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Finding the Hot Spot

By: Briony Davies
Posted: August 28, 2008, from the February 2007 issue of GCI Magazine.

With global sales of $5.6 billion in 2005, sun care remains one of the smaller categories of cosmetics and toiletries. However, booming sales, averaging 7% growth each year since 2000, indicate that huge potential for development exists—especially in emerging markets where penetration is currently low. Euromonitor International explores key trends over the past year and recommends strategies for maximizing opportunities and avoiding possible barriers to success.

Latin America, Asia-Pacific Set for Strong Growth

Although Western Europe, North America and Australasia currently show strong growth in spite of being developed markets, price discounting and increasing penetration will subdue progress looking forward to 2010. Manufacturers with plans for global ascendancy need to look outside of these mature markets to realize the sector’s full potential. Forecast increases in absolute value terms for Western Europe and North America to 2010 is smaller in actual terms than that predicted for Latin America and, especially, Asia Pacific—where figures are buoyed by China and South Korea manufacturers keen to ignite growth.

The Latin American sun care sector enjoyed a second successive year of double-digit growth in 2005, due to improved economic conditions in Argentina and Colombia, and increased awareness of the dangers of exposure to the sun in the region’s dominant market—Brazil, accounted for two-thirds of regional value sales in 2005. As a result, the sector recovered all of the ground it lost in the region following Argentina’s economic collapse in 2001.

Sun protection sales were boosted by a growing educational network of government bodies, health charities, sun care manufacturers and the media. Multifunctional products also drove sales in Brazil in 2005, with a major trend toward incorporating skin care benefits such as hydration, antiaging and exfoliation into sun care products. Relatively low volume per capita consumption in the region can be boosted through increased sun safety awareness and more affordable products. Basic product lines and small unit sizes are central to putting sun care within reach of this generally low-income region. Self-tan innovation may also provide a long-term route to growth, although such products remain in their infancy in the region and will have to compete with an abundance of low-cost artificial tanning salons.

Also in 2005, Asia-Pacific confirmed its status as a key region to watch in sun care, recording value growth of more than 15% to account for almost 18% of global sales (double the region’s share in 2001).