COSMETICS AND TOILETRIES IN TURKEY 2004 - … report analyses the market for Cosmetics and...

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COSMETICS AND TOILETRIES IN TURKEY 2004

1. INTRODUCTION

This report analyses the market for Cosmetics and Toiletries in Turkey. For the purposes of the study, the market has been divided into 11 sectors:

Baby care

Bath and shower products

Deodorants

Hair care

Colour cosmetics

Men's grooming products

Oral hygiene

Fragrance

Skin care

Depilatories

Sun care

2. EXECUTIVE SUMMARY

Cosmetics and toiletries recorded high growth rates in 1999 and 2000 due to several factors, particularly the growing interest in Western lifestyles and increasing advertising expenditure from manufacturers. However, after the economic crisis at the beginning of 2001, cosmetics and toiletries recorded a significant decrease in sales due to the decreasing levels of disposable income amongst all income groups in Turkey.

Hair care the dominant force in C&T

Hair care accounted for 32% of total value sales in 2003 and remained the largest contributor to cosmetics and toiletries over the review period. Shampoo was responsible for the bulk of sales; however, styling agents saw the most dynamic performance with strong volume growth and was the only type of hair care not to witness a decline in value sales.

Sun care most dynamic thanks to increasing number of tourists

Sun care reached sales of US$23,1 million in 2003 demonstrating positive growth both in value and volume terms over 2002. The growth was attributed to the increasing consciousness of consumers in Turkey about the importance of sun protection as well as to the increasing number of tourists visiting Turkey. The low base of sales also aided the positive growth rates.

Supermarkets dominate

Supermarkets were the dominant retail outlets over the review period due to their high penetration throughout Turkey, acceptance of credit cards, wide range of products, and most importantly the low prices and promotions they offered. The share of supermarkets increased significantly over the review period in line with the increasing number of these outlets.

Positive growth expected during forecast period

Euromonitor forecasts that cosmetics and toiletries will reach sales of almost US$3.3 billion by 2008, representing constant value growth of 11.2% over 2003. In line with the recovery of the economy and the growing young population, cosmetics and toiletries will demonstrate positive growth over the forecast period in contrast to the decreases during the review period. Driving factors will include increased disposable incomes, the higher number of working women, and the increasing interest of young people in Western lifestyles which will encourage them to use more cosmetics and toiletry products. Furthermore, fierce competition amongst

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both local and multinational companies will lead to stronger investment in advertising, promotion and new product development.

3. COSMETICS AND TOILETRIES

2003 headlines

Positive volume growth achieved

Consumer expenditure dropped due to low income levels

Sun care witnesses most dynamic growth in 2003

Fierce competition between local and multinational players

Positive volume growth achieved despite decrease in value sales

Sales of cosmetics and toiletries reached a value of almost US$2,936 billion in 2003 representing a current value decrease of nearly 3.8% over 2002 and of 11.1% over the review period as a whole.

Cosmetics and toiletries recorded strong growth rates in 1999 and 2000 due to the increasing interest of young people in these products, improved retailing activity, increased disposable incomes, new value added product developments, increased product ranges and improved advertisements on television mainly from the multinational companies.

After the 3rd October 2002 elections, the Justice and Development Party (AKP) won the vast majority of seats in Parliament. As a result, after 12 years, a powerful one-party government was formed and the perceived political risks were born. After the election, the economy began to recover; however, the possibility of a war with Iraq slowed down the recovery. Turkey did not enter the war and the war ended in a shorter period of time than it was expected. The Turkish economy began to grow in 2002 and the growth continues in 2003. If this trend can be sustained in 2004, the negative effects of the 2001 crisis will be greatly reduced.

Promotional campaigns were the basic marketing strategy of all companies in order to preserve their sales levels at least in volume terms. Companies either gave gifts, such as trial sizes of their other products, or offered "buy one get one free" promotions in order to compete with their rivals. These promotions were very effective on the purchasing decisions of price sensitive consumers as the brand loyalty of consumers decreased significantly after the economic crisis. Even the consumers of premium products began to switch to mass products due to their decreasing disposable incomes.

Sun care witnessed strongest growth in 2003

Sun care products reached a value of US$23,1 million in 2003 translating into a value growth rate of 1.6% over the previous year. The increasing awareness of consumers in Turkey regarding sun protection became an important factor to drive sales. Television programmes warning on the dangerous effects of prolonged exposure to the sun played an important role in the increases of sales.

The increasing number of tourists visiting Turkey was also important for the increasing sales value in 2003. Sun protection products held the bulk of the sales in 2003 whilst sales of aftersun and self- tanning products remained minimal.

Hair care dominated C&T sales

Hair care products reached sales of US$ 931,8 million in 2003, representing nearly 31% of total cosmetics and toiletries value sales. The consumption of shampoos, in particular, has increased significantly in the last 15 years. People in rural areas have also begun to use shampoo instead of bar soap for washing their hair.

New types of products, such as styling agents and conditioners, are mainly consumed by the young population in urban areas. In the beginning of the review period, women were the regular consumers of conditioners and styling agents; nevertheless, the consumption of these products among young men increased significantly over the review period. Manufacturers tend to target the15 to 25 year old consumer group for styling agents but even children aged below 10 have begun to use these products. Conditioners are mainly consumed by women. Women using colourants mostly also consume conditioners in order to preserve the colour and health of their hair as there is a common belief that colourants are harmful to hair. Thus, most of the conditioners are prepared for consumers with coloured hair. However, an increasing number of men also began to use conditioners over the review period.

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Fierce competition between both locals and multinationals

According to Hurriyet (trade press), there are nearly 2900 companies in the cosmetics and toiletries industry in Turkey. Many leading multinational firms such as L'Oréal Groupe, Procter & Gamble, Unilever Group, and Henkel KGaA are present competing with the leading local companies like Kopas Kozmetik Pazarlama San AS, Hunca Kozmetik Sanayii AS and Evyap Sabun Yag Gliserin Sanayii ve Ticaret AS.

Advertising expenditure increased over the review period

Cosmetics and toiletries manufacturers increased their advertising expenditure over the review period. In 1998, cosmetics and toiletries accounted for 11% of the total advertising spend in Turkey; this figure increased to an estimated 14.4% in 2003. Advertising expenditure decreased when the sales were high in 2000. Thus, the companies had to increase their advertising expenditure in order to boost their sales after the crisis.

Table 1 Cosmetics & Toiletries % of Total Advertising Expenditure 1998-2003

% share 1998 1999 2000 2001 2002 2003

Cosmetics and toiletries in total advertisement expenditure 11.0 10.4 8.8 12 14.4 14.4

Source: Euromonitor

Products in large sizes became popular

A general trend for cosmetics and toiletries consumers was to buy larger packs in order to decrease the unit price of the goods consumed. For example, family members began to use family size shampoos instead of buying gender specific shampoos. Almost all brands began to launch bulk size shampoos in line with these changes in consumer demand.

Table 2 Retail Sales of Cosmetics and Toiletries by Sector: Value 1998-2003

US$ million 1998 1999 2000 2001 2002 2003

Baby care 51.3 55,8 60,6 53,7 50,4 47,1 Bath and shower products 767,1 804,9 841,8 767,7 750,9 743,1 Deodorants 163,5 187,2 198,6 172,8 155,4 151,8 Hair care 1110,6 1247,7 1397,4 1114.8 974.7 931.8 Colour cosmetics 257.4 288.6 325.2 270,3 231,3 209,4 Men's grooming products 300.0 393,0 440,7 405,0 362.7 332.7 Oral hygiene 262,5 285,9 312.9 268.8 262.5 258,6 Fragrances 11,7 126 145,2 94,8 86,7 84,0 Skin care 240,3 270,3 298,8 219.0 193,8 186.6 Depilatories 26.6 28.6 30.5 28.2 28.1 28.4 Sun care 28,5 30,9 33,6 24,3 22,8 23,1 Premium cosmetics 210,7 - - - 148,5 138,6 Cosmetics and toiletries 3300,9 3638,4 3988,2 3334,5 3052,5 2935,8

Source: Trade associations (Turkiye Tuvalet Mustahzarlari Ureticileri Dernegi), trade press (Beauty Business News), company research, store checks, trade interviews, Euromonitor estimates

Note: Sum of sectors does not equal total cosmetics and toiletries because of double counting (for example men's skin care is included in men's grooming products and skin care)

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3.1 Competitive Environment

Procter & Gamble Tuketim Mallari Sanayi Ltd Skt

Procter & Gamble Tuketim Mallari Sanayi Ltd AS was the biggest player cosmetics and toiletries in value terms in Turkey in 2003. The company entered Turkey in 1987 through a joint venture with Mintax AS, a strong local company at the time. Another joint venture was made with Eczacibasi in 1990 to manufacture disposable paper products. Procter & Gamble bought all of the shares of Mintax and Eczacibasi in 1998 and took the name Procter & Gamble Tuketim Mallari Sanayi Ltd AS.

During the review period, the company was very strong in hair care and in oral hygiene. The most popular cosmetics and toiletries brands of the company are Pantene Pro-V, Blendax, Rejoice, Ipana, Clairol Herbal Essences, Ellen Betrix and Max Factor. The company's brand portfolio also consists of Ariel, Alo, Mintax, Ace, Ipanol, Vicks, Orkid, Prima, Pampers and Pringles.

Procter & Gamble Tuketim Mallari Sanayi Ltd AS manages its operations from the General Offices in Icerenkoy Kosifler Centre and manufactures operations through wholly owned plants in Sefaköy and Gebze, and a distribution centre in Sekerpinar.

