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Markets Drive Color Cosmetics Growth

By: Oru Mohiuddin, Euromonitor International
Posted: February 27, 2009, from the March 2009 issue of GCI Magazine.

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Manufacturers have not stopped at either applications or eye makeup; they are also investigating new colors and textures, to the extent that they have even been inspired by the iridescence of a beetle’s carapace or a frog’s skin. Experts believe audacious makeup looks are becoming a major trend, and makeup today is viewed as a means of self-expression rather than just enhancing skin tone. To this end, vinyl- and plasticlike finishes in makeup are expected to be among the major trends, and Lancôme is in the process of introducing a lacquer makeup that will create the much desired vinyllike finish. Lacquer, in general, can be described as a wet varnish from which a solvent dries to leave a very hard, durable, smooth and water damage-resistant color. In introducing lacquer makeup, Lancôme intends to create these very features in its products. To take the process further, materials that better interact with light continue to be a major area of research for cosmetics manufacturers.

Natural Cosmetics Create Price-resilient Demand

Parallel to the self-expression through bold looks trend, manufacturers are also looking into natural cosmetics—a popular area driven by greater health awareness and environmental concern. Apart from investing in new applications, marketers have also been tapping into natural color cosmetics. For example, L’Oréal’s Bare Naturale, a mineral makeup, has been well received by consumers. Revlon has also announced a natural line for Almay, Almay Pure Blends. Estée Lauder has gone further, purchasing a minority stake in Forest Essentials, a privately held Indian company that manufactures, markets and sells beauty products based on ayurvedic formulations.

New Product Development Not Enough; Value for Money Demanded

It is all well and good offering new products, but that, in itself, is not enough in the current market environment. Consumers are becoming very price-conscious, particularly to minimize the pressure on their purses. To this end, they are demanding products that offer good value for the cost. For example, masstige brands have been increasingly challenging premium brands. To make color cosmetics more acceptable to consumers, manufacturers will have to convince them that their products are a good value. New products such as battery-operated mascaras may achieve this because they are unique and designed to give a smoother finish, increasing the perceived value. Multipurpose cosmetics—foundations with antiaging benefits, for example—are also becoming increasingly popular.

Emerging Markets Offer Hope

In addition to new product development, emerging markets are coming to the rescue to counter slow growth in the West. Consumers in these markets now have more disposable income, and are increasingly taking to Western lifestyles. Latin America and Asia-Pacific are the two primary regions leading growth in the color cosmetics category. Noting this, Estée Lauder is focusing on India, and is planning to open as many as 20 outlets, covering all the major cities in the country. Its purchase of Forest Essentials is not only strategic positioning in naturals, but a move toward establishing share in a growing market, one that is well suited to the current market environment. L’Oréal posted its highest CAGR (21%) during 2001–2007 in Eastern Europe, followed by a 17% CAGR in Asia-Pacific during the same period, according to Euromonitor International. And all the major color cosmetics marketers are taking the BRIC markets more seriously.

Manufacturers Yet to Address Emerging Market Needs

Although emerging economies offer hope in the face of bleaker prospects in Western markets, color cosmetics marketers have yet to add color palettes and textures designed for the skin tones in emerging markets. Most facial makeup is designed for Caucasian skin tones, and thus is not a good match for consumers in developing countries with a different skin base. This is also true for other, more specific color cosmetic products, such as lipsticks and eye shadow—the suitability of which, again, depends on specific skin tone as well as climate and culture.