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Premium Positioning; Innovative Retail Hallmarks of Middle East Beauty Market

By: Gayatri Bhasin, Euromonitor International
Posted: November 5, 2010, from the November 2010 issue of GCI Magazine.

Beauty in the Middle East, particularly in the Persian Gulf, is a massive market for international brand owners—with the United Arab Emirates (UAE), Saudi Arabia and Iran being the biggest in terms of overall and per capita sales, along with Israel. However, although the UAE has seen growth rates for beauty products slow considerably over the last two years due to the impact of the economic recession, Iran has seen burgeoning growth in most categories, according to market research company Euromonitor International.

The UAE remains a strong player in beauty, attracting the world’s most significant beauty brands and retailers. Despite the financial constraints experienced by many in the UAE over the last two years, women have continued to purchase beauty products, albeit at a slower rate, perceiving them as an affordable luxury and a harmless indulgence.

The beauty market in the UAE and the Middle East, in general, is characterized by international brands, premiumization and an expanding retail landscape. According to Euromonitor, the most significant categories in value terms in the UAE are color cosmetics, hair care, fragrances and skin care. Women in the UAE spent an average of $73 on color cosmetics in 2009, compared with $69 in the U.K. and $53 in France, indicating how important a market it is for these products.

International brands dominate the competitive landscape in the Middle East, with the big multinationals such as Procter & Gamble, Unilever, L’Oréal and Beiersdorf leading the way. Fragrances is the only major category in beauty where local brands and companies play a significant role. The three major domestic fragrance manufacturers Ajmal, Rasasi and Designer Shaik accounted for a 21% share of value sales in 2009, according to Euromonitor. These companies benefit from strong demand for traditional perfumes from the affluent Emirati population, demand which is not as sensitive to the current economic climate. This also explains why fragrances saw the smallest decline in growth in 2009 when compared with other categories, falling to 9% from an average of 12% between 2004 and 2009. While domestic manufacturers are making their mark on the fragrances category in the UAE, large multinational companies tend to dominate the beauty landscape and are likely to continue to consolidate their leading positions over the next few years.