Evyap Sabun Yag Gliserin Sanayii ve Ticaret AS

Evyap Sabun Yag Gliserin Sanayii ve Ticaret AS is a very successful local company with a history of 75 years. Evyap started its journey with the production of soap in Erzurum-Turkey but today manufactures a wide range of products including soap, shower gels, shampoos, shaving preparations, detergents and toothpastes, which are sold in more than 100 countries.

Today, Evyap is one of the biggest soap and cosmetics producers in the world and is among the top 100 Industrial Companies of Turkey. Exports make up 75% of Turkey's total soap output. In 2002, Evyap started to produce in Egypt. In addition a new facility in Ukraine commenced with soap production in 2003.

In soap production, today, Evyap utilises the continuous process which allows production of the highest quality soap in the most economical manner.

Steam and electrical energy are produced on site with a co-generation system significantly reducing manufacturing costs. Water used in production is purified and reused within the factory.

Dalan Kimya Endustrisi AS

Dalan Kimya Endustrisi AS started to produce traditional pure olive oil soap in the 1940's. The capacity in those days was very small compared whereas today the company has a product portfolio of more than 100 items. The company exports its products to 123 countries in five continents. Besides the toilet soaps, bath soaps, granulated soaps, and soap powder, it is also producer and exporter of technical grade glycerine. Dalan follows the latest technology and uses top technology in the production of its soap.

The Dalan Kimya factory is situated in Izmir, which is the third largest city in Turkey. The company is expanding day by day to reach its best and to present a wider range of products to customers. Dalan, Alara, Cindy, Diana, Adalya, Nancy and Roxy are the brands sold in Turkey and in other countries.

Hunca Kozmetik Sanayii AS

Hunca Kozmetik Sanayii AS was established in 1957 as a family company producing cosmetics and toiletries. The company first produced hair care products but withdraw its products after its entrance in fragrances. The company entered the fragrances sector with its Madigan brand in 1978.

Hunca Kozmetik Sanayii is active today in hair care, liquid soap, deodorants, fragrances, men's pre-shave and colour cosmetics. Its brands include Destiny Fresh, Caldion, Extory, Equal, Viva Cappio, Jagler, Carmina and Ivrindi.

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3.2 Retail Distribution

Retail distribution trends

The main channel for the distribution of cosmetics and toiletries in Turkey during the review period was supermarkets and hypermarkets. This channel increased its distribution share to nearly 34% of total sales in 2003 up by over seven percentage points over 1998. This rise mirrored the general trend towards one-stop shopping as well as the growing number of these outlets.

The growth of supermarkets/hypermarkets was related firstly to the increasing price-sensitivity of consumers, especially in the last three years of the review period. These outlets, especially supermarkets, offer lower prices than other outlets. Secondly, over the review period, an increasing numbers of consumers gained employment and that directed people to spend less time shopping. One-stop shopping therefore became a big attraction for time-poor consumers.

In some outlets, new products were presented and advertised by sales representatives of the supermarket or the manufacturers. Thus, consumers were informed about the products and were more able to make better choices on products. Moreover, the private labels offered by supermarket/hypermarket chains became very popular amongst the price sensitive consumers in Turkey, which further helped to increases the value share of this channel.

Pharmacies and drugstores become outmoded

The review period recorded a considerable decline in the share accounted for by pharmacies/drugstores, falling by about six percentage points on 1997 to stand at 8.4% in 2003. Until the 1990s consumers had to buy all their cosmetics and toiletries from local pharmacies as this was the only way they could get hold of such products.

Many modern department stores were opened during the review period in the eastern part of Turkey. These department stores offer almost every type of product offered in the big cities like Istanbul. After the recovery of the economy, these stores are expected to generate further demand for all cosmetics and toiletries products.

Most of the department stores, such as Çarsi, Yeni Karamürsel, Beymen, and Vakko, have their own cosmetic departments and sell world wide famous brands such as Estée Lauder, Christian Dior, Lancôme, Clinique, Guerlain, La Prairie, Shiseido and Chanel.

Direct sales increased their share

Direct sales have become popular in almost all regions of Turkey and accounted for nearly 10% of cosmetics and toiletries value sales in 2003. Companies such as Avon Products Inc, Oriflame International and Amway compete. Direct sales companies employ sales representatives, mainly educated and enthusiastic housewives and university students who have free time, to sell their products mainly to friends, neighbours and family. As a sociable way of making purchases, the popularity of buying cosmetics products from sale representatives who are either a friend or neighbour increased in the late-1990s. The rise in shopping from online shops was also influential in raising the distribution share of direct sales by 2.5 percentage points during the 1998-2003 review period.

Direct sales provide consumers with a practical and less time consuming shopping facility. The sales representatives can give detailed information on products including colour cosmetics, skin care, hair care products and fragrances. Direct sales companies also guarantee to take back these products when any problem is experienced. Due to the decreases in the levels of disposable incomes enjoyed by consumers, many are won over by this guarantee of quality as it saves wasting money on products that turn out to be no good. All of these factors increased the share of direct sales.

Specialist outlets witness a slight decrease after the economic crisis

The share held by specialist retailers was 22.2% in 2003 down by one percentage point on 1998. Specialists are termed perfumeries but also sell other cosmetics products such as colour cosmetics and hair care. Perfumery chains, such as Sevil Kozmetik, dominate sales of premium products but privately-owned perfumeries also hold a very strong position. Chained perfumeries, such as Sevil Kozmetik, tend to be located in popular shopping centres or on the high streets of major cities.

Discounters new but will be popular

Discounters are currently fairly insignificant in the sales of cosmetics and toiletries in Turkey. There are outlets, such as Dia and BIM, which sell products at low prices, but discounters only sell a fairly narrow range of products such as baby care, bath and shower products, deodorants and hair care. They do not sell products

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such as colour cosmetics or fragrances. These outlets represented nearly 3% of retail sales of cosmetics and toiletries in 2003, up by more than two percentage points on 1998. The increased price-sensitivity of consumers made discounters more popular in last three years of the review period and they will gain a stronger position until the economy recovers.

Outdoor markets increased their share thanks to the price sensitive consumers

The share of cosmetics and toiletries retail sales held by outdoor markets increased slightly over the review period. In 2003, outdoor markets represented almost 4% of the total retail sales of cosmetics and toiletries, whereas in 1998 they accounted for less than 3% of total value. The products sold at outdoor markets are known to be cheap and inferior but price sensitive consumers began to choose these outlets in spite of the lack of variety.

Buying bar soaps, cheap shampoos, hand cream and basic shaving products from outdoor markets is still common. These cosmetics and toiletries are considered everyday necessities, for which consumers are reluctant to pay high prices. In contrast, higher-quality cosmetics and toiletries such as facial skin care and colour cosmetics are rarely bought from outdoor markets, as people believe that such products should be of the highest quality they can afford.

Outdoor retailers selling their products via street vendors or bazaars tend to sell products at prices lower than other retailers as most of them neglect the legal rules relating to taxation. However, effective government measures forbidding such practices in recent years had a slight negative impact on the importance of outdoor markets in retailing cosmetics and toiletries.

Table 3 Retail Sales of Cosmetics and Toiletries by Distribution Format: % Analysis 1998/2003

% retail value rsp 1998 2003

Supermarkets/hypermarkets 27.4 33.8 Independent food stores 3.7 2.2 Convenience stores 2.4 1.5 Pharmacies/drugstores 14.2 8.4 Discounters 0.6 2.9 Department stores 15.7 13.4 Specialists 23.0 22.2 Direct sales 7.7 9.8 Outdoor markets 2.7 3.8 Others 2.7 2.0 Total 100.0 100.0

Source: Trade associations (Cosmetics and Toiletries Manufacturers Association of Turkey), trade press (Milliyet, Zaman, Radikal),, store checks, trade interviews, Euromonitor estimates

Retailer activity

Supermarkets dominated the market

Supermarkets increased their share to nearly 34% of total sales in 2003 up nearly seven percentage points on 1998. The increasing penetration of supermarkets all over the Turkey, the lower prices they offered, one shopping possibility in these outlets, the promotions offered by supermarkets (other than the producers), possibility of using credit cards and the large product ranges in these outlets increased the popularity of supermarkets over the review period.

Discounters and outdoor markets were other winners of the review period

After the beginning of the economic crisis in 2001 the number of the discounters increased significantly in all cities of Turkey. These outlets offered less choice possibilities but the prices of the products were very low compared to specialists, department stores etc. Due to the increasing price sensitivity of consumers, these outlets increased their popularity in the last three years of the review period and held nearly 3% in 2003 up from 0.6% in 1998.

Outdoor markets were still very popular in Turkey in 2003. The share of outdoor markets under cosmetics and toiletries tended to decrease in the first three years of the review period due to increasing importance on quality given by consumers in Turkey. However, after the beginning of economic crisis, the share of these markets increased with to nearly 4% up by 1% on 1998.

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Private label trends

Private labels share of C&T surprisingly fell

Most of the big supermarket chains, such as Migros, Gima, Tansas, and Kiler, increased the product ranges of their private labels after the beginning of the economic crisis. Consumers in Turkey became very price sensitive after the economic crisis and the private labels offered cosmetics and toiletries at very low prices. The private labels became very popular especially under bath and shower products, hair care, men's grooming and deodorants. Private labels are produced by local manufacturers and are sold for very low prices compared to other branded products.

Internet sales

E-commerce is currently insignificant in sales of cosmetics and toiletries but is quickly growing. Powerful local companies made huge investments in the internet and an increasing number of internet cafés were established during the review period. However, usage of the internet is still not as widespread as in Western countries. Use of the internet is especially popular among university students and students attending high schools in large cities such as Istanbul and Ankara.

