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Bulgarian Beauty: Resilience and Aspiration
By: Gregory Grishchenko
Posted: January 5, 2010, from the January 2010 issue of GCI Magazine.
- The growth rate for Bulgaria’s beauty market is projected to be a modest 2–3% 2008–2013.
- Bulgarians’ spending power keeps growing, and the country has better prospects of recovery due to its benchmark personal income, low production costs and an educated labor pool.
- Multinational brands have grown significantly, reducing local brands share.
- Bulgaria has a strong beauty manufacturing base due, in part, to an abundance of locally processed aromatic and essential oils.
According to Euromonitor International, the beauty market in Bulgaria (pop. 7.6 million) reached $379.5 million in 2008 (13% growth over 2007), and the highest sales growth rates (2007–2008) occurred in premium cosmetics (18.7%), fragrance (16.5%), skin care (16.4%) and sun care products (16.3%)—helped by consumers’ shift from economy to mid-priced brands.
Bulgaria’s purchasing power, as a new member of the European Union (EU), is still relatively low compared with other EU countries. However, Bulgarians’ spending power keeps growing, helping 2008 to become a profitable year for beauty marketers, and growth was across segments. The market also benefited from altered shopping habits. Retailing and distribution channels in Bulgaria have experienced a significant change during the past five years, from the selling of merchandise through open-air markets, small kiosks or privatized former state stores to specialized health /beauty retailers (38%), direct sales (21%) and modern supermarkets and hypermarkets (11%)—many of which are run by major international chains.
According to Euromonitor International, multinational brands grew significantly, reducing local brands share. Bulgarian subsidiaries of Avon, L’Oréal, Beiersdorf and P&G were market leaders in almost all categories in 2008. Only two Bulgarian companies, Aroma Cosmetics A.D. and Ficosota Syntez OOD, are among the top 10 in retail sales. Bulgarian beauty companies such as Aroma A.D., Alen Mak A.D. and Rubella Beauty A.D. are currently at a disadvantage competing against multinationals. While investing heavily in quality and technology, they have not allocated comparable funds for promotion and advertising due to limited financial power. As a consequence, consumer attention is diverted to imported brands supported by strong marketing campaigns.
“Today’s reality in cosmetics is that people are simply changing spending habits, buying quality (though less expensive than multinational) domestic brands or buying more costly multinational brands less frequently,” says Iva Ikonomova, marketing director, Aroma.
A Look at Local Manufacturing; Marketers