Most Popular in:

Cosmetics

Email This Item! Print This Item!

Euromonitor International Report: A Shift in Focus

By: Carrie Lennard, Euromonitor International
Posted: April 6, 2010, from the April 2010 issue of GCI Magazine.

page 2 of 4

Color cosmetics sales were particularly hard hit in key mature markets such as the U.S. and the U.K., where consumers shunned department stores and the lure of premium beauty counters. In the U.S., for example, sluggish value growth of just over 0.5% in 2008 in color cosmetics had strong implications for global growth of the category because the U.S. alone accounts for a 20% share of global color cosmetic value sales.

Although private label has accounted for a significant share of toiletry sales for many years, commanding a 12% share of bath and shower products in Western Europe in 2008, for example, way above the share of any single brand, color cosmetics has traditionally been one of the few areas in beauty that has traditionally been dominated by brands. This is changing, however, and now the industry is suddenly seeing an influx of budget products. In the U.K. alone, there have been several high-profile launches of low-cost makeup ranges. Primark is one of the few retailers that has not only stayed afloat during the recession but also increased its company sales. The retailer has dabbled in the beauty market for some time, with shower gel and body lotion sales, but in summer 2009, it dipped its toes into the color cosmetics market. Its new range includes mascara, eye liners, lip gloss and eye shadows, many priced as low as £1.

Despite these prices being low enough to make consumers question the quality, it seems, for now, that price alone could be enough to persuade consumers to try the products. Whether or not they keep coming back is a different matter, but many more women are willing to take a chance on less expensive products for the time being.

Stagnant Growth in Mature Markets Offset by Emerging Regions

Stagnant sales of color cosmetics in mature regions were offset, to an extent, by double-digit growth in emerging markets such as Eastern Europe and Latin America. With 10% and 11% value growth, respectively, in 2008, these regions should be high on the agenda of color cosmetics players in the coming year.

China’s Outstanding Growth in Premium Color Cosmetics

China proved to be a bright spot for color cosmetics. The country’s rapidly rising disposable income levels, love affair with prestige brands and mistrust of local products meant that premium-priced makeup outperformed mass products in terms of value growth in 2008 (15% for the former and 13% for the latter). As a result, French beauty retailer Sephora has seen a meteoric rise in value sales and outlet numbers in just three years. In 2005, the retailer began its entry into China’s major cities, initially with just three stores. It now has 40, and plans to reach 100 by the end of 2010. As lipstick sales fell rather flat in many mature markets, lip products are booming in China, and accounted for 52%, or the majority of color cosmetics value sales in 2008. As color cosmetics are relatively new products for many Chinese women, especially those in rural areas and lower-tier cities, lipstick, which is the most basic product in overall color cosmetics, tends to be the first color cosmetic product for entry-stage female consumers living in these locations.

Russia’s Double-digit Performance