Using the internet for shopping purposes is still rare in Turkey. People still do not feel that this channel is secure enough to make large purchases. The younger generation and people with high levels of education and income, however, increasingly see the internet as a modern and convenient retail channel. Internet sales are increasing as a result. As a growing number of people own computers and are connected to the internet, more are discovering the advantages and convenience of online shopping. Development of internet sales is evolving in line with the penetration of multiple grocery chains all over the country. These retail channels are beginning to focus more on selling their products through online shops, which offer a rapid shipment of orders to local customers in their homes.

In addition, many smaller retailers also have websites that consumers can access to make purchases. However, these are not as well known as those of the powerful multiple grocery chains such as Migros, Gima and Tansas. In addition to retailers, many manufacturers took the opportunity to introduce themselves and their brands via websites and some of them also offered the opportunity to make online orders. However buying direct from the manufacturer was limited over the review period, since most consumers in Turkey want to see a product before they buy it.

Big retail channels begin to find different ways to increase their internet sales

Migros, one of the leading retailer channels in Turkey, began to offer online services in the coastal parts of Turkey such as Adana, Ankara, Antalya, Bodrum, Bursa, Fethiye-Göcek, Istanbul, Izmir, Marmaris and Mersin. Migros also targets the marines stationed in these regions.

3.3 Forecast Market Performance

Positive factors

Future looking much better

Euromonitor forecasts that sales of cosmetics and toiletries market in Turkey will reach US$3,264.6 billion by 2008, demonstrating constant value growth of 11.2%, with a CAGR of 2.1%. Over the review period, the industry suffered negative growth mainly due to the earthquakes in 1999, the economic crisis that hit the country at the beginning of 2001, and the ongoing effects of the economic crisis in the last couple of years of the review period. The optimism of the industry regarding cosmetics and toiletries in Turkey is highly related to the economic, demographic, and social trends that are anticipated over the forecast period.

Dynamic economic rebound = increased disposable income

Turkey's economy is expected to recover over the forecast period. According to the World Bank, Turkey was the 17th biggest economy in the world in 2000. The war in Iraq had created worries for the Turkish economy; however, the end of the war means that consumers regained their confidence which is expected to help to boost the economy in the immediate future.

Growth is expected to gather momentum over the 5-year period as living standards and disposable income levels reach a more satisfactory level. This will allow people to spend more on products that they would previously have considered as luxuries, such as cosmetics and toiletries.

Demographic boom will drive the growth

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The high birth rate and increasing number of working women will be two of the main factors underpinning the growth of cosmetics and toiletries over the forecast period. Specifically, in 2002, the birth rate in Turkey was over 20 babies per 1000 inhabitants, the highest in Western Europe, followed by Ireland where there were 15.2 births per 1000 inhabitants. According to Euromonitor estimates, the high birth rates will continue throughout the review period, at a slower growth though, at 17.6 births per 1000 inhabitants in 2008. At the same time the death rate in Turkey is among the lowest in Western Europe.

The majority of Turkey's population is young and they are the target consumers for the cosmetics and toiletries companies. According to Euromonitor estimates, in 2002, 66% of the population were between 0-34 years of age. The population aged between 15 and 35 represented 36% of the total population, of which nearly half were females. According to industry experts this is significantly important since women are the main purchasers of cosmetics and toiletries in Turkey, even for products used by men.

In terms of the employment of the female population, the number of working women in Turkey has shown one of the highest growth rates, just after Spain, at 15% total growth over the review period. Specifically, in 1998 there were around 6,364,000 working women in Turkey, whereas in 2002 that number increased to 7,300,000. Euromonitor forecasts that such a trend will continue increasing over the forecast period, with Greece and Turkey showing the highest growth between 2003 and 2008.

Modern retail channel to improve availability and prices of C&T

The increasing number of supermarkets/hypermarkets that offer different types of cosmetics and toiletries will also fuel growth of the industry over the forecast period. Despite its high 66.4 million population in 2002, there were only 3,768 supermarkets and 188 hypermarkets in Turkey. Euromonitor expects that in 2006, there will be a significant increase in the number of these outlets, approximately 5,186 supermarkets and 290 hypermarkets found not only in the big cities but also in many small towns in Turkey.

Supermarkets are expected to dominate the sales of cosmetics and toiletries over the forecast period. The increasing penetration of supermarkets, lower prices they offer, as well as the ability to do shopping with credit cards in these outlets, will be the main factors for the increasing popularity of supermarkets. The availability of a range of different products and product promotions are further advantages of these outlets.

Table 4 Forecast Retail Sales of Cosmetics and Toiletries by Sector: Value 2003-2008

US$ million 2003 2004 2005 2006 2007 2008

Baby care 47,1 47,4 48,3 49,2 50,4 52,2 Bath and shower products 743,1 751,5 763,5 778,5 800,1 829,8 Deodorants 151.8 150,9 152,4 155.4 158,7 163,2 Hair care 931,8 940,5 954,3 976,5 1004.7 1039,2 Colour cosmetics 209.4 207,3 209.1 212,7 218,1 225,6 Men's grooming products 332,7 327,6 331,5 337,8 348.3 361,5 Oral hygiene 258,6 261,9 267,6 275,4 285,9 299,7 Fragrances 84,0 84,6 85,8 87,6 90,3 93,9 Skin care 186,6 188,7 191,7 195,6 200,7 207 Depilatories 85,2 87 89.4 92,1 95,4 99,6 Sun care 23,1 23,7 24,3 24,9 25,8 26,7 Premium cosmetics 138,6 - - - - - Cosmetics and toiletries 2935,8 2952,9 2997,9 3063,6 3150,9 3264.6

Source: Trade interviews, Euromonitor estimates

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Table 5 Forecast Retail Sales of Cosmetics and Toiletries by Sector: % Value Growth 2003-2008

% constant value growth 2003-08 CAGR 2003/08 TOTAL

Baby care 2.0 10.6 Bath and shower products 2.2 11.7 Deodorants 1.5 7.5 Hair care 2.2 11.5 Colour cosmetics 1.5 7.7 Men's grooming products 1.7 8.7 Oral hygiene 3.0 15.9 Fragrances 2.2 11.7 Skin care 2.1 11.0 Depilatories 3.2 16.9 Sun care 3.0 15.9 Premium cosmetics - - Cosmetics and toiletries 2.1 11.2


4. BABY CARE

Baby care market was worth US$60,6 million in 2000 and showed annual growth around 8% to 9% between 1997 and 2000. This growth was driven by rising living standards, an increase in the urbanisation, rise in overall awareness of baby care products, and an improvement in retailer's activities.

Pharmacies dominated the sales of baby care at the beginning of the review period, accounting for nearly 41% of total sales value in 1998. However, as a result of the increasing penetration of supermarkets and the lower prices they provided supermarkets increased their share in 2003 to 30% up nearly nine percentage points on 1998. Pharmacies indicated a significant decrease during the review period and held 31% of the total sales value at the end of the review period. Specialists also increased their share from 16% in 1998 to 20% in 2002 due to the lower prices they provided compared to the prices of pharmacies. However, this share fell back to 16% again in 2003.

Three leading companies, Kopas Kozmetik Pazarlama San AS, Johnson & Johnson Sihhi Malzeme Sanaii ve Ticaret AS, and Eczacibasi-Beiersdorf Kozmetik Urunleri San ve Ticaret AS held about nearly 72% of total sales value between them in 2003.

Competition in baby care was generally in the form of promotions and price discounts, rather than advertising or product diversification due to the increasing price sensitivity of consumers. Otaci Kurtsan Ilaclari AS, Colgate Palmolive Temizlik Urunleri San ve Ticaret AS, Birlesik Ilac Sanayi ve Ticaret AS, Pinkar Kimya Sanayi AS, and Sebapharma GmbH & Co were other important companies within baby care in 2003, although each garnered substantially less than 10% value share.

During the review period, families with medium or high incomes were the main consumers of these new value-added products. This was not just because of the products' prices but also because they were generally the consumers with well-educated backgrounds who wanted the best for their children.

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Forecast Sector Performance

Increasing interest in baby care products

Baby care products are expected to reach sales of US$52,2 million in 2008, representing constant value growth of almost 11% over the 5-year forecast period. However, together with the recovery in the economic conditions, sales are expected to be boosted during the forecast period.

The westernised lifestyles of today's parents, who are more aware of the benefits of baby care products, will further boost the future sales of these products. Young parents have begun to prefer using baby care products for their babies instead of the traditional products such as bar soaps and general purpose creams. Moreover, the high birth rate in Turkey, which was over 20 per 1000 inhabitants in 2002, and the consumption of these products by adults, will be other important factors to fuel the demand for baby care products over the forecast period.

Table 6 Forecast Retail Sales of Baby Care by Subsector: Value 2003-2008

US$ million 2003 2004 2005 2006 2007 2008

Baby toiletries 5,1 5,1 5,1 5,1 5,4 5,4 Baby hair care 26,1 26,4 26,7 27,3 28,2 29,1 Baby skin care 13,8 13,8 14,1 14,4 14,7 15.0 Baby sun care 2,4 2,4 2,4 2,4 2,4 2,7 Baby care 47,1 47,4 48,3 49,2 50,4 52,2

Source: Trade press (Milliyet, Zaman, Capital), trade interviews, Euromonitor estimates

5. BATH AND SHOWER PRODUCTS

Bath and shower products the C&T's second biggest force

Sales of bath and shower products reached US$744 million in 2003.Bath and shower products recorded annual current value growth of nearly 5% in the first two years of the review period. Bath and shower products were not significantly affected by the economic crisis and recorded lower decreases compared to other sectors under cosmetics and toiletries. This is because the bar soaps, which make up over 90% of the total sales value, are perceived as a necessity instead of a luxury.

