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Beyond BRIC: Opportunities for Premium Beauty and Personal Care

By: The Smart Cube
Posted: February 8, 2012, from the March 2012 issue of GCI Magazine.

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Of the other three, Belarus is unlikely to become a lucrative beauty market in the near future as an authoritarian regime and a state-controlled economy provides significant roadblocks, though it is one of the most industrialized nations in the world with a highly skilled and educated population. However, both Kazakhstan and Azerbaijan have displayed robust economic growth, have high GDP per capita, and rank favorably in terms of human development and low unemployment. Kazakhstan’s estimated luxury market size was a substantial $800 million in 2010, with makeup and perfumery accounting for 15-20%. Many multinational beauty companies have already entered the markets to leverage the expected growth.

Mongolia is expected to grow at an accelerated pace by at least 20% annually until 2020 from a current GDP of $7 billion. Mongolia’s open market structure is conducive to the entry of foreign players, and lately investors have shown great interest. High-end brands such as Louis Vuitton, Burberry, Zegna and Hugo Boss have already opened shops but only a few manufacturers, such as Oriflame and Shiseido, have a significant presence.

The Needle in Central and Eastern Europe’s Haystack

In the haystack that is Central and Eastern Europe, Turkey is the proverbial needle. Due to sustained economic growth and a favorable demographic makeup, Turkey’s consumer spending is expected to increase significantly in the next decade. According to industry reports, in 2010, Turkey’s beauty care market grew by more than 10% to $2.8 billion and although the sales of premium beauty products have recently declined, rising disposable income is likely to cause consumers to trade up into the premium beauty segment over time. Thus, Turkey may present a strategic opportunity in addition to the relatively well-known leader in the region: Poland. Poland is the largest beauty care market in the region ($3.9 billion) with a per capita beauty product spending of approximately $125.

Most other markets in the region offer moderate potential due to their strong economic growth over the past decade and high disposable income. Outside of Poland and Turkey, the region’s consumer base remains relatively untapped yet recent trends indicate consumers are moving toward cheaper mass market products. Many markets also struggle with declining population due to falling birth rates, emigration and a high old age dependency ratio resulting in a shrinking consumer base.

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