressure on sales will persist in 2009.
To woo consumers manufacturers are adding extra features, such as anti-ageing benefits (Cover Girl/Olay-
Simply Ageless) and sun care SPF. The trend towards natural products is creating dynamic 'price-resilient'
demand for mineral make-up (ie. L'Oréal's Bare Naturale, Almay's Pure Blends).
Geographic expansion into emerging markets together with novel products and designs are imperative.
Battery-operated mascara is one such example, while colour palettes and textures suited to skin tones in
emerging markets is as yet untapped.
0
1
2
3
4
5
6
7
8
2004 2005 2006 2007 2008
% y
-o-y
gro
wth
Growth Rates of Global Colour Cosmetics Sales 2004-2008
Facial make-up Eye make-up Lip products Nail products
36
© Euromonitor International >Cosmetics & Toiletries-Prospects
Fragrances grew by 5.5% to US$38.9 billion in 2008, or
13% of the global CT market. All regions, except Middle
East Africa saw a deceleration in sales from 6.9%
growth in 2007. The sector's overall performance
mainly reflected a lower 2.4% expansion in Western
Europe (largest fragrance market, 36% of world sales)
and a sharp 4.5% fall in North America. Both regions
saw a slowdown in both premium and mass. In the US,
the decline occurred in all product categories, and the
largest fall was in mass men's fragrances (-8.9%).
Latin America was the growth engine, strong across
categories, especially women's (premium +17.6%,
mass +16.7%). Brazilian sales rose by 14.9% to
US$5.3 billion (60% of Latin America); the strongest
growth was in Venezuela (35.5%) and Argentina
(27.0%).
Sector growth rates will cool as the narrowing margin of
disposable income from the past economic growth
phase will weigh on volume sales, especially in the
western world. Producer response will be on smaller
packaging (Estée Lauder's 'Beautiful'), limited editions,
and a continuation of 'masstige' such as celebrity
fragrances. These require no advertising budgets and
cost less to manufacture. Mid-ranging fragrances will
see more price pressure. Exclusive perfumes (Roja
Dove's Enslaved at £350/100ml, Le Exclusif) will
maintain a limited consumer base.
Fragrances: Latin America Marks the Growth Pace
-10% -5% 0% 5% 10% 15% 20%
Latin America
Middle East and Africa
Eastern Europe
Asia Pacific
Western Europe
Australasia
North America
Premium and Mass Fragrances by Region
Mass fragrances Premium fragrances
Category Review
0
1
2
3
4
5
6
7
8
333435363738394041424344
2007 2008 2009 2010 2011 2012 2013
% y
-o-y
gro
wth
US
$ b
illio
n
World Fragrances Market 2007-2013
World fragrance market Annual growth rate
37
© Euromonitor International >Cosmetics & Toiletries-Prospects
In 2008, the global bath & shower products market grew by
5% as consumers were more willing to trade up for basic
hygiene products. Bar soap is the single most valuable
product, with sales of US$11.8 billion (41% of sector value),
followed by body wash/shower gel (32%.)
Bar soap grew by 7% and was the fastest growing category
given rising disposable income in emerging markets and
despite falling sales in Western Europe (fifth year in a row).
Liquid soap was second fastest and rose by 6% (11% of bath
& shower sales), aided by bubble gel in individual capsules
and gel in sachets.
Asia is the largest market in value terms with a 27% share
(US$7.7 bn). The highest growth was in shower gel and liquid
soap. Latin America and Eastern Europe grew double-digit
and faster than the global average.
Latin American middle and high-income consumers traded up
to more sophisticated products, causing a sharp growth rate
of 14% in 2008. Shower gel is seeing strong growth as the
category is still very small. A trend to shower more often and
with more value-added features (eg. moisturising, anti-
bacterial properties) are the two main factors that buoyed
sales of bar soap.
Bath & shower sales are to grow on average 1.5% over
2009-13. Firmly rising growth rates in China/India stand in
sharp contrast to mature Japan, and Asia could further
expand its share of global bath & shower spend to 28% by
2013.
Category Review
Bath & Shower Products: Emerging Regions Steer Growth
-4
-2
0
2
4
6
8
02468
101214
% C
AG
R
US
$ b
illio
n
Global Bath & Shower Sales by Category
2008 2003-08 CAGR % 2008-13 CAGR %
Sector Growth: Mature vs Dynamic
DYNAMIC
Bar soap
Liquid soap
Body wash/
shower gel
Latin America
Eastern Europe
MATURE
Bath additives
Talcum powder
North America
Western Europe
38
© Euromonitor International >Cosmetics & Toiletries-Prospects
Men's grooming was one of the most dynamic CT sectors
in 2008, growing by 6% to US$26 billion in value terms.
Men's toiletries grew by 7% based on solid growth in all
products, especially very strong growth in skin care
across all regions. Meanwhile, men's shaving products
grew by 5.4% as consumers traded up from disposable
razors to system razors (Gillette Mach 3, 4-5-blade).
Western Europe (WE) rose by 4.4% and is the largest
contributor to sales of men's grooming products being the
most mature regional market at 32% of global value. WE
maintains stronger growth dynamics than the US, and
forecasts suggest WE will grow substantially faster than
the US in 2009-13.