In the latter part of the review period, multinational companies had to decrease the prices of their goods in order to compete with the prices of local producers. After the economic crisis of 2001, many companies had to agree to decreasing profit margins in order to keep or increase their sales level.

Only liquid soaps recorded positive value growth.Liquid soap reached sales of US$50,7 million in 2003. These products enjoyed an increased amount of retail shelf space during the review period as consumers perceived them as higher in quality and as more healthy compared to bar soaps.

Bar soaps dominate sales.Bar soaps reached a value of US$666 million in 2003.

Amongst middle and lower income earners, bar soaps became a substitute for shampoos and body washes/shower gels in times of financial hardship.

Bath additives remained a niche in Turkey in 2003. The retail sales of these products reached nearly US$2,7 million. Foam bath, bath gel and bath oils were consumed only by the high income groups during the review period due to their higher prices. These goods are mostly perceived as a luxury for the majority of consumers in

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Turkey. Another reason behind the low sales of bath additives is linked with consumer preferences for bathing. Specifically, people in Turkey prefer to shower rather than to bath. The use of baths is not widespread in the country. In fact, many people, especially in the rural areas, pour water onto their hair and bodies from a bucket.

Body wash/shower gel sales reached a value of US$20,7 million in 2003 down more than 2% in value terms and up by around 4% in volume terms on the previous year. Over the review period as a whole, these products recorded a decrease of 9.2% in current value terms and an increase of nearly 11% in volume terms due to the decreasing unit prices.

Retail sales of talcum powders reached US$3,3 million in 2003. Almost all the talcum powder products available in Turkey are designed for babies.

As a result of the economic crisis, consumers in Turkey became very price sensitive and manufacturers had to use promotions as their main marketing strategy. "Buy one get one free" promotions were very common as well as offering free gifts, such as a trial size of one of the company's other products. For example, bath and shower gels were sold with bar soaps. Another strategy was giving high priced prizes to consumers. For example Haci Sakir by Colgate-Palmolive Temizlik Urunleri San ve Ticaret AS gave away a car and holiday in a lottery for consumers.

At the beginning of the review period, specialist outlets accounted for 32% of total value sales and were the leading distribution channel for the bath and shower products. However, over the review period the share of specialists decreased to 30% whilst supermarkets/hypermarkets moved into the lead, increasing their share from 29.5% in 1998 to 36% in 2003.

Bath and shower products is largely the domain of three companies Evyap Sabun Yag Gliserin Sanayii ve Ticaret AS, Colgate-Palmolive Temizlik Urunleri San ve Ticaret AS and Dalan Kimya Endustrisi AS the first two of which operate in several categories. These three companies are also the leading companies in bar soap with increasing shares as bar soap sales accounted for 90% of total bath and shower product sales in 2003.

Multinationals led in body wash/shower gels with Turk Henkel Kimya San ve Ticaret AS in the lead with a 25% value share in 2003. Colgate-Palmolive ranked second with a share of 14%.

Three local firms held a combined share of 52% of the total sales of liquid soap. Temsu Kozmetik ve Kimya San AS was the leading firm with its Sandy brand. The company achieved wide distribution and offered low prices which helped to increase its share to nearly 20% up by nearly one percentage point over 2001. Canan Kozmetik Sanayi ve Ticaret AS followed Temsu Kozmetik with its Ipek brand which began to become established in the cosmetics and toiletries industry due to effective advertising and its low prices. Canan Kozmetik increased its share from 16.2% in 2001 to 16.7% in 2003. Evyap Sabun Yag Gliserin Sanayii ve Ticaret AS ranked third in liquid soap with its share of nearly 16% in 2003.


Positive growth ahead

Bath and shower products are expected to reach a value of almost US$830,0 million by 2008, representing constant value growth of nearly 12% over the 5-year forecast period. The Turkish economy grew in 2002 and the growth continued in 2003. The young population and their increasing education level will be one of the leading factors to underpin the growth after 2003. The young are more interested in the new types of products such as body wash/shower gel. After 1980, a high proportion of the population migrated to the big cities. In 2002, about 76% of the population of Turkey was living in big cities and a growing part of the younger generation has adopted western lifestyles. All of these factors together with the expected increase in the levels of disposable income will bring higher growth rates to bath and shower products. It can be expected that the new types of products, such as body washes and shower gels, will attract an increasing number of consumers over the forecast period.

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Direct sales to increase

Supermarkets are expected to dominate sales of bath and shower products over the review period due to their higher products ranges and lower prices. Supermarkets became very popular over the review period and these outlets are now easy to find even in the very small towns in Turkey. It can be predicted that direct sales will also increase its share over the forecast period. The young population is using the internet very actively and some supermarkets began online sales over the review period.

Table 7 Forecast Retail Sales of Bath and Shower Products by Subsector: Value 2003-2008

US$ million 2003 2004 2005 2006 2007 2008

Bath additives 2,7 2,7 2,7 2,7 2,7 2,7 - Bath gel 0.3 0.3 0.3 0.3 0.3 0.3 - Bath oil 0.3 0.3 0.3 0.3 0.3 0.3 - Foam bath 1,8 1,8 1,8 1,8 1,8 2,1 - Other bath additives 0.3 0.3 0.3 0.3 0.3 0.3 Body wash/shower gel 20,7 21,0 21,3 21,9 22,8 24,0 Bar soap 666.0 673,2 683,4 696,3 715,2 741,6 Liquid soap 50,7 51,6 52,8 54,3 56,1 58,2 Talcum powder 3,3 3,3 3,3 3,3 3,3 3,6 Bath and shower products 743,1 751,5 763,5 778,5 800,1 829,8

Source: Trade press (Milliyet, Capital, Radikal), store checks, trade interviews, Euromonitor estimates

6. DEODORANTS

Deodorants reached sales of US$151,8 million in 2003. Deodorants increased their popularity and achieved healthy growth rates before the 2001. With the increasing education level and the growing number of working women, people in Turkey became more conscious of their personal hygiene. Also, the hot climate, coupled with a desire to avoid unpleasant odours associated with perspiration, played an important role in generating demand for antiperspirant deodorants across the country. People living in the cities, in particular, became more sensitive to body odour and strove to avoid this unpleasant condition. Women are the main consumers of deodorants but young men are becoming increasingly interested in these offerings.

The average unit prices of sprays decreased to US$22 per litre in 2003 from US$24.75 in 1997. In fact, some local companies launched no name brands over the review period with much lower prices. These products increased their popularity after the economic crisis because their prices were between US$7 to $9 per litre. Moreover, many local firms launched sprays imitating the odours of the popular fragrances which became very popular in Turkey in a very short period of time.

The unit prices of roll-ons decreased to nearly US$59 per litre at the end of the review period from US$70 in 1997. In the same way sticks first made an entrance at US$79 per kg in 1999 but the unit prices decreased to about US$71 per kg in 2003. This was the effect of the economic crisis and the sharply decreasing levels of disposable income. Companies had to make price discounts or conduct promotions in order to keep their sales levels. Multinationals also decreased their prices in order to compete with the products of local companies and had to agree with the decreases in their profits.

Sprays reached sales of US$117,3 million in 2003.Over the review period, sprays were the most common format for consumers from lower-income groups and they used scented deodorants as a substitute for fragrances due to deodorants' lower-prices. Therefore, consumers demanded that deodorants not only eliminate unpleasant body odour but also offer a pleasant scent.

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The retail sales of stick deodorants reached US$16,8 million in 2003. Sticks became popular over the review period in spite of their higher prices. These products were highly and effectively advertised on television and in magazines mainly by the multinational companies.

The format is perceived to have longer-lasting properties than other formats and the products are convenient to carry in a bag.

Roll-on deodorants garnered sales of US$16,5 million. Sales achieved positive growth of almost 2% in both 2002 and 2003.

Creams used by high income groups.The retail sales of creams reached US$0,9 million in 2003.The sales of creams are very limited for two main reasons. Firstly, these products are not familiar to a very large percentage of the consumers and they are sold only in big cities and in expensive shops. Secondly, they are very expensive compared to the prices of sprays and other formats of deodorants. Therefore, the retail sales of these products accounted for less than 1% of the total sales value of deodorants over the review period.

Deodorants is the domain of three multinational companies Eczacibasi-Beiersdorf Kozmetik Urunleri San ve Ticaret AS, Lever-Elida Temizlik ve Kisisel Bakim Urunleri San Ticaret AS (Unilever) and Turk Henkel Kimya San ve Ticaret AS (Henkel). These three companies accounted for 46% of the total sales value of deodorants in 2003. Hunca Kozmetik Sanayii AS trailed not far behind them with a share of just over 8% in 2003.


Higher increase in sales volumes

The retail sales of deodorants are expected to grow in high rates in volume terms over the forecast period in spite of a moderate growth in constant value sales. Deodorants are projected to reach nearly US$163,2 million by 2008 which represents a constant value increase of nearly 8% on 2003.

The increasing awareness of personal care among consumers in Turkey, the interest of the young population in the new formats such as sticks and roll-ons, an increasing number of men using deodorants, and the fierce competitive environment of multinational and local companies, will lead to an expansion in deodorant sales over the 5-year forecast period.

Value-added products will be important for the multinationals to compete with the low-priced goods of the local companies. Sensitive, functional and skin-friendly variants are expected to increase in popularity in line with the increases in levels of disposable income.

