Segments Sponsored by
Although color cosmetics continues to lag slightly behind overall cosmetics and toiletries growth of 5.4% on 2005 numbers, the color category’s growth of 5% in 2006 represents the highest year-on-year increase since 2001. From a traditionally fashion driven, highly innovative sector, sales in 2006 were propelled by demand from the emerging markets of Latin America and Eastern Europe, where color cosmetics are already perceived as a staple part of the beauty regime. The category’s future prospects are also looking strong, with sales set to exceed $40 billion in 2011, maintaining color cosmetics’ position as the third largest category behind skin care and hair care respectively. Manufacturers are employing innovative tactics to stretch consumer spending in the mature markets, and going forward, there are substantial opportunities to maximize sales in developing regions.
This upturn in fortunes in color cosmetics is largely due to Latin America and Eastern Europe, where recent economic prosperity is allowing consumers to spend more on nonessentials. With real GDP growth of 6.5% in 2006, Eastern Europe was the world’s fastest growing region in economic terms. Furthermore, disposable incomes in both Eastern Europe and Latin America expanded by 18% in 2006, fuelling gains across a range of categories. Euromonitor International’s research shows color cosmetics rose by 10% in Latin America and 13% in Eastern Europe during 2001–2006, enlarging the sector by a combined $1.4 billion.
Double-digit growth has been the norm in Eastern Europe in recent years, although the market did show some signs of slowing down in 2006 (from a high of more than 17% in 2003). Growth was underpinned by the increasing spending power of the female population—which had a positive impact on sales of premium and masstige products, particularly for foreign brands, which are perceived to be of higher quality and therefore hold a certain cachet. Sales were also positively influenced by the success of direct selling companies such as Avon and Mary Kay, by offering consumers good quality products at competitive prices.
Lip products represented the largest and most dynamic subsector, with sales increasing by 12% in 2006 to exceed $1 billion. A lipstick is a must-have product for most Eastern European women. In Russia, for example, research carried out by MAGRAM Market Research suggests that 90% of women in the 16–55 age group wear lipstick every day.
Growth forecasts to 2011 for Eastern Europe also remain positive. On a national level, Ukraine appears to offer the best development prospects, with sales expected to increase 9% per year between 2006 and 2011. Indeed, the market’s future potential has been recognized by Avon, which has invested $4.8 million in the construction of a new office and warehouse complex in the country and named it as a priority market for the future.