Latin America showed tremendous growth, rising by
11.9% in 2008, aided by changing attitudes towards
appearance and a rise in disposable income.
Sector growth potential is large (skin/hair care, bath &
shower) given: low penetration of men's product lines,
niche products not yet mainstream (male 'make-up':
YSL's Touche Eclat for Men), rising product sophistication
(higher value-added anti-agers & moisturisers) and
growing adoption of daily personal care routines (male
product lines start to mimic those of the more lucrative
women's market). Near-term, cash-strapped male
consumers are likely to trade down from premium to
mass brand/uni-sex, with price a large influence when
choosing personal care products.
The most important product distribution outlet for men's
grooming lines is grocery stores via which 53% of all
male-specific CT globally are sold.
World brand leaders are Procter & Gamble 36.1%
(Gillette Mach 3, Fusion, Series, Sensor), Unilever
10.0% (Axe/Lynx, Rexona), Energizer 5.5% (Schick-
Wilkinson sword) and Beiersdorf 4.8% (Nivea for Men).
P&G is clear leader in men's grooming given its 'Gillette'
superbrand, capturing well over a third of the world
market. Unusually high brand loyalty in men's grooming
(unlike the women's market) strengthens the value of
these market share figures.
Category Review
Men's Grooming Category Still in Its Infancy
0
2
4
6
8
10
0
5
10
15
20
2007 2008 2009 2010 2011 2012 2013
% y
-o-y
ch
an
ge
US
$ b
illio
n
Men's Grooming Products Market 2007-2013
Men's shaving Men's toiletries
Men's shaving % change Men's toiletries % change
39
© Euromonitor International >Cosmetics & Toiletries-Prospects
The global deodorants market grew by 7.6% in
value terms in 2008, despite the economic
slowdown. Much of this industry-beating growth
was due, in large part, to strong growth in sprays
and roll-ons in Latin America (Brazil +18%,
Argentina +28%) and Middle East/Africa (South
Africa, UAE/Saudi Arabia). Latin Americans' liking
of scents makes the region the world's second
largest for deodorants after Western Europe, which
grew by 2.7% aided by manufacturers' value-
adding efforts (enhanced efficacy, 24h/48h
protection, Old Spice Red Zone's anti-bacterial
properties).
Globally, the share of premium vs mass products
remained almost unchanged at 3%.
Sprays sales rose by 9%, driven by consumers in
emerging markets trading up from pumps to sprays
(growth engine Latin America up a massive 35%),
and the gaining popularity of sprays vs pumps and
new products with natural qualities (Natura): aloe,
cucumber, green tea appeal to consumers looking
for more natural, gentle and moisturizing products.
Many consumers with sensitive skin search for
gentle products without added fragrances or
irritants, especially given frequent use of
deodorants. Growth in Western Europe was a more
moderate 4%.
Unilever is undisputed global market leader with 31% share
(brands: Rexona, Axe/Lynx, Dove), and is the #1 player in
Western Europe and Latin America (combined 62% of world
market); the #2 player is Procter & Gamble with 10% market
share.
New product launches ('hair-minimising' formula for Dove:
24h anti-perspirant, skin care benefits, slower rate of under-
arm hair growth) could boost sales for the group, though its
response to price hikes by competitors to offset higher
production costs could challenge market share.
Category Review
Deodorants Fastest Growing in 2008
-5
-4
-3
-2
-1
0
1
2
3
4
0
1
2
3
4
5
6
7
8
Sprays (+9.2%)
Roll-ons (+9.5%)
Sticks (+5.0%)
Pumps (+4.7%)
Creams (+0.0%)
Wipes (+0.1%)
% C
AG
R
US
$ b
illio
n
Global Deodorants by Category
Market Size - US$bn 2008-13 % CAGR
Note: Brackets indicate % y-o-y growth for 2008
40
© Euromonitor International >Cosmetics & Toiletries-ProspectsCategory Review
Sun Care Maintains Growth Dynamics
Sun care was a dynamic segment and rose by 6.6% in 2008, as every year driven by growth in increasingly
commonplace sun protection products (cancer prevention, premature skin-ageing), which now account for as
much as 83% of the sun care category. Both Eastern Europe and North America showed continuity in their
recent years' pace of growth.
Premium products represented 21% of total sun care sales in 2008, slightly above the previous year.
The need to respond to the dangers of unprotected exposure to the sun is the main demand driver, unlike
other cosmetic and toiletries categories, and has partly come at the expense of tanning.
Ingredient innovation has been important in the sun care market and products with 'higher factor' sun
protection are increasingly popular. Growth is anticipated to stay positive in coming years, and is likely to
outgrow the rest of the cosmetics & toiletries market. Concern that nanotech may penetrate sun-damaged skin
has so far been insufficient to meaningfully dent demand.
In some countries, usage of sun protection products has partly been driven by public health campaigns (eg.
Australia's 'Slip-Slop-Slap' campaign).
-5
0
5
10
2007 2008 2009 2010 2011 2012 2013
% y
-o-y
ch
an
ge
Global Sun Care 2007-2013
Sun protection (US$6.9bn) Aftersun (US$581mn) Self-tanning (US$710mn) Total sun care (US$7.8bn)
Note: Brackets indicate size of category in 2008
41
© Euromonitor International >Cosmetics & Toiletries-ProspectsCategory Review
Sun Care: Leaders Differ Across Regions
North American sun protection sales grew by 10.5% as consumers sought protection against UV exposure
and improved skin care (rather than bronzing). A hefty 70.2% slice of the sun protection market is held by
Energizer (Banana Boat), Schering (Coppertone), and Johnson & Johnson (Neutrogena).