Table 8 Forecast Retail Sales of Deodorants by Subsector: Value 2003-2008

US$ million 2003 2004 2005 2006 2007 2008

Deodorant sprays 117,3 116,4 117,6 119,4 121,8 125,1 Deodorant pumps - - - - - - Deodorant roll-ons 16,5 16,5 16,5 17,1 17,4 18,0 Deodorant sticks 16,8 17,1 17,1 17,7 18,3 18,9 Deodorant creams 0,9 0,9 0.9 0.9 1,2 1,2 Deodorant wipes - - - - - - Deodorants 151,8 150,9 152,4 155,4 158,7 163,2

Source: Store checks, trade interviews, Euromonitor estimates

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7. HAIR CARE

Hair care sales reached a value of US$931,8 million in 2003.Hair care recorded a high current value growth rate of between 12% and 13% each year between 1998 and 2000. This healthy growth was attributed to the increased awareness of the benefits of hare care products, strong advertisements and effective promotions by the multinationals. There was a greater focus on beauty in the media, which stimulated demand from the younger generation. In addition, competition between the multinational companies resulted in a wide range of products that attracted consumers because of their contents, packaging and price.

However, after the economic crisis because of the decreasing levels of disposable income, demand shifted towards cheaper brands owned by local companies or economy brands from the leading multinationals. There was increased demand for bulk-sized products in order to decrease the cost of using hair care products. In addition, people in lower-income groups returned to traditional hair washing products such as bar soaps or used bar soaps together with shampoos to decrease their hair care expenditure.

Young consumers are more interested in value-added and task-specific products, such as shampoos for coloured hair, long-lasting conditioners, high-tech formulas with vitamins etc. As the bulk of the population is young in Turkey, most manufacturers targeted the young population in their advertisements as well as in their new product developments. The population in Turkey aged between 15 and 40 adds up to nearly 25 million which is why its is essential for manufacturers to win this group over.

Complete hair care systems began to be launched and advertised by leading multinationals such as Procter & Gamble Tuketim Mallari Sanayi Ltd Skt in the last years of the review period. These products and advertisements tried to expand the consumer base and bring salon care systems into the home. These products did not become very popular until the end of the review period mainly due to their high prices. These offerings are only sold in salons and consumed by high income groups.

Retail sales of styling agents reached US$72,3 million in 2003.Multinational companies developed new styling products targeting the young population over the review period and backed them with effective advertisements on television and in magazines. Local firms, such as Hobi Kozmetik AS, also launched different styling products which with low prices, interesting packages and promotions, made them more popular amongst the younger generations. Both the local companies and international companies increased their sales over the review period due to the increasing demand of young consumers with Westernised lifestyles. The decreases in unit prices led to decreases in the sales values after the beginning of the economic crisis and also caused difficulties for even the local producers. Some of the strongest local players faced some financial problems after the economic crisis in spite of the increase in their retail volume sales.

Multinationals preferred to launch value added products in order to compete with the low-priced offerings of the local companies. They emphasised UV-protection, spray gels and innovative packaging in order to attract young consumers. However, the penetration of these products remained relatively low due to their higher prices.

Gels and spray gels made up the bulk of sales in styling agents. Mousses also increased their share due to strong advertisements by the major manufacturers. The use of hair gel remained more widespread than styling mousses as these products tended to be cheaper and advertised more widely by manufacturers.

Furthermore, an increasing number of young male consumers were using gels to style their hair, which stimulated its performance. Nonetheless, male-specific styling agents are not available in Turkey.

Retail sales of 2-in-1 products were valued at US$213,3 million in 2003. The added convenience of 2-in-1 products made them increasingly popular. For this reason, despite being relatively new, these products enjoyed strong sales, especially among the younger population. Moreover, most of the advertising campaigns, new product development, and promotions conducted by hair care companies were within 2-in-1 products, reflecting its dynamism in volume terms.

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Anti-dandruff formulas are heavily advertised in Turkey and most of the brands available have an anti-dandruff extension.

Conditioners garnered sales of US$116,7 million in 2003. The increased popularity of 2-in-1 products, which served to negate the use of separate conditioners, was important in the decreases of retail sales of conditioners during and after the economic recession. However, this was somewhat balanced out by the entry of local companies, such as Canan Kozmetik Sanayi ve Ticaret AS, with low prices in last two years of the review period. The local companies backed their products with effective advertisements on television. The lower prices of these goods led to a decrease in the unit prices and decreases in the sales value of conditioners but an increase in the sales volume.

Throughout the review period, young women were the main consumers of conditioner products. Newly product development by multinationals to compete the local companies and effective advertisements of these products also pushed the sales volume further in 2003.

According to the trade press (Milliyet), nearly 16% of households were using conditioners regularly in 1993, this percentage increased to 23% in 2001. Industry sources claimed that value-added conditioners had become more attractive to consumers by 2003.

The retail sales of perms and relaxants reached a value of US%11,1 million in 2003.The bulk of demand for colourants and perms and relaxants came from the Western and Central parts of Turkey. These are the areas where most working women live. A presentable look is important for these women and therefore they use more hair care and cosmetics and toiletries in general.

Sales of colourants dropped to a value of US$86,7 million in 2003.The local companies which entered colourants over the review period, such as Kopas Kozmetik Pazarlama San AS with its Voila brand, increased their share due to their lower priced-offerings. Kopas backed its brand with effective advertising campaigns and gained a strong position in the industry. There were also other small companies that produced no name products and retailed them on a regional basis. These companies did not have a significant share for each but they played a fundamental role in pushing the unit prices down. Multinational companies had to decrease their prices in order to compete with these local companies. Colourants with value-added benefits were not sold in large amounts due to their higher prices.

Kina, a natural colourant, is a popular cheap alternative to packaged colourants in Turkey. Kina is made from vegetable extracts, which gives hair a deep red colour. However, consumption of kina was not very popular among younger consumers and among women who live in urban areas. The main consumers of colourants, particularly kina, are women in their middle and older ages. However, young women who want to follow fashion and new trends increased the consumption of packaged colourants in Turkey. Also, intensive advertising of hair colourants on television and in magazines stimulated consumer interest leading to an increase in volume sales.

Multinationals launched easy-to use colourants products and kits to increase their sales in the last years of the review period. Although these products were acceptable they achieved low sales levels due to their high prices.

All of the mass hair products from the major manufacturers in Turkey are available in supermarkets/hypermarkets generally with lower prices than other outlets. In line with the increasing penetration of these outlets throughout Turkey, their share in sales of hair care increased significantly over the review period from 34% of retail sales value in 1998 to 40% in 2003.

Direct sales gained power by increasing their share slightly to 7% in 2003 from 6% in 1998. Pharmacies, on the other hand, lost half of their share over the review period due to a common believe that their prices are much higher than the prices of supermarkets.

Specialist outlets increased their share of sales at the beginning of the review period but lost it again after the beginning of the economic crisis. The share held by the outdoor markets increased over the review period mainly after the economic crisis. The product ranges sold in outdoor markets are very limited but they began to be chosen by many consumers due to their low prices.

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Premium versus Mass

Retail sales of hair care are dominated by mass brands with different quality levels. A large percentage of premium brands available are salon hair care products. Premium hair care products are also available in the large retail outlets, such as department stores, in big cities.

The key brands of premium hair care products in Turkey are Schwarzkopf Professional, L'Oréal Serie Expert Intense Repair Sampuan, Wella High Hair, Sebastian, Boots, Osmose, Swiss Formula and Neutrogena.

Table 9 Hair Care Premium vs Mass % Analysis 1998/2003


Premium 8.5 6.2 Mass 91.5 93.8 Total 100.0 100.0


Salon Hair Care

Sales of salon hair care dropped by nearly 13% in current value terms between 1998 and 2003. This low level of salon hair care sales was due to the fact that the majority of consumers in Turkey are in the habit of buying hair care products from retail outlets such as supermarkets or specialists. Buying hair care products from salons was a relatively new concept, especially as patronage of hair salons is low in Turkey. These products are therefore only consumed by high income groups. Furthermore, while brands sold in salons are of high quality, they are also much more expensive than comparable products sold in other retail outlets and only women with the highest levels of purchasing power can afford to buy them.


Positive growth to be driven by new value-added products

A large number of new products are expected to be launched in Turkey over the forecast period due to the high competition in this sector. The local companies will take the advantage of low prices and the continuing price sensitivity of consumers. The multinationals, therefore, will launch value-added products like conditioners with sun protection factors in order to keep their sales levels and to spark the interest of consumers. In line with the increases in disposable income, the very popular all-family bottles (the most popular package sizes after the economic crisis), will move away and manufacturers will try to encourage the sales of problem-specific products such as shampoos for weak or greasy hair.

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Table 10 Forecast Retail Sales of Hair Care by Subsector: Value 2003-2008

US$ million 2003 2004 2005 2006 2007 2008

Shampoo 374,4 378,0 382,2 390,0 400,2 411,9 2-in-1 products 213,3 215,7 219,3 224,1 230,4 238.2 Conditioners 116,7 117,0 118,5 120,9 124,5 129 Styling agents 72,3 73,5 75,3 78.0 81,3 85,5 Perms and relaxants 11,1 11,4 11,4 11,7 12.0 12,3 Colourants 86,7 87,6 89,1 91,5 94,8 99,3 Salon hair care 57,0 57,6 58,5 60.0 61,5 63,3 Hair care 931,8 940,5 954,3 976,5 1004,7 1039,2

Source: Store checks, trade interviews, Euromonitor estimates

8. COLOUR COSMETICS

Colour cosmetics garnered sales of US%209,4 million in 2003. Colour cosmetics enjoyed healthy volume and value growth rates of between 10% and 13% pre year in the first two years of the review period. Demand for colour cosmetics was generated by the increasing number of working women in Turkey and their need and desire to improve their appearance. The growing education levels of women stimulated them to use colour cosmetics more effectively and consciously. Until 2001, growth in colour cosmetics was also underpinned by the rising purchasing power of consumers and the increasing number of women entering the workforce who could afford to buy more products and trade up to more expensive offerings.

