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State of the Industry

By: Carrie Lennard, Euromonitor International
Posted: June 3, 2010, from the June 2010 issue of GCI Magazine.

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Global skin care growth slowed to 3% in 2009, down from 5% in 2008. The segment was hit hard by stagnant value growth of 0% in the key region of North America, down from 3% during the previous year. Antiaging products showed comparatively strong growth (7%) despite the threat of trade down, as the global population ages and remains equally preoccupied with resisting the outward signs of growing older.

Sun Care Impact by Reduction of Travel

Sun care saw much lower growth than the previous year, dropping from 10% growth in 2007–2008 to -3% 2008–2009. The category was largely affected by reduced international holiday travel and further penetration of private label and mass market offerings in the category’s key North American market, which saw growth in the region plummet to just 1%. Sun care is comprised mostly of sun protection products, which accounted for approximately 85% of global sun care sales in 2009. All segments took a big hit as consumers in key markets cut back on summer holidays. Australasia was an exception, posting increased growth in sun care due to health fears related to sun exposure.

Discretionary Categories Suffered

Premium cosmetics were hit hard by consumer trade down to less expensive brands in most regions, with the exception of the Middle East/Africa (which saw 12% value growth 2008–2009), leading to an overall decline of -0.5%. Fragrance’s position as a discretionary product meant that global sales growth was poor in mature regions such as North America (-5%) and Western Europe (0%), but boosted by strong growth in Latin America as disposable incomes rose in the region, producing overall growth globally of 4% 2008–2009.

Hair Care; Color Cosmetics Saw Reduced Growth

Value growth in hair colorants jumped from 1% 2007–2008 to 5% 2008–2009 as consumers opted to color their own hair instead of salon treatments. This failed to have a major impact on overall hair care growth, which remained unchanged 2007–2008 at 3%. While Latin America saw growth of 18%, the comparatively small size of its color cosmetics market meant its growth has limited impact on global growth. Western Europe was the only mature region where the lipstick theory actually seemed to hold true, posting growth of 3%. Negative growth in the key region of North America pulled down global growth to 3% in 2008–2009.

Losses in Key Markets Slow Global Growth

While some markets showed resistance to the downturn posting 2008–2009 growth rates similar to those seen 2007–2008, the bad news was that it was primarily the countries with the biggest beauty value markets that suffered most. Japan has become the problem child for the beauty industry, becoming the slowest of the major markets to recover from recession. The country saw negative growth in percentage terms 2008–2009, and is set to decline by $2 billion 2009–2014. The U.S. also experienced negative growth 2008–2009, and is set for stagnant absolute growth 2009–2014 (just $7 million for the period).

Emerging Regions Compensate—To an Extent