In Eastern Europe, sun protection sales rose 12.2%, boosted by demand in Russia and Ukraine (albeit from
small base). Regional brand leaders are Beiersdorf's Nivea Sun (12.7% market share) and L'Oréal's Ambre
Solaire (7.8% share).
Asia represented 20% of total sun protection. The trend for a pale complexion remains intact, especially in
Japan where market growth was driven by products as Kanebo Cosmetics' Allie Whitening Protector or Nivea
Sun Protect Whitening Gel.
China remains a comparatively small market as a minority of consumers use sun care given cost and limited
awareness. Sun protection sales rose by 16% in 2008 on the back of skin-whitening sun protection products
(eg. Dior Snow Sublissime UV) and mass sun protection products (eg. Herborist Sunblock Emulsion).
-2
2
6
10
14
18
22
0
1
2
3
4
5
Asia Pacific Australasia Eastern Europe Latin America Middle East and Africa
North America Western Europe
% C
AG
R
US
$ b
illio
n
Sun Care Market by Region
2008 Sales (US$bn) 2003-08 CAGR % 2008-13 CAGR %
42
© Euromonitor International >Cosmetics & Toiletries-Prospects
The baby care market rose by 6.7% in 2008 to
US$6.7 bn or 2% of global CT spend. Sales
withstood economic pressures comparatively well
as parents were generally unwilling to sacrifice
product quality for their children (despite media
cover on potentially dangerous chemicals in baby
products).
Demand growth also benefited from increased
purchases of baby care products for adult
consumption (female consumers trade down to
cheaper baby body care, such as baby lotion).
Premium products represented 5.6% of sector
sales.
The move towards natural and environmentally
friendly products showed resilience in this category.
Baby toiletries remain the largest product type, with
sales of US$2.2 billion (38% of sector value),
followed by baby skin care with 31%. Baby toiletries
and baby hair care were the two fastest growing
products in 2008, rising by 7.3%/6.8% respectively.
Growing competition, especially from local
companies in emerging markets, will increasingly
place pressure on Johnson & Johnson's dominant
market share. This is the case across all BRIC
markets, and strong growth projected for China
suggest increasingly fierce competition from Tianjin
Yumeijing, Henkel and Pigeon Corp going forward.
Category Review
Baby Care: Small but Robust
Baby toiletries
38%
Baby hair care22%
Baby skin care31%
Baby sun care9%
Baby Care by Category 2008
02468101214
0
400
800
1,200
1,600
% C
AG
R
US
$ m
illio
n
Baby Care Market by Region
2008 Sales (US$mn) 2003-08 CAGR % 2008-13 CAGR %
43
© Euromonitor International >Cosmetics & Toiletries-Prospects
Global Snapshot
Regional Overview
Category Review
Channel Analysis
Competitive Environment
Global Prospects
Appendix
44
© Euromonitor International >Cosmetics & Toiletries-ProspectsChannel Analysis
Winners and Losers by Channel Type
Department stores are losing relevance in a highly-pressured luxury market. The channel's value share of
global CT sales fell by 0.4 percentage points in 2008, as grocery retailers and non-store retailing (internet and
direct selling), made gains. The market share of department stores is down from 12% in 2002. Even emerging
markets favour new retail formats (share in Eastern Europe down from 10% in 2002 to 5% in 2008).
Specialists are benefitting from the booming emerging markets. They are filling the gap left by department
stores in decline and fueling the penetration of niche brands. Estée Lauder launched Clinique and Estée
Lauder as stand-alone outlets in India; department stores offer little to differentiate premium and mass.
Direct sellers are benefiting from the recession. Total direct sales amounted to US$36.4 billion in 2008, around
half of which came from Eastern Europe and Latin America. Door-to-door selling is diminishing in importance
in developed markets (albeit still posting reasonable growth), as the role of internet, interactive technologies,
blogs become more important and personal advice can be replicated through the internet and TV more easily.
Pharmacies/drugstores benefit from product differentiation and "pharma" brands. Drugstores gained share of
total cosmetics and toiletries sales in 2008 in the US, for example, as retailers such as CVS and Walgreens
upgraded their beauty departments and added more exclusive and private label lines.
Share of CT Purchases: Outlets Gaining Over
2003-2008 PeriodShare of CT Purchases: Outlets Losing Over
2003-2008 Period
Supermarkets 28%
Discounters 2%
Beauty Specialists 13%
Internet Retailing 2%
Direct Sellers 11%
Department Stores10%
Mass Merchandisers 3%
Small Grocers 5%
Pharmacies 6%
Home Shopping 1%
45
© Euromonitor International >Cosmetics & Toiletries-ProspectsChannel Analysis
Intensive Retail Expansion in Russia
Price and convenience continued to place supermarkets in the lead of CT retailing, and the format gained
share across most regions, except in Latin America and Australasia, where supermarkets nevertheless
distribute the highest shares of regional CT sales in the world (39% and 44%, respectively). Geographic
expansion continued with intensive focus on Russia where Auchan and Carrefour made commitments to
expand their networks in 2009, and Wal-Mart looked set to take a controlling stake in local hypermarket Lenta.