Colour cosmetics are seen as an essential part of the working women's daily beauty routine, especially in big cities. Fashion trends were mostly followed by the young generation but this consumer group tends to be less selective in their choice of brands, making their purchasing decision instead on the available colours and packaging.

The trend towards enhancing products and introducing distinctive new formats, to satisfy the convenience and time saving demands of consumers, was increasingly evident in colour cosmetics over the review period. Fast-paced and busy lifestyles often lead to a demand for products combining different aspects such as concealer and foundation, foundation and blushers, or blushers and eye shadows. Therefore, the consumers' purchasing decision is increasingly determined by the time and money saving aspects of these products. Buying one product instead of two or three is more affordable for women in Turkey due to their economic difficulties and demand for such offerings increased after the economic crisis.

Multinational brands of mass colour cosmetics such as L'Oréal and Nivea launched more technologically advanced products with additional benefits in order to sell their products to high income groups who gave up using premium goods after the economic crisis. As a result, upper-mass products were often substituted for premium products after the economic crisis.

Women in Turkey strongly believe that imported colour cosmetics are higher quality products and they try to buy the products of the multinationals instead of the products of local companies.

Nail polish reached sales of US$20,4 million in 2003 holding nearly 65% of the total sales value of nail products. Polish removers represented 13% of nail products sales due to their low prices. For example, Kopas Kozmetik Pazarlama San AS launched new products under nail treatments under its well established Alix Avien brand. The prices of these products were affordable compared to the products of premium brands and these products generated a demand amongst the young women in Turkey who give importance to the time-saving aspects of the offerings they consumed.

Eye make-up sales reached US$79,5 million in an they were very popular over the review period. Nearly every woman living in urban areas has eye and lip make-up products in Turkey. The demand for other products, such as foundation, is much more limited to the young working women and to consumers from upper income groups. However, eye make-up products are widely used in Turkey. Therefore, eye make-up remains a core marketing

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focus for cosmetics and toiletries manufacturers and received extensive promotional support, both on television and especially in magazines and newspapers.

Furthermore, morning television programmes for women showed make-up application techniques and advised on which products to use. As a result women become more aware of the range of products available and their uses, which in turn generated demand for those products. The wide product availability through modern outlets such as specialists and supermarkets all over the country was also important in encouraging women living in the smaller cities and towns to buy eye make-up, even in the less developed regions of the country.

Mascaras were the most valuable eye make-up products in the review period accounting for 53% of total eye make-up value sales in 2003. As a result, mascaras were also the most advertised eye make-up products. Using mascara is very traditional in Turkey but the new value added forms of mascaras creating a longer or thicker look for eyelashes became very popular, especially among the young generation living in big cities.

Eye shadow products represented about 33% of total sales value in total eye make-up products in 2003. Demand for eye shadow products is generated by the new trends advertised by the manufacturers for summer months and winter months. Consumers following these trends are mostly limited to the high income groups or to young consumers but the high rate of advertisements on television, magazines and newspapers helped to generate demand for eye shadow products in both rural and urban areas.

Eye liners represented a small proportion of eye make-up value sales due to their lower prices and due to the fact that not all women use these products.

Demand shifted towards cheaper alternatives in lip products.Lip products reached sales of US$62,1 million in 2003 .Women are less concerned about trading down in colour cosmetics because they do not see a great deal of difference between the quality and cheaper products, unlike in skin care where many women wanted to continue

using their regular skin care brands for fear the cheaper products would not be beneficial to their skin.

Lipsticks represented approximately 74% of total lip products sales value in 2003. Lip glosses gained popularity during the mid-1990s, as it was fashionable to emphasise the lips through their use. Lip glosses have lost their popularity and glossy lipsticks increased their sales instead. Most of the new brand extensions of the existing brands include shiny lipstick products. Lip liners and lip pencils held a small share over the review period due to their lower prices as well as limited popularity in Turkey.

Although specialists were the main distribution channels for lip products, the importance of supermarkets, hypermarkets and shopping centres also grew over the review period in distribution terms. Almost all working women living in urban areas, regardless of their income levels, use lip products.

The number of department stores increased over the review period in Turkey. Previously, department stores were only situated in the big cities of Turkey but over the review period, many new department stores have been opened in the smaller cities which have given manufacturers the opportunity to reach out to new consumers. Most of the department stores such as, Çarsi, Yeni Karamürsel, Beymen, Vakko, have their own cosmetic departments covering world wide famous brands such as Estée Lauder, Lancôme, Clinique, Guerlain, La Prairie, and Shiseido.

Nectar is the outlet for lovers of natural products, whilst Tekin Acar is one of the oldest and the most famous cosmetic shop chains which supplies most of the well known brands. The Body Shop also opened two stores in Turkey and is planning to increase the number of their stores over the forecast period which shows the interest of foreign colour cosmetic producers in the cosmetics industry in Turkey.

L'Oréal a clear leader.Lorepar Kozmetik, the local subsidiary of L'Oréal Groupe, led colour cosmetics with a value share of around 21% in 2003. The company's Maybelline brand retailed in supermarkets, such as Tansas, which strengthened its position in the last three years of the review period due to its lower prices.

Pinkar Kimya Sanayi AS held a value share of 8% of the total colour cosmetics sales in 2003 which represented a slight increase on 2001. Pastel was the main brand of the company under colour cosmetics. The price discounts

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applied to Pastel products was the main reason for the increase in the sales of the company. Moreover, the increasing range and colours of products and improvements in the quality over the review period were other important factors.

Kosan Kozmetik Sanayi AS was a close competitor of Pinkar Kozmetik throughout the review period with its Flormar brand. Flormar is a very old brand in Turkey and is very familiar to almost all consumers. New products with value added features as well as price discounts and promotions helped the company to increase its share slightly over the review period.

Premium versus Mass

Premium products lost share due to adverse economic conditons

Premium products held more than 12% of total colour cosmetics sales value in 1998. After 2001demand shifted towards upper- mass products in the last three years of the review period.

Brands such as Chanel, Lancôme, Helena Rubinstein and Estée Lauder are regarded as premium, whereas brands such as Pastel, Nivea, Carmina, Flormar and Avon are regarded as mass products. Women tended to choose the mass products if they wanted to have different colours of eye shadows or lipsticks. Otherwise it became impossible for them for afford enough different high quality products to get a complete look.

Table 11 Colour Cosmetics Premium vs Mass Analysis 1998/2003





Euromonitor estimates that the retail sales of the colour cosmetics will reach a value of slightly more than US$ 225,6 million by 2008, which represents constant value growth of less than 8% over the 5-year forecast period. Volume sales are expected to increase by about 12% in the same timeframe.

Demand shifted towards cheaper products over the review period but also the manufacturers of mass products decreased their prices in Turkish Lira in order to keep their sales levels as a result of the increasing price sensitivity of consumers. A rapid increase in the prices is not expected over the forecast period. The disposable incomes of some consumers increased in 2003 but the value sales of colour cosmetics continued to decrease

Turkey's younger generation is becoming increasingly interested in Western culture and as a result there is likely to be a greater focus on beauty in the future. This will help to stimulate sales over the forecast period. Secondly, leading multinational companies will heavily advertise their products through media and promote them effectively.

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Table 12 Forecast Retail Sales of Colour Cosmetics by Subsector: Value 2003-2008

US$ million 2003 2004 2005 2006 2007 2008

Facial make-up 36,3 35,4 35,4 36,3 37,2 38,4 - Blusher 7,8 7,8 7,8 8,1 8,4 8,7 - Foundation 17,1 16,5 16,5 16,8 17,1 17,7 - Powder 7,5 7,2 7,5 7,5 7,8 8,1 - Other facial make-up 3,9 3,9 3,9 3,9 3,9 4,2 Eye make-up 79,5 79,2 80,1 81,6 84,0 87,3 - Eye shadow 26,1 26,1 26,1 27,3 28,2 29,4 - Eyeliner 6,9 6,9 6,9 6,9 7,2 7,5 - Mascara 42,6 42,3 42,6 43,2 44,4 45,9 - Other eye make-up 4,2 4,2 4,2 4,2 4,5 4,5 Lip products 62,1 60,9 61,2 61,8 63 64,8 - Lip gloss 6,9 9,3 9,3 9,3 9,6 9,9 - Lip liner 5,1 5,1 5,1 5,1 5,1 5,4 - Lipstick 46,2 45,6 45,6 46,2 47,1 48,6 - Other lip products 1,2 1,2 1,2 1,2 1,2 1,2 Nail products 31,5 31,8 32,1 33,0 67,8 34,8 - Nail polish 20,4 20,4 21,0 21,3 21,9 22,8 - Nail treatment/ 6.0 5,7 6.0 6.0 6.0 6,3 strengthener - Polish remover 4,2 4,2 4,2 4,5 4,5 4,5 - Other nail products 1,2 1,2 1,2 1,2 1,2 1,2 Colour cosmetics 209,4 207.3 209,1 212,7 218.1 225.6


9. MEN'S GROOMING PRODUCTS

Retail sales of men's grooming products garnered a value of US$332,7 million in 2003.Men began to pay more attention to their appearance and began to use products specially designed for men. Branding became more important in men's cosmetics and toiletries products and men also started to demand diversified deodorants and shampoos for their own skin or hair types. According to trade experts the shaving frequency of men in Turkey did not change enormously. However they began to prefer different types of pre-shave products.

Consumers with upper-income levels are the core consumers of men's grooming products and many of them were made redundant from work during 2001. Therefore, the reduction in consumption of these products worsened in 2002 as this group suffered more. Moreover, the decreasing unit prices of these products was another reason for the high decreases in value terms in spite of the beginning of the economic recovery in 2002.

