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State of the Industry: Will Megabrands Rule?

By: Briony Davies
Posted: August 15, 2006

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Euromonitor International forecasts average annual growth of 3.7% to reach global sales of more than $300 billion by 2010. Skin care and sun care are expected to lead growth, with emerging markets Russia, China and Brazil increasing dramatically in terms of importance (watch for India to join this group). As these areas grow, it is likely that local leaders such as Natura, Kalina and Faberlic will become increasingly important on a global scale, as seen with South Korean player Missha in 2005.

In terms of trends, the megabrand looks set to stay for the near future as companies such as Shiseido include this in their core strategy. Since the finalization of L’Oréal’s acquisition of The Body Shop, Colgate-Palmolive purchased Tom’s of Maine, a natural personal care company, indicating that larger manufacturers are targeting niche players to give them a foothold in segments with growth potential. Whatever the future holds, innovation will be a key to success, and manufacturers and retailer alike will have to adapt to the changing circumstances rapidly to exploit growth potential.

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