As the Eastern European economic landscape continues its transformation, the falls in small grocery retailers
and department stores have been dramatic, with consumers being attracted to the ease of supermarkets and
the better product differentiation and service of beauty retailers (perfumeries). The latter are the 3rd most
important channel in this region, where fashion and appearance are taking increasing importance and growth
of the channel has been exceptional. LVMH was seen taking a 50% stake in Ile de Beaute in Russia in 2008,
indicative of the company's commitment to this fast developing market.
Beauty retailers also made great inroads in Western Europe, and Middle East Africa. However, focussing on
small speciality retailers as opposed to department stores has also become a focus in Japan. Shiseido has
released its first major brand for speciality shops in 10 years.
0
10
20
30
40
World Asia Pacific Eastern Europe Latin America Middle East Africa
North America Western Europe
% v
alu
e s
ha
re
Share of Regional Market
Supermarkets & Discounters Department Stores & Mass Merchandisers Drugstores & Pharmacies
Beauty Specialists Non-store Retailers Others
46
© Euromonitor International >Cosmetics & Toiletries-Prospects
0
5
10
15
Internet Homeshopping Direct Selling
% v
alu
e s
ha
re
Non-store Retail 2003/2008
2003 2008
Channel Analysis
Internet Retailing Benefits from 'Cocooning'
Frugal Green
Cocooning Online
Worldwide, there is a trend towards the home – from the networked
office facilitating home working at one end of the scale to a fortress
existence at the other.
Many Americans are "hunkering down" and "nesting" at home that
translates to more time spent online, while CT manufacturers are
creating increasingly sophisticated online interfaces with consumers
that together, support increased CT spend via the internet channel.
Internet retailing has grown sharply in Eastern and Western Europe,
where usage has caught up with Asia Pacific levels that have slowed
in recent years.
In developing markets there is an increased supply of newly
unemployed that are keen to take up direct selling activities to
supplement family income.
Direct sellers' mass and masstige offerings incorporate the latest
scientific developments at affordable prices with personal service
and direct-to-the-home.
Consumer behavioural shifts in cold economic climate support the growth of non-store retail
47
© Euromonitor International >Cosmetics & Toiletries-ProspectsChannel Analysis
Private Label Set to Grow in Emerging Markets
-10
0
10
20
30
40
0
1
2
3
4
5
World Asia Pacific Australasia Eastern Europe
Latin America Middle East Africa
North America
Western Europe
% C
AG
R
% v
alu
e s
ha
re
Regional Comparison of Private Label Penetration and Growth in Sales
Regional share of CT sales % CAGR 2003-08
Though private label sales grew by 7% in 2008, the segment's presence remains marginal with a 2.1% share of global
sales that is flat to 2003. Across regions, the relative success of private label is impacted by cultural factors (mistrust
in the Middle East for example, or strong price/quality link in Japan), disposable income levels (in Eastern Europe
private label fills the gap between high-end and low-priced products), and reach/strength of the supermarket
/hypermarket channel (very strong in Europe that drives global growth). Emerging markets where penetration is low
hold promise, and generally can target basic necessity toiletries.
Retailers are promoting 'captive' brands (not associated with the retailer) that claim a higher margin. Walgreen's
natural BioInfusions line recorded solid gains in the US market. In products where consumers prioritise image and
efficacy over price, such as skin care, private label has mostly failed with some exceptions (UK's Boots No7 Protect
and Perfect Beauty, Aldi's Siana anti-wrinkle cream).
Supermarket retailers are successfully adapting their strategies to a recessionary world and increasingly sophisticated
global consumer becoming more brand-oriented in their approach, segmenting with premium/economy ranges, and
with categories such as kids, healthy eating, organic, fairtrade, free from, ethnic etc. They are tapping into the natural
trend, with all majors branching into natural cosmetics, Auchan being the largest to roll out its certified organic
cosmetic and toiletry line in November 2008. Since mid-June 2008 private label focus has shifted firmly to discount
lines.
48
© Euromonitor International >Cosmetics & Toiletries-Prospects
Global Snapshot
Regional Overview
Category Review
Channel Analysis
Competitive Environment
Global Prospects
Appendix
49
© Euromonitor International >Cosmetics & Toiletries-ProspectsCompetitive Environment
Brazil Aids Solid Sales Gains for Natura and Avon
Manufacturers that are able to capture additional CT spend in large and fast growing markets, such as Brazil and
China, are those making the greatest advances in global market share levels.
L'Oréal performed well thanks to increasing coverage of the emerging markets and being positioned in some of the
fastest growing segments, such as anti-agers, men's skin care and sun care. L'Oréal is well-placed in China's skin
care sector, that will be contributing the most to global CT growth. Its boost in share was also helped by the
acquisition of Yves Saint Laurent.
Strong performance in Brazil's colour cosmetics sector helped Avon increase overall global CT market share. Colour
cosmetics in Brazil is predicted to grow at a faster rate than global cosmetics and global colour cosmetics markets,
even if it is one of the slower growing areas in Brazil. To maintain share gains in the long-term, Avon needs to reverse
market share losses in China's skin care sector, and in other sectors predicted to grow fast such as Brazil fragrances
and Brazil skin care.
