Natural and organic cosmetic sales continue to increase at a healthy rate in Europe, according to Organic Monitor, with revenues projected to increase by 13% to €1.7 billion this year. Organic Monitor’s 2009 edition of The European Natural Cosmetics Market report finds that natural and organic cosmetic sales have been affected by the financial crisis. However, healthy growth is continuing because of increasing distribution and high consumer demand for "chemically clean" cosmetics, and revenues are forecast to approach €2 billion in 2010.
The U.K. market has been the most adversely affected by the economic recession. The market growth rate has dropped from 16% in 2008 to 8% in 2009 because sales have been hit in organic food shops and health food retailers. However, natural and organic cosmetic sales continue to expand at double-digit rates in other European countries.
The French and German markets are the fastest growing in Europe. High growth rates are occurring as product penetration increases in mainstream retailers. Both countries have observed a large number of retailer private label launches in recent years. Certified natural and organic cosmetics have been introduced under private labels of supermarkets, drugstores, perfumeries, organic food shops and discounters in these countries. Private labels are so successful in Germany that they comprise over 10% of total sales. Alverde has become the leading retailer private label of natural cosmetics in the world, having more than 100 certified products across categories.
Natural and organic products now comprise 3% of total cosmetic sales in Europe. The market share is above 4% in Germany, Austria and Switzerland. High growth in the German market is projected to raise the market share of natural and organic cosmetics to 10% in the coming years.
Apart from private labels, a major retailing trend is the growing number of concept stores for natural and organic beauty products. Dedicated stores are being opened by leading natural cosmetic brands, large retail groups as well as private investors. Most developments are in Paris where highly established brands such as Dr. Hauschka as well as large retailers like Monoprix are opening concept stores.
The report, produced by continuously tracking the European natural and organic cosmetics market since 2003, finds the competitive landscape has changed significantly. High growth rates have been responsible for mergers, acquisitions and an influx of new entrants. Rising competition is leading natural and organic cosmetic brands to expand distribution outside traditional sales channels. This strategy has enabled the Swiss company Weleda to consolidate its position as market leader.
With competition for retail shelf-space stepping up, Organic Monitor expects market winners to be companies that can successfully differentiate their products from competitors. New entrants and existing participants are advised to consider strategies based on product differentiation and market segmentation; companies should target specific consumer groups or sales channels.
The latest figures on the European natural cosmetics market, including market growth projections and business opportunities are highlighted in a dedicated workshop in the upcoming Sustainable Cosmetics Summit. Taking place in Frankfurt (November 16–17), the summit will also have a high-level conference with presentations from leading natural and organic cosmetic companies, certification agencies and ingredient suppliers.