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BRIC: Promises and Caveats
By: Irina Barbalova, Euromonitor International
Posted: November 5, 2008, from the November 2008 issue of GCI Magazine.
page 3 of 6Although growth is predicted to slow in Russia by 2012, with sectors such as hair and skin care reaching maturity, the shift in focus to lifting value rather than volume should keep the sector buoyant. There is also potential in as yet largely untapped product areas—such as natural products, which are increasingly in vogue. Local manufacturers such as Kosmetika XXI are currently leading the way in naturals, but foreign companies with their bigger budgets are expected to rapidly make their mark.
Unlike the other BRIC countries, Russia has a declining population. High mortality and low birth rates mean the population is falling by around 700,000 per year, which will eventually have an impact on the sector.
Strong; Steady Sales in India
India has, so far, been the least impressive of the BRIC countries in terms of fulfilling its early promise. From a $2.9 billion market in 2002, it grew to $4.6 billion in 2007. While this 46% total growth is still above the global average, it is by far the smallest of the four BRIC countries, according to Euromonitor International.
The extent of poverty in the country means sales come from a very small consumer base, and per capita spend is just $4.10. While rising incomes are slowly opening up the market to lower-income groups and driving volume sales, the country’s population remains very polarized and inequality continues to rise. High levels of rural poverty and unemployment remain barriers to sector growth.
Bath products, hair care and oral hygiene top India’s product table, as a sizeable proportion of Indian consumers can only afford to purchase essential hygiene products. In a bid to draw in low-end consumers, Procter & Gamble, in 2007, began to offer sachets of its Pantene Pro-V for Rs1.50 (US$0.03) and the trend is likely to extend into other product areas.