Brazilian company Natura has expanded throughout Latin America, with a strong "latin" ethos and products that
highlight the South American identity such as the 2008 launches of fragrances named Amor America Paramela and
Amor America Palo Santo. It has developed strong branding as an environmentally friendly producer, and its
packaging has reflected this successfully. It is the leading CT player in Brazil, thanks to top positions in baby care,
fragrances and skin care, and holds 2nd largest share in other sectors.
Hypermarcas of Brazil, formerly in household care and food packaging, entered the cosmetics and toiletries market
via acquisitions in the hair care and colour cosmetics sectors (Éh Cosméticos' company; the Aquamarine, Juvena and
Bozzano's brands from Revlon; and Niasi, all in 2008).
Market Share Gains 2008
L'Oréal Avon Natura Amway Oriflame Botica Hypermarcas
Global market share 10.4 3.6 1.2 0.9 0.7 0.5 0.2
Basis point change 20 20 20 10 10 10 20
Nominal sales growth 11% 14% 28% 15% 27% 31% 454%
50
© Euromonitor International >Cosmetics & Toiletries-Prospects
Opportunities
WeaknessesStrengths
Threats
Commanding market
share in premium
Long-term benefits in
emerging markets
Further grow the YSL
brand in MEA
West Europe's high
growth categories
Negative CAGRs in
North America
YSL integration needs
to be effective
Premium cosmetics
segment volatile
Weak share in Asia
Pacific (AP)
The acquisition of YSL Beauté
catapulted L'Oréal to #1 in
West Europe's premium colour
cosmetics segment raising
market share to 23.7% from
18.3%, overtaking Estée
Lauder. West (and East)
Europe will drive premium
cosmetics growth. YSL also
boosted L'Oréal's global share
of premium CT spend to 14%,
from 12.8%, on the heels of
rival Estée Lauder's 15.3%.
Beyond the current recession,
the rising middle class of BRIC
countries and frontier markets
means demand for premium
cosmetics will increase in
these emerging regions over
the long term. L'Oréal can
capture this new spend with
the YSL brand using its
existing network.
Around 66% of Yves Saint
Laurent's CT portfolio consists
of colour cosmetics, that is
currently one of the slowest
growing categories within
premium, posting growth of 1%
in 2008. Additionally, current
trends favour mass cosmetics
(+6% 2008/07) over premium
cosmetics
AP will be amongst the leading
markets for premium
cosmetics over 2008-13, and
YSL's AP presence is currently
limited. With a share of 4.8%,
L'Oréal is the fifth leading CT
player in AP and could utilise
its position to leverage the
expansion of YSL, particularly
in colour cosmetics where
L'Oréal ranks third.
Middle East Africa continues to
offer good prospects for the
long term. Premium colour
cosmetics are predicted to
achieve the second highest
growth rate in MEA over 2008-
13. YSL has a good presence
in this region and is the third
leading brand in premium
colour cosmetics.
WE accounts for 65% of YSL's
portfolio. Premium cosmetics'
2nd highest predicted absolute
growth is in WE. YSL can help
L'Oréal capture growth via on-
line sales, by tapping into
men's grooming or with new
products to compete with the
likes of Lancôme's Turbo Lash
mascara.
.
The growth forecast for North
America's CT market is a
negative 1.5% CAGR over the
2008-13 period, while the
region's premium cosmetics
segment is forecast to decline
by an even greater -7.2%
(colour cosmetics -7.8%).
Around 16% of the YSL brand
is based in North America.
L'Oréal faced difficulty with its
acquisition of Chinese CT
brand Mininurse, where it
subsequently lost market
share. YSL's integration should
be aided by both companies
being West European and
culturally similar, and by
L'Oréal's now greater
experience integrating.
Competitive Environment
L'Oréal Boosted by Acquisition of YSL Beauté
51
© Euromonitor International >Cosmetics & Toiletries-Prospects
Procter & Gamble’s performance in 2008 was not encouraging, with the firm losing share in the global
cosmetics and toiletries market. This was partly due to the divestment of Noxzema, but it also lost share in two
leading BRIC markets: China and Brazil.
L'Oréal's boost in market share was facilitated by its acquisition of Yves Saint Laurent, but it has been
focusing on markets with strong growth potential including China skin care. It has performed well in most of
the high growth markets.
Unilever and Colgate have been focusing on mass toiletries such as bath & shower, deodorant and oral
hygiene. These firms have strong brands which enjoy high degree of loyalty, but unless these firms expand in
high growth areas such as skin and hair care they may face stagnation in the long run.
Avon's share in the global cosmetics and toiletries market increased 20 basis points in 2008. This was partly
driven by Avon's growth in colour cosmetics in Brazil, but this market is predicted to grow below that of the
cosmetics and toiletries in Brazil. Avon lost share in some of the high growth markets such as China skin care.
Estée Lauder lost share mainly due to strong competition from masstige brands in the anti-ageing category
and heavy reliance on North America. Beiersdorf increased its market share at the global cosmetics and
toiletries level mainly driven by men's grooming and hair care. Beiersdorf however lost share in China's hair
care, a high growth market, despite the acquisition of C-Bons in 2007.