Men's grooming products are mostly advertised in economic magazines due to the lack of men's magazines in Turkey. The penetration of male-specific products remained limited over the review period and these products were thus consumed mostly in the big cities. A lack of consumer awareness and acceptance in rural areas was the main reason of this limitation.

In 2003 men's pre-shave products remained the largest contributor to men's grooming products, with a retail value of US$87,3 million which represented 26% of total value sales at the end of the review period

Although deodorants were not very popular among men in Turkey until the 1990s, demand for these products increased enormously over the review period. This was as a result of an increasing number of well-educated men attaching more importance to the negative image associated with unpleasant odour resulting from perspiration. According to a survey conducted by a leading multinational company in 2000, 43% of deodorant users were male, 55% of users were aged between 21-34 years and only one third of non-users were students, showing that deodorant usage varies according to education, age and gender. As a consequence of increasing demand from male consumers, male-specific deodorants grew considerably over the review period. It should also be noted that most men avoid using unisex deodorant. This boosted demand for men's deodorants.

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There were an increasing number of post-shave products available from reputable manufacturers, such as Eczacibasi-Beiersdorf (Nivea), Evyap (Arko) and Gillette (Gillette Series). Their intensive advertising in support of these products also fuelled growth.

Sales of razors and blades reached US$78,6 million in 2003 making razors and blades the second largest contributor to men's grooming in value terms, representing 24% of total value. Razors and blades were very dynamic in terms of product diversification, which was often initiated by the leading multinational, Gillette Sanayi ve Ticaret AS and followed by its local and multinational rivals. Manufacturers tried to promote regular shaving as most men in Turkey shave on average only two or three times per week.

Manufacturers were also very active in organising attractive advertising and promotional campaigns. As a consequence of strong competition between the local and multinational companies, unit prices tended to decrease throughout the review period.

Gillette remained leader

Gillette Sanayi ve Ticaret AS, Evyap Sabun Yag Gliserin Sanayii ve Ticaret AS and Eczacibasi-Beiersdorf Kozmetik Urunleri San ve Ticaret AS dominated sales of men's grooming products, holding a total value share of nearly 54% in 2003. The remaining sales were highly fragmented between a large number of both local and multinational companies. Most companies other than three leading firms focused on different products and were not active under all product areas. New products with value-added features were competitive in the premium segment but the mass products were price-led.


Men's grooming products are expected to reach a value of US$ 362 million by 2008, following an increase of about 9% in constant terms over the 5-year forecast period.

Table 13 Forecast Retail Sales of Men's Grooming Products by Subsector: Value 2003-2008

US$ million 2003 2004 2005 2006 2007 2008

Men's pre-shave 87,3 85,5 86,4 87,9 90,3 93,0 Men's razors and blades 78,6 76,2 76,8 78 79,5 82,2 Men's post-shave 48,9 48,3 48,9 49,8 51.0 52,5 Men's bath and shower 1,2 1,2 1,2 1,2 1,2 1,2 Men's deodorants 73,8 74,4 75,3 77,4 81,0 85,5 Men's hair care 17,7 17,7 18,0 18,3 18,9 19,8 Men's skin care 24,9 24,6 24,9 25,5 26,4 27,3 Men's grooming products 332,7 327,6 331,5 337.8 348,3 361,5


10. ORAL HYGIENE

Oral hygiene was worth US$258,6 million in 2003 and recorded growth rates of between 8% and 10% in the first two years of the review period. Raising awareness of consumers through educational campaigns and sponsorship of products was the main factor for this strong growth. The educational programmes were largely initiated by trade associations such as the Turkish Dentist's Federation and promotions and advertising conducted by the leading manufacturers Procter & Gamble Tuketim Mallari Sanayi Ltd Skt, Lever-Elida Temizlik ve Kisisel Bakim Urunleri San Ticaret AS and Colgate-Palmolive Temizlik Urunleri San ve Ticaret AS. However, at the time of writing, the majority of people in Turkey are still not familiar with the full range of oral hygiene

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products other than toothpaste and toothbrushes. Even with toothbrushes, awareness of the importance of frequent replacements only recently became widespread.

Visiting dentists regularly is not common in Turkey. According to the federation, only 34.000 people in Turkey use dental floss on regular basis. As a result, 83% of children in the country have unhealthy teeth.

Oral hygiene awareness up until recently was only widespread among educated people living mainly in urban areas. Younger consumers were more conscious about oral hygiene than their older counterparts and even those who are not in the habit of following daily oral hygiene routines regularly urge their children to brush twice daily. However, the majority of the people living in rural areas and shantytowns do not feel the need to brush their teeth every day. When they do clean their teeth, they use soda powder to whiten their teeth. However, educated younger consumers in these areas attached more importance to oral hygiene and thus overall demand for products showed an upward trend over the review period, though it was also undermined by the economic crisis of 2001.

Contrary to other European countries, 2-in-1 toothpaste/mouthwashes are not available in Turkey as even the sales of the toothpastes have not yet reached their full potential.

Oral hygiene sales are quite concentrated, with the top three companies Procter & Gamble Tuketim Mallari Sanayi Ltd Skt, Lever-Elida Temizlik ve Kisisel Bakim Urunleri San Ticaret AS and Colgate-Palmolive Temizlik Urunleri San ve Ticaret AS having a combined 67 % value share in 2003. The remaining sales were relatively fragmented between a number of both multinational and local manufacturers. Banat Firca ve Plastik Sanayi AS, which led manual toothbrushes with a share of 32% in 2003, and Evyap Sabun Yag Gliserin Sanayii ve Ticaret AS, which is active within toothpaste, are the local followers of the leading multinationals.

Most brands produced by the leading companies were widely available at almost all retail channels throughout the country in 2003. Competition was generally in the form of promotions and price discounts after the beginning of economic crisis but advertising and product diversification was the main competition strategy in 2003.


Stronger performance over the forecast period

A much better performance is expected for oral hygiene between 2003 and 2008. Euromonitor estimates that the retail sales of oral care products will reach a value of US$299.7 million by 2008 representing constant value growth of 16%. Volume growth is expected to see an increase of just under 16% over the forecast period.

Table 14 Forecast Retail Sales of Oral Hygiene by Subsector: Value 2003-2008

US$ million 2003 2004 2005 2006 2007 2008

Toothpaste 183,9 186 189,9 195,6 202,8 212,7 Manual toothbrushes 73,8 75,0 76,5 78,9 82,2 86,1 Mouthwashes/dental rinses 0.0 0.0 0.0 0.0 0.0 0.0 Denture care 0.0 0.0 0.0 0.0 0.0 0.0 Mouth fresheners 0.6 0.6 0.6 0.6 0.6 0.6 Dental floss 0.3 0.3 0.3 0.3 0.3 0.3 Oral hygiene 258,6 261,9 267,6 275,4 285,9 299,7


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Power brushes to be more familiar to consumers in Turkey

Power toothbrushes are expected to be worth US$2,1 million by 2008 which represents constant value growth of more than 9% over 2003. The increasing interest of young consumers, the increase in levels of disposable income, better retailing activities and lower prices due to the higher competition, will generate demand for these products.

Tablew 15 Forecast Retail Sales of Toothbrushes by Type: Value 2003-2008

US$ million 2003 2004 2005 2006 2007 2008

- Manual toothbrushes 73,8 75.0 76,5 78,9 82,2 86,1 - Power toothbrushes 1,8 2,1 2,1 2,1 2,1 2,1 -- Battery toothbrushes 0.6 0.6 0.9 0.9 0.9 0.9 --- Battery toothbrush 0.6 0.6 0.6 0.6 0.6 0.9 units --- Battery toothbrush 0.0 0.0 0.0 0.0 0.0 0.0 replacement heads -- Electric toothbrushes 1,2 1,2 1,2 1,2 1,2 1,2 --- Electric 1,2 1,2 1,2 1,2 1,2 1,2 toothbrush units --- Electric 0.0 0.0 0.0 0.0 0.0 0.0 toothbrush replacement heads Manual and power 75,9 76,8 78,6 81,0 84.0 88,2 toothbrushes

Source: Trade press (Milliyet, Capital, Hurriyet), store checks, trade interviews, Euromonitor estimates

11. FRAGRANCES

Fragrance sales reached US$ 84 million in 2003. To increase sales of fragrances, some companies implemented special promotions, in which another product, such as a make-up bag, deodorant or gift was given free to those who bought their products.

During the review period the major consumers of perfume and eau de toilette were young to middle-aged consumers, particularly those living in urban areas. In rural areas, rose water and lemon cologne are traditionally used instead. However, this began to change due to the increasing interest of young people living in rural areas as well as due to the increasing number of modern retail outlets selling these offerings throughout the country.

Over the review period, foreign brands dominated sales, especially in the Western regions of the country. However, local companies were more successful in Eastern and Central parts of Turkey, due to the lower-prices of products offered by them.

After the economic crisis in 2001, the sale of products through perfumeries increased. These stores are owned by local firms under licence from the Ministry of Health.

Premium women's fragrances held the highest share in 2003, with nearly 33% of fragrance retail value sales and a value of US$27,6 million. The majority of consumers of fragrances in Turkey were in middle- and upper-income groups and using expensive perfumes was considered as a symbol of social status by them. However, as a result of the economic recession, which caused many to lose their jobs, even many women using premium fragrances felt it necessary to trade down to cheaper mass fragrances.

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Mass women fragrances reached a value of US$26,7 million in 2003, very close to the sales of premium women fragrances. Mass men's fragrances reached sales of US$15.6 million in 2003.

Young people from the high income groups were the core consumer group of these unisex offerings. These products are mainly available in big department stores mostly in the west part of Turkey.

