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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 4 of 6However, the Indian market is not one to overlook. The country has a large and growing population of young people living in urban environments who are increasingly brand conscious, and it is they who are the key to the future of the sector. In BRIC, the retail channels are modernizing. In 2008, for example, Estée Lauder announced the openings of four stand-alone outlets in the country.
While India’s growth is small compared to the other three countries, it is predicted to continue at the same rate up to 2012. Total value sales should rise to $6 billion by 2012, making the country a safer, if less exciting, bet for investors.
China’s Premium Potential
It is well documented that China’s economy is booming, and this is reflected in the strong growth of the cosmetics and toiletries sector. Its total market value rose to $14.2 billion in 2007. In terms of total value spend, China is closing the gap on Asia-Pacific leader Japan. But in terms of per capita it lags far behind, standing at $10 in 2007, with Japan at $238. However, per capita expenditure is expected to rise by 104% during 2007–2012, a figure unrivalled anywhere else in the world.
Disposable incomes are rising in China, along with increasing sophistication among consumers, who are placing more emphasis on appearance and embracing Western culture more than ever before. These factors make the country a fertile ground for imported premium cosmetics. To the Chinese consumer, a premium brand is a status symbol, offering a quality guarantee that is well worth the indulgence. Currently standing at a retail value of $1.8 billion, premium products are also expected to achieve growth of 104% by 2012.
Major multinationals have been quick to catch on to the country’s potential, and are now leading the way. Shiseido had 104 outlets in the country in 2004; in 2007, it had 2,500. Estée Lauder announced early in 2008 that it would introduce two or three more brands to the Chinese market by 2010—its skin care products currently have a 70% market share and its high-end products have a 25% share, according to Euromonitor International.