Shiseido and Kao, both Japanese companies, have managed to retain their shares. While Shiseido is moving
in the right direction by expanding in the skin care category in China, Kao is too Japan focused.
Competitive Environment
Regional Expansion to Increase Growth
52
© Euromonitor International >Cosmetics & Toiletries-ProspectsCompetitive Environment
Market Share Movement by Major Player
Top 10 Players Performance
Company nameY-o-y share
movement 2008
2004
Ranking
2005
Ranking
2006
Ranking
2007
Ranking
2008
Ranking
2008 %
value share
Procter & Gamble Co, The 2 1 1 1 1 12.6
L'Oréal Groupe 1 2 2 2 2 10.4
Unilever Group 3 3 3 3 3 7.1
Colgate-Palmolive Co 5 4 4 4 4 3.9
Avon Products Inc 7 6 6 6 5 3.6
Estée Lauder Cos Inc 6 5 5 5 6 3.4
Beiersdorf AG 8 7 7 7 7 3.3
Johnson & Johnson Inc 10 9 8 8 8 2.8
Shiseido Co Ltd 9 8 9 9 9 2.5
Kao Corp 12 12 10 10 10 2.3
53
© Euromonitor International >Cosmetics & Toiletries-ProspectsCompetitive Environment
Leading Companies in High Growth Markets
Chart/image area
Strengths Weakness Opportunities Threat Recommendation
Procter &
Gamble
Number 1. China
skin and hair care.
Gained share in
China hair care.
Lost share in
China's skin care
and Brazil hair
care.
Should focus on
China skin care
L'Oréal in China
skin care and
direct sellers in
Brazil
P&G should focus on
China skin care
through new product
launches.
L'Oréal
Gained market
share in China skin
care and Brazil hair
care
Lost market share
in Brazil skin care
Hair care in China
and skin care in Brazil
Shiseido in China's
skin care.
L'Oréal has been on
right track focusing on
China's skin care
market.
UnileverMarket penetration
in emerging markets
Unilever operates
in limited
categories.
Skin care in China
and Brazil
L'Oréal in Brazil
hair care and
Procter & Gamble
in China hair care
Unilever is focused on
limited categories and
should expand to fast
growing skin care
Beiersdorf
Increased market
share in skin care
China, but remains a
small player
Lost market share
in hair care China
Skin care China and
Hair Care China and
Brazil
Bawang in hair
care China
Beiersdorf is rightly
increasing its market
share in China, but
focus on product
development in hair
care China.
ShiseidoIncreasing market
share in China skin
and hair care
Limited regional
presence
Skin care and hair
care Brazil, although
it has Asian
orientation
L'Oréal in skin care
China
Although, Brazil offers
opportunity, Shiseido
is better off focusing
on China skin care
Coty
Amongst the leading
company in global
mass fragrances
category
Limited presence
in Brazil mass
fragrance,
Mass fragrances
Brazil
Natura, Botica and
Avon in Brazil
mass fragrances
Mass fragrance Brazil
offers good growth
opportunity for Coty.
54
© Euromonitor International >Cosmetics & Toiletries-ProspectsCompetitive Environment
Direct Sellers' Success Not Uniform
The performance of direct sellers during 2008 was helped by the global economic downturn in countries where direct
sellers already hold strong footholds, such as Russia and Brazil, however product strategies played the key role in the
success of individual manufacturers. Performance across regions varied sharply. Direct sellers enjoyed healthy share
gains in faster growing CT markets, ie. Latin America and Eastern Europe; they continued to lose strength in Asia
Pacific and Australasia, and held their ground in remaining world regions.
In Eastern Europe, Oriflame was again the clear winner, raising its market share from 5.7% in 2007, to 6.3% in 2008.
While Amway also made progress gaining 0.2 percent points, Avon continued a four-year long declining trend in
market share. Oriflame has had a string of successful product launches (see Regional Overview - Russia) that have
enabled the company to consistently make large market share gains over the past decade.
Brazil - where consumers spend three times as much on personal care as consumers do elsewhere - is a key market
for direct sellers, particularly in the fragrances category (18% of CT spend, versus 11% globally). Avon and Natura -
the top two global mass fragrance manufacturers - are amongst the overall top three in the Brazilian CT market. More
importantly, they achieved share gains during 2008, together with local beauty retailer Botica, while the vast majority
of leading international manufacturers lost market share.
0
5
10
15
20
25
30
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
% v
alu
e s
ha
re
Market Share of Direct Sellers by Region 1997-2008
World Asia Pacific Australasia Eastern Europe
Latin America Middle East and Africa North America Western Europe
55
© Euromonitor International >Cosmetics & Toiletries-Prospects
Global Snapshot
Regional Overview
Category Review
Channel Analysis
Competitive Environment
Global Prospects
Appendix
56
© Euromonitor International >Cosmetics & Toiletries-ProspectsGlobal Prospects
What Does 2009 and Beyond Hold for the Industry?
Euromonitor International expects US and world GDP to decline in 2009 – for the first time in 60 years. Despite some
commentary in the financial press featuring "green shoots" of recovery in June 2009, growth is not expected to pick up
until 2010 and is likely to remain below trend levels for several years.
