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The full force of the global recession was not felt in 2008, but global growth did slow to 5%—down from 6% in 2007. In many countries, media coverage of the economic slowdown only gathered speed during the second half of the year, meaning that consumer spending was largely in line with that of previous years. As the bear market mentality set in among consumers, many beauty product manufacturers posted fourth-quarter results that were far lower than those of the same period the previous year. In 2009, the effects will be far more evident, as growth of only 1% in constant terms is forecast by Euromonitor International.
Deodorants and baby care were the best performers globally in 2008, with growth rates of 8% and 7%, respectively. These two sectors, along with bath and shower, were also the only sectors to outperform their percentage rise of the previous year. Premium cosmetics and toiletries bore the brunt of the impact of decreasing consumer confidence and disposable income and rising unemployment rates. The category’s growth rate more than halved from 5% in 2007 to 2% in 2008 as consumers sacrificed luxury brands for mass alternatives.
Few countries have escaped the impact of the global recession, but the 2008 effect was far more pronounced in mature markets such as the U.S. and Japan, both of which posted negative growth of -1% for personal care in 2008. This was partially offset by strong development in numerous frontier regions such as Venezuela (30% growth) and Argentina (29%), but—because the U.S. and Japan are the two single biggest markets for the industry and together account for a quarter of the total global $333 billion—their sluggish results contributed to the global drop in sales. The U.S. and other Western markets were hit by a shift away from premium cosmetics coupled with a rise in private label product sales, as well as by the effects of discounting in premium channels such as Macy’s—a measure undertaken to try to entice consumers back.
The birth rate in 2008 remained almost identical to 2007, yet value sales of baby care products rose significantly. The sector posted growth of 7% 2007–2008, compared to 5% 2006–2007, according to Euromonitor International. This growth can be attributed to the fact that babies are often not the end consumers of these products, particularly baby skin care, with many products bought by adults for their own use. As the global recession set in, female consumers, in particular, traded down from costly eye makeup removers to lower-priced baby oil, often touted by beauty publications as an effective and less expensive alternative, and from standard body lotions to baby lotion. This was evident from a drop in general purpose body care and a rise in baby skin care.