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According to Staraya Krepost, a Russian cosmetics market research group, the beauty market in Russia reached a value of $9.2 billion in 2008 (see Figure 1) with the highest market share in makeup/perfumes and hair care, both at 18% (see Figure 2). The growing segments of skin care and professional cosmetics followed with 14%, and men’s care came in third with 13%.
From the beginning of the 1990s, the market for upscale, luxury products experienced the highest growth rate in the world, and has already become one of the five largest in Europe. Thanks to Russian women’s desire for beauty after the penny-pinching years of Communism, the Russian beauty market was growing by 20% annually by the early 2000s.
However, the growth slowed down to 10–15% by the mid-2000s, and the growth rate was only 7.9%, according to Staraya Krepost, by 2007–2008. During the Perestroika years, beauty retail was developing even more rapidly than the economy as a whole—expanding by 30–40% annually, second only to the grocery market (60–80%). And direct sales of cosmetics, especially in the makeup sector, grew an average of 8% annually during the last seven-year period. According to Romir Monitoring, Avon (47%) and Oriflame (32%) led catalog sales in 2007.
Market growth has also created new shopping habits, and major changes have impacted beauty distribution channels. During 1997–1999, nearly 40% of beauty products were sold in kiosks, open-air markets and department stores. Direct sales accounted for approximately 5% of sales, and specialized stores accounted for much of the rest—with almost no sales in pharmacies and supermarkets. The current distribution channel structure has taken 10 years to form, and now presents a quite different picture.