Leading BRIC economies that are expected to recover more quickly than developed countries, will lead regional CT
markets out of the downturn. While CT spend will fall an estimated -1.6% in Japan in 2009, the remaining Asia Pacific
region's CT market is projected to grow 4.2% in 2009, thanks to China (22% of AP's CT, +6% in 2009) and India (7% of
AP's CT, +8% in 2009). Similarly, Brazil that accounts for 55% of Latin American CT spend will grow by 4.5%.
Manufacturer strategies to succeed in the economic slowdown should incorporate expansion in the most dynamic/large
sectors of major emerging economies such China's skin care and hair care markets, and Brazil's fragrances, skin care and
hair care markets.
Because the largest sectors (hair care, fragrances, overall skin care excluding anti-agers) will slow markedly or decline
(hair care), adding benefits, tapping into popular trends (organics, cosmeceuticals) and investing in advertising and
marketing campaigns will also be necessary, particularly in mature markets.
Department stores should continue seeing footfall declines, and perfumeries/specialist beauty retailers and supermarkets
continue to expand, at a slower pace, still helping to drive CT sector growth. Private label, direct sellers and online retail is
poised to perform well in 2009, as consumers look for cheaper alternatives.
-2
0
2
4
6
World Asia Pacific Australasia Eastern Europe
Latin America Middle East/Africa
North America Western Europe
20
08
-13
CA
GR
%
Cosmetics and Toiletries Forecast Regional Performance
CT Premium CT
57
© Euromonitor International >Cosmetics & Toiletries-ProspectsGlobal Prospects
Skin Care, Fragrances and Hair Care to Lead Industry Growth
Skin care will be the most prospective sector in the next five years. The sector will grow above the cosmetics and
toiletries market and contribute the most to cosmetics and toiletries absolute growth. Growth in this category will
mostly be driven by China, while anti-agers will contribute 45% of skin care's absolute growth.
Fragrances is the next most lucrative sector; it will grow above the market rate, forming the second leading category in
terms of absolute growth, 61% of which will come from mass fragrances in Brazil.
Hair care, although projected to grow below the cosmetics and toiletries market, is the third leading category in terms
of absolute growth that will total US$4 bn in the next five years. This therefore falls within growth opportunity, and
shampoo will account for nearly 60% of the growth in this category, while the key markets will be China, Brazil and
India.
Firms well placed in markets projected to grow have a head start to benefit from future growth prospects. For
example, L'Oréal is a top ranking firm in both skin and hair care. However, how well the companies actually perform
will depend on how effectively they can diversify regionally.
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2009 2010 2011 2012 2013
% y
-o-y
gro
wth
, va
lue
Cosmetics and Toiletries Forecast Category Performance 2009-2013
Total CT Hair care Colour cosmetics Men's grooming products Fragrances Skin care
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© Euromonitor International >Cosmetics & Toiletries-ProspectsGlobal Prospects
Premium Cosmetics Set to Be Worst Hit by 2013
Forecast Category Performance
Categories CAGR 2008-13 Absolute growth (US$ bn)
Sun care 2.8% 857
Baby care 2.8% 1,145
Skin care 2.4% 9,466
Men's grooming products 2.2% 3,041
Fragrances 2.0% 4,103
Deodorants 1.9% 1,645
COSMETICS AND TOILETRIES 1.8% 30,292
Oral hygiene 1.5% 2,625
Colour cosmetics 1.4% 3,151
Bath and shower products 1.3% 1,887
Depilatories 1.3% 247
Hair care 1.2% 4,056
Premium cosmetics 0.7% 2,707
Note: Categories expected to consistently grow above the sector average every single year are marked in green, those below in red.
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© Euromonitor International >Cosmetics & Toiletries-Prospects
Though BRIC countries will not be shielded from
economic slowdown, they will drive CT market growth
over the next five years, accounting for a combined
US$19 billion out of US$30 billion in absolute value
sales growth to be generated globally during the
forecast period. The leading markets (US and Japan
currently) will contract.
By 2013 Brazil's CT market will be worth US$36 bn,
and China's US$25 bn, as continued economic growth
filters to the population. Brazil's annual spend will
average US$178 per person (3x the global average),
while China's will be around US$17 or 10% of Brazil's,
despite a much larger population. China's economy is
highly protected, and roughly a third is controlled by
the government. Foreign manufacturers still have to
partner with a Chinese company to trade locally.
India's CT market will remain small and still focused on
basic personal care categories. However, cumulative
growth of 45% will mean absolute growth will be the
third highest globally.
Over the next five years Russia's CT market will see
slower growth in real terms. The market will likely
exhibit maturity and relative saturation in major beauty
categories such as hair care, bath and shower, oral
hygiene, and skin care.
