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This information is an excerpt from a white paper published by The Smart Cube titled “The Premium Beauty Care Industry: Emerging Markets, December 2011.” To request a copy of the full report, contact The Smart Cube.
For global beauty companies, emerging markets present an attractive target as consumers yearn for luxury products and premium brands. Developing global markets have been the buzz in the industry for some time—especially the usual suspects, i.e. the BRIC countries—yet few have explored the dynamics that define these markets. Through our exclusive analysis, The Smart Cube has identified the top performers beyond the BRIC quartet, enabling [beauty brands] to pinpoint the best opportunities for growth.
Premium beauty brands, like Lancôme and Estée Lauder, have already entered developing markets in Asia such as the Philippines, India and Vietnam. A few countries, however, offer potential yet remain untapped. Others present marginal opportunities at best, such as those with a small consumer base, like as Vanatu, Tonga and Fiji while still others, such as Nepal, Myanmar and Laos, face considerable hurdles, including political upheaval, social issues and very modest consumer spending.
Two markets present significant upside for mass market and premium beauty: Sri Lanka and Bangladesh. In the former, the economy grew by 8.2% in 2010 and is expected to grow by 9.5% in 2011. Further, the Dow Jones classified Sri Lanka as an emerging economy in 2010. The GDP per capita has doubled since 2005, while poverty and unemployment have dropped by 7.6% and 2.3%, respectively. Internal strife ended with the defeat of Liberation Tigers of Tamil Elam (LTTE) in 2009, giving way to a more conducive environment for social and economic development. With a cosmetic market valued at only $150 million in 2010, Sri Lanka shows plenty room for growth. But Sri Lanka has not gone unnoticed, as major brands are picking up share.
Goldman Sachs identified Bangladesh as one of the Next Eleven countries poised to become some of the largest economies in the 21st century. The report selected Bangladesh based on macroeconomic stability, political maturity, openness of trade and investment policies, and the quality of education. Bangladesh has a GDP (PPP) of $257 billion (according to the International Monetary Fund) and a population of about 142 million. What is otherwise a favorable demographic characteristic has become a hindrance as the economy struggles to absorb the working population. That issue notwithstanding, World Bank figures on Bangladesh report an average annual growth rate of 5% since 1990. In recent years, Bangladesh witnessed an expansion of the middle class, rapid growth in the consumer industry, and an increase in foreign direct investment.