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Niche Outpaces Mass in Australia

Posted: July 21, 2005

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Manufacturers are quick to jump to their aid with offerings whose marketing focuses on product difference and added value compared to the competition. The combination of innovative products and the efficiency of fast launches together with a careful choice of the best distribution channels that will cover the target market globally, has led the firming/anti-aging product category to create a new demand and generate sales without switching consumers from other skin care products. Consumers are increasingly demanding multi-purpose preparations that can nourish their skin and significantly reduce aging at the same time.

Product Trend Underpinned by Value-added Benefits
As in other developed markets, incorporating value-added benefits in products is a major strategy adopted by manufacturers to boost sales in the Australian market. This is particularly so in subsectors suffering from saturation in sales, such as shampoo, toothpaste, toothbrushes and men’s razors and blades. Brand lines are fast being extended to include products that offered multi-purpose functions. Extra benefits can command higher prices, thus helping manufacturers to enhance value gains.

Manufacturers of mass branded skin care and color cosmetics are adding benefits such as age-defying skin firming ingredients, sunscreen and anti-pollution protection—qualities once found only in premium products. This has led to an increase in the range of high-end mass brands in the market, creating stiffer competition for premium products. To maintain their share of the market, manufacturers of premium brands are getting their own back, expanding their consumer base by targeting younger buyers.

Unilever Australia—the Market Leader
The Australian cosmetics and toiletries market remained highly competitive and fragmented. It was characterised by the dominating presence of a large number of subsidiaries of multinational corporations. Unilever Australia and Procter & Gamble Australia led the market, each holding an 11.4% share of total sales, with third placed L’Oréal Australia closing the gap slightly last year, and the first domestic player, Creative Brands Pty Ltd., ranking only nineteenth.

Future Growth Expected to Slow
Growth in value sales of cosmetics and toiletries is expected to record slightly more lackluster performance in future, with value sales expected to reach A$4.0 billion (US$3.0 billion) by 2009. While smaller sectors such as depilatories will remain major growth areas, their small base will not be sufficient to offset slower sales in the more saturated larger categories. Growth in hair care in particular is expected to contract due to stiffer competition and saturation in shampoo sales.