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Annual State of the Industry: BRIC: It’s Mighty, Mighty

By: Alexander Kirillov
Posted: June 9, 2008, from the June 2008 issue of GCI Magazine.

page 3 of 5

The global fragrances market reached $33 billion in 2007, a 6% growth from 2006, driven by a plethora of celebrity scent launches. This was especially evident in Western Europe, where sales were up 3.6%, and booming demand from emerging markets Latin America, Eastern Europe and Asia-Pacific (excluding Japan) contributed double-digit growth in 2007.

Celebrity fragrances continued to create buzz in 2007, with more than 30 scents launched in the U.K. alone—including fragrances from Kate Moss, Katie Price, Christina Aguilera and Gwen Stefani. Men also joined in. After Sean John’s Unforgivable achieved top 10 status in the men’s premium segment and Intimately Beckham for Him demonstrated strong performance in both the U.K. and U.S., fragrance manufacturers rushed to create new celebrity fragrances for men.

Even direct sellers saw opportunity with celebrity fragrances. Avon teamed up with designer Christian Lacroix to create Christian Lacroix Rouge, and Avon also announced that actor Patrick Dempsey will collaborate with the company on a signature men’s fragrance—to be launched in November in the U.S. and globally in 2009.

However, the fragrances market growth was hampered by worsening economic conditions in developed countries. The recent credit crunch pushed consumer credit rates and mortgage payments higher, squeezing consumers and forcing them to cut down their expenses on nonessential items such as fragrances, leading to market contraction in North America.

Smoky Eyes, Nude Lips Drive Color Market

Global color cosmetics sales reached $36.8 billion in 2007, according to Euromonitor International’s research, representing a near 5% rise on the 2006 figure. While a seemingly healthy increase, cosmetics and toiletries are typically strong performers within the consumer packaged goods market and, compared to other beauty categories, color cosmetics lag behind the average. In fact, Euromonitor International’s figures suggest only the commoditized bath and shower category and depilatories, which faces stiff salon competition in many markets, recorded lower growth in 2007.

Eye makeup ($10.1 billion) was the engine of dynamism in the global color cosmetics market from 2002–2006, and enjoyed a further year of category-leading growth at 6% in 2007. Dramatic, smoky eyes and nude lips and the mod look dominated makeup trends across Western markets. This helped propel the sector with continued innovation in mascara. Facial makeup, at $13.2 billion, is the largest color cosmetics sector and showed the weakest performance in 2007. Not even the growing demand for blusher and bronzers could help offset the slowdown in the maturing foundation market.

Strong Growth in Direct Sales Channel