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The global cosmetics and toiletries industry saw another year of strong growth in 2007 to reach a value of $290.9 billion. According to Euromonitor International’s research, the market grew by 6%, which represents only a slight slowdown on the 2006 figure ($274.7 billion). The worsening economic climate in many developed countries, particularly the U.S., and signs of a slowdown in penetration in emerging markets proved a drag on growth. These trends were partially offset by strong growth in emerging markets, continuing premiumization and product innovation across all sectors.
Sun care, while down from the double-digit growth achieved in recent years, remained the most dynamic sector, as consumer awareness of the dangers of solar radiation grew. There was no change to skin care’s status as the largest contributor to absolute growth, either. Thanks to innovation, premiumization and consumer fears about aging, skin care accounted for more than a quarter of the $16.2 billion growth in global beauty sales in 2007.
The global rankings of major cosmetics and toiletries manufacturers have not changed since 2006. Procter & Gamble, L’Oréal and Unilever occupy the top three places globally, accounting for 30% of the market. Unilever demonstrated the strongest growth, 7.7% in 2007, while Procter & Gamble and L’Oréal increased their sales by roughly 5.5% each. Of the top 10 global players Beiersdorf showed the healthiest growth, benefiting from its strong position in Eastern Europe and acquisition of C-Bons in China.
Favorable economic conditions in emerging markets benefited smaller local players. Companies such as Natura and O’Boticario in Brazil, Kalina and Faberlic in Russia, Jiangsu Longliqi and La Fang International in China, and Godrej and Dabur in India, showed very strong growth in their domestic markets, often outpacing multinationals.
Emerging markets remain the power engine of the global beauty market. Accounting for only a third of the global market of cosmetics and toiletries, they added more than $10 billion or two-thirds of absolute growth in 2007—with BRIC countries responsible for over 70% of this gain. Euromonitor does not expect the pace of growth to slow in the next few years, and, according to Euromonitor’s forecast, Brazil and China will gain almost $10 billion each by 2012, topping the list of the markets with the highest absolute growth. While India and Russia are expected to show more modest results, they still remain among the top five on the list. The only developed market on the list is Japan, mostly due to its sheer size rather than high growth rate.
Strong growth in Brazil was driven by steady economic expansion in the country, and the cosmetics and toiletries market benefited from this, expanding 22% in 2007 and reaching $22.3 billion in retail prices. Substantial contributions to these results came from successful governmental efforts to combat poverty through social programs as well as the favorable effect of U.S. dollar devaluation as local manufacturers took advantage of a cheaper greenback to invest in new technologies and modern machinery.