Natural Beauty Shows Promise in the Middle East

Healthy growth in the Middle East market for natural cosmetics is continuing in spite of political instability and social unrest, states a new report, The Middle Eastern Market for Natural Cosmetics, from Organic Monitor that predicts revenues will expand by about 20% in 2011. Natural cosmetic sales are increasing at a fast rate in key country markets, although turbulence in the region has curbed investment and consumer spending power.

The UAE natural cosmetics market is the largest in the region, comprising more than half of total revenues. In other countries, demand is mainly concentrated in major cities, such as Riyadh, Kuwait City and Manama. The study finds affluent consumers and tourists generate most demand for natural and organic cosmetics in the region.

The major drivers of market growth are growing consumer demand for "chemically clean" cosmetics and expanding distribution. Product penetration is increasing in pharmacies, beauty retailers and department stores.

High growth rates can further be attributed to a market growing from a small base. Compared to Europe and North America where the market share is above 3%, natural products comprise just 0.1% of beauty sales in the Middle East. Although the region has a sizeable consumer market, adoption rates are low because of lack of consumer awareness and high product prices. There is also an absence of indigenous brands, with European and American brands mainly capitalizing on high market growth rates.

Korres and Neal’s Yard Remedies are the market leaders due, in part, to their distribution strategies. Both brands are investing in concept stores, enabling them to educate consumers on products and differentiate from conventional beauty products. Direct marketing also gives these brands the advantage of fostering consumer relationships and getting vital feedback. Organic Monitor predicts Neal’s Yard Remedies to become market leader if it continues to expand its retail network in the region.

The market analysis finds companies are facing difficulties in marketing natural cosmetics to consumers. Unlike Europe and North America, the Middle East has a small market for organic products, preventing consumer demand to percolate from foods to beauty products.

Organic Monitor draws many comparisons between the Middle Eastern and Asian market for natural cosmetics; both regions are fragmented in terms of retail structure for beauty products. In the naturals sector, low adoption rates are due to consumer confusion and inadequate distribution.

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