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The global beauty industry generated some $21 billion of incremental retail value in 2011, of which the emerging markets fueled a whopping 81%, according to the latest data from Euromonitor International. But as the world’s economy teeters on the edge of a new downturn, triggered by debt crisis in the Eurozone, can the industry continue to count on consumers in emerging markets to offset lackluster demand in Europe and North America?
Currently, there is an overriding sense of unease surrounding the global consumer goods market as international investors and multinational companies alike get jittery about the prospect of a global recession—in particular, its effect on fast-growing emerging markets.
The primary concern is that an economic slowdown in 2012 could prove more damaging than the 2008 financial crisis, first because emerging Asia, and China in particular, looks more exposed than four years ago, and second because high commodity prices are applying upward pressure on inflation almost everywhere in the world. As a result, even if the emerging markets continue to post upbeat GDP growth, their consumers are unlikely to feel as insulated as in 2008.
Since 2008, emerging markets have been essential ballast to the weakness of developed markets. Total beauty and personal care spending is still higher in developed markets, at around $226 billion in 2011 compared to $177 billion, but growth in the emerging markets was 10 times stronger over the 2008–2011 period, according to Euromonitor International.