Global Prospects
Brazil, India and China: Antidote to Global Recession
0
5
10
15
20
25
30
35
40
China India Russia Brazil
US
$ b
illio
n
CT Performance in the BRICs
2003 2008 2013
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© Euromonitor International >Cosmetics & Toiletries-ProspectsGlobal Prospects
Latin America Set to Overtake North America by 2013
Countries with 2008-13 CAGR that is positive,
equal or higher than the 2003-08 CAGRCountries whose 2008-13 CAGR is negative or
worsens markedly vs. the 2003-08 CAGR
Peru 8.7% vs. 6.3% $655 mn
Brazil 4.7% vs. 8.4% $7,457 mn
Chile 3% vs. 3.2% $262 mn
Colombia 2.1% vs. 2.1% $287 mn
USA -0.6% vs. -1.1% -$1,636 mn
Argentina 2.2% vs. 10.9% $331 mn
Venezuela 3.1% vs. 9.0% $508 mn
Uruguay 1.9 vs. 4.2% $27 mn
Immaturity in emerging markets supports value growth. Because per capita spend in mature CT markets is
high and has a comparatively greater premium component, there is possibly greater scope for curtailing
purchases when the economic climate worsens. Furthermore, the eye of the current global economic storm is
in North America's US market that takes 88% of the region's CT spend. These factors will underpin an overall
contraction of US$1 billion in the North American market over the next five years, despite only a modest
slowdown in Canada's 2008-13 CAGR's to 1.7%, from 2.7% during the review period.
Their proximity to the US will see Canada and Mexico generating lower average annual growth. Mexico's
2008-13 CAGR is projected to decline from 2.9% in the 2003-08 period to a low 1.6% for 2008-13. The
relatively large size of the overall CT markets of Canada and Mexico, will enable the two countries to continue
to generate important absolute growth in value sales (Canada US$606 mn, Mexico US$668 mn).
In all, Latin America, is poised to generate one third of the global CT market's absolute growth in the next five
years, overtaking North America by 2011. South American economies, which suffered a financial crisis in
2001-2002, are many now sound, and will see slower growth due to lower exports and reduced credit access,
but should remain resilient (excepting Argentina and Venezuela). Brazil is counted on to be the region's
engine, accounting for 55% of CT sales, but generating 71% of absolute sales growth in the forecast period.
Absolute Growth Absolute Growth
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© Euromonitor International >Cosmetics & Toiletries-Prospects
The BRIC countries were named as the most rapidly developing countries with the greatest economic potential. With
these countries continuing to develop fast, it is useful to look at the next tier of emerging economies. Those countries
following the BRIC path will typically have high rates of population growth, and rising disposable incomes, creating a
growing pool of potential consumers.
The frontier markets are far smaller economies than the BRICs and, with smaller populations hold less potential for
beauty firms looking for opportunities beyond the maturing developed world. However, economic growth is
accelerating in these markets, and amid optimism that more governments will embrace capitalism they have become
lures for foreign investors. The frontier markets, being less exposed to swings in the global economy, can also be a
way for cosmetics firms to reduce risk. Most importantly, they offer the multinationals new options for global expansion
beyond the BRIC economies, should any slow down, such as Russia.
Global Prospects
Frontier Markets to Watch Out for Next
0 1 2 3 4 5 6 7 8
Poland
Ukraine
Venezuela
Saudi Arabia
Netherlands
Canada
Peru
Mexico
Thailand
Spain
UK
Russia
India
Brazil
China
US
$ b
illio
n
Absolute Growth 2008-2013
0 1 2 3 4 5 6 7 8 9
Venezuela
Malaysia
Ukraine
Kazakhstan
Indonesia
Saudi Arabia
Brazil
Thailand
Belarus
Morocco
Vietnam
United Arab Emirates
China
India
Peru
%
CAGR 2008-2013
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© Euromonitor International >Cosmetics & Toiletries-ProspectsGlobal Prospects
Masstige Beauty Will Continue to Accelerate
Key Issues Future Impact to 2013
Resilience
to
recession
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
account for over half of the global absolute growth, an additional US$ 2.6 billion in the next five years), and
hair care in China, India and Brazil, contributing with a combined extra revenue of US$ 2.9 billion by 2013,
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).
The rise of
'masstige‘’/
focus on
value
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
P&G and Beiersdorf. While many are opting for lower priced brands, high quality and novelty continue to
be a key factor. The most successful brands will be those that offer something unique, but also put extra
emphasis on value, while preserving the 'functional' benefits and a luxury status.
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.
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© Euromonitor International >Cosmetics & Toiletries-ProspectsGlobal Prospects
Demand for Both Natural and Scientific Beauty Set to Thrive
Key Issues Future Impact to 2013
The rise of
cosmeceuticals
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.
At -home treatments are surging as consumers are tightening their belts. The expected rise in DIY
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.
Ingestible
beauty
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
foods with beauty enhancing properties must be convincing and marketing should clearly
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
products
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
baby care, deodorants and mineral make up have shown resilience in demand for natural product
lines and look set to remain strong despite the recession. As more retailers tap into this trend and
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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© Euromonitor International >Cosmetics & Toiletries-Prospects
Global Snapshot
Regional Overview
Category Review
Channel Analysis
Competitive Environment
Global Prospects
Appendix
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© Euromonitor International >Cosmetics & Toiletries-Prospects
All values expressed in this report are in US$ terms, using a fixed 2008 exchange rate.
All forecast data are expressed in constant terms; inflationary effects are discounted. Conversely, all historical
data are expressed in current terms; inflationary effects are taken into account.
Cosmetics and Toiletries (CT) coverage:
Cosmetics
Colour cosmetics
Fragrances
Skin care
Toiletries
Baby care
Bath and shower products
Deodorants
Depilatories
Hair care
Men's grooming products
Oral hygiene
Sun care
BRIC (Brazil, Russia, India and China)
Middle East and Africa (MEA)
Appendix
Definitions
66
© Euromonitor International >Cosmetics & Toiletries-Prospects
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