Fragrances remained very competitive and fragmented over the review period, with the top three companies

Hunca Kozmetik Sanayii AS, Aromel Kozmetik Sanayii ve Ticaret AS and Calvin Klein Cosmetics Co having only a combined value share of around 27% in 2003. Sales are divided between a huge number of multinational and local companies. All premium fragrances were produced by multinational companies and entered through local distributors but local manufacturers were dominant in sales of mass fragrances.


Increasing young working women will stimulate demand

Fragrances are expected to worth more than US$93 million by 2008, representing growth of 12% in constant value terms on 2003. Volume sales are expected to experience a higher growth rate of almost 18% over the 5-year forecast period.

Open parfumes began to be consumed widely mostly in big cities and in line with the rapid penetration of the stores selling these products. The number of drugstores increased in number over the 5-year review period. These outlets were previously only located in the big cities of Turkey such as Izmir, Istanbul and Ankara. Over the review period a number of these drugstores have been opened in the less developed cities such as Antep, Adana or Diyarbakir. These outlets are effective in the sales of fragrances as consumers can test different

perfumes in these stores and can take the advice of the sales persons.

The number of young working men living westernised lifestyles increased over the review period in Turkey. These men are very interested in cosmetics and toiletries designed for men. The number of men aged between 15 and 35 was about 16 million in 2002 in Turkey. An increasing number of them began to live in urban areas and give importance to their personal care and status. As fragrances are seen as a status symbol, the consumption of fragrances among these people increased over the review period and it will rise more rapidly over the forecast period in line with the economic recovery.

Mass men fragrances and premium men fragrances are expected to see growth of nearly 11% and In the case of local companies producing mass fragrances, however, sales are likely to be divided among a few powerful companies such as Aromel Kozmetik, Hunca Kozmetik, Pinkar Kimya Sanayi, Temsu Kozmetik and Akat Kozmetik. It will become more difficult for smaller local companies to compete with these powerful companies due to the increasing importance given to company image. Brand loyalty and the quality of the scent will become the most important factors rather than price among the increasingly young population over the forecast period.

As a result, some smaller fragrance manufacturers will focus more on other cosmetics and toiletries such as deodorants, skin care or bath and shower products or on producing high quality products.

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Table 16 Forecast Retail Sales of Fragrances by Subsector: Value 2003-2008

US$ million 2003 2004 2005 2006 2007 2008

Premium fragrances 40,8 40,8 40,8 42,3 43,2 45.0 - Premium men's 11,1 11,4 11,4 11,7 12.0 16,4 fragrances - Premium women's 27,6 27,6 28,2 28,8 29,4 30,6 fragrances - Premium unisex 1,8 1,8 1,8 1,8 1,8 2,1 fragrances Mass fragrances 43,2 43,8 44,4 45,6 47,1 48,9 - Mass men's fragrances 15.6 15,6 15.9 16,2 16,5 17,1 - Mass women's fragrances 26,7 27 27,3 28,2 29,1 30,3 - Mass unisex fragrances 1,2 1,2 1,2 1,2 1,2 1,2 Fragrances 84,0 84,6 85,8 87,6 90,3 93,9


12. SKIN CARE

Skin care retail sales reached US$186,6 million in 2003.Advertising and seminars conducted by the leading companies to educate women about the importance of skin care products and the increasing number of working women with greater economic freedom were the factors stimulating demand for skin care products over the review period. New product developments with anti-ageing and other cosmeceutical benefits such as maintaining a youthful appearance became very important mostly for women living in urban areas.

Until the mid-1990s skin care products were predominantly used by consumers in the 25 to 50 years age range. People outside this age group felt that they did not need such products. Those under 25 years felt that their skin was still young and supple, while those over 50 years thought that they were too old and that application of such products would be pointless. However, this perception changed over the review period, particularly in urban areas, thanks to the high level of advertising conducted in support of skin care products. As a result, consumers increasingly came to feel that using such offerings could be beneficial regardless of age. New products such as offerings with natural ingredients entered the arena and began to attract consumers at the beginning of the review period. However, these offerings lost their popularity after the beginning of the economic crisis due to their high prices.

Skin care products were mostly advertised on television and in women magazines over the review period. Programs sponsored by big companies explaining the benefits of skin care and how to use these offerings were mostly released in the mornings, targeting the housewives in Turkey. These programs and articles in the media increased awareness of the need for a regular skin care regime. Consumers in Turkey began to attach great importance to facial care; however, the sales of body care and hand care remained relatively underdeveloped over the review period.

Facial care products accounted for about 67% of skin care value sales in 2003.Regular facial care is still very uncommon in Turkey in spite of the increasing number of women living in cities who attach importance to this routine. The general routine is the use of a cleanser, toner, and moisturiser on an everyday basis. However, many of the consumers use only moisturiser and cleaners or moisturisers alone. After the economic crisis, the number of products used in the daily routines of women from middle to low income groups decreased significantly.

Younger generations are more interested in using a number of different facial care products other than their daily routine products. Therefore face exfoliators increased their popularity mostly amongst young women and consumers from upper income levels.

Retail sales of facial moisturisers were worth US$ 44,1 million in 2003, making them the most important contributor to facial care. Although general face and body moisturisers were used until the mid-1990s, during the review period women increasingly realised that moisturising was an important part of the daily facial skin care routine. They paid special attention to their faces, particularly the eyes, as this is the area that tends to show ageing the most.

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Nourishers/anti-agers remains comparatively underdeveloped with sales of US$29,7 million in 2003. Facial cleansers and toners were worth US$35,1 million and US$16,5 million respectively in 2003.

More than 80% of retail value sales of facial cleansers were liquid/cream/gel/bar formats since they long preceded wipes.

The majority of consumers in Turkey are still in the habit of cleaning their faces with bar soap and water or use hand creams to remove eye make-up. However, women's programmes on television and magazine articles continuously repeated the importance of cleaning and toning the skin each day with non-soap products. This was important in stimulating demand for these products over the review period.

Although many women started cleaning their skin with the right products, most still did not adopt the habit of toning their skin, particularly when removing make-up at bedtime. While most women using skin care products were aware of the skin care routine of cleansing, toning and moisturising, some eschewed toning as they feel that cleaning and moisturising are enough and do not feel the need to pay extra for another product.

Cleansers are still not very common in Turkey in spite of the increasing interest in these products due to the growing number of advertisements and television programs.

Anti-cellulite products made the bulk of sales under firming/anti-cellulite body care as they are advertised heavily on televisions and in women's magazines. A variety of anti-cellulite brands with different price ranges are available in Turkey.

Retail value of facial cleaning wipes reached to US$ 6 million in 2003 since they were first introduced in Turkey as recently as 1999. However, as the number of women aware of them was very low, they held only a marginal share over the review period and in 2003

Face masks held only a marginal proportion of value sales in 2003, which partly accounted for the increase of nearly 11% in current value terms over the review period, making it the only form of skin care to see positive growth. Very few women use face masks as a part of their beauty routine in Turkey. Even among the women who do use face masks, their usage is irregular as most find them time-consuming.

However, the use of face masks increased over the review period, as interest in these products among young women with enough purchasing power increased.

As the consumption of body creams was always popular in Turkey, body care was the second largest contributor to skin care in 2003 with sales of US$48,9 million, the most popular brands being Arko and Nivea. Although both female and male consumers from all income groups bought body care creams to use on their body and hands, some people from lower-income groups also used them as alternatives for baby creams and facial moisturisers. Moreover, most advertising and promotions conducted by skin care companies over the review period were for general-purpose moisturising creams for the body.

Hand care sales were worth US$12 million in 2003. Advertising and promotions for such products were not intensive. Despite this, the rapid penetration of modern retail outlets, such as multiple grocers and specialists with sales assistants, throughout the country pushed up retail sales in the first years of the review period.

Skin care was the domain of four multinational companies which took a combined value share of 65% in 2003: Eczacibasi-Beiersdorf Kozmetik Urunleri San ve Ticaret AS, Lorepar Kozmetik, Johnson & Johnson Sihhi Malzeme Sanaii ve Ticaret AS and Avon Products Inc. However, some local companies like such as Evyap Sabun Yag Gliserin Sanayii ve Ticaret AS, Kopas Kozmetik Pazarlama San AS, Hobi Kozmetik AS and Innova Kozmetik Kimya San ve Tic AS are working hard to gain ground in Turkey.

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Premium versus Mass

Mass products dominate skin care sales

Mass products accounted for 91.4% of the total skin care products in 2003 down by only 1.1 percentage points on 1997. Mass products are available in retail outlets throughout Turkey, thus consumer awareness of these products is high. Well-known mass brands available in Turkey included Nivea, Arko, L'Oréal Plénitude, Johnson's pH 5.5, Clean & Clear, Avon and Oriflame.

Premium products are available in large stores such as shopping centres, department stores and specialist shops in urban areas. However, they are not widely available in smaller towns and cities especially those located in the central and eastern regions of the country. Generally, only urban consumers in the highest income groups could afford to purchase these products.

Table 17 Skin Care Premium vs Mass Analysis 1998/2003



Source: Trade press (Milliyet, Hurriyet, Zaman), store checks, trade interviews, Euromonitor estimates


The retail sales of the skin care products are expected to reach nearly US$207 million in 2008, which represents growth of 11% in constant value terms on 2003. The growth will be underpinned by the increasing interest of young people (mainly young women) in these products. The rising number of television programs and magazine articles will increase the consciousness of women on the importance of skin care and the benefits of the different types of products. Women's magazines are becoming increasingly popular in Turkey and new skin care products are strongly advertised in these publications.

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Table 18 Forecast Retail Sales of Skin Care by Subsector: Value 2003-2008

US$ million 2003 2004 2005 2006 2007 2008

Facial care 125,7 126,9 128,7 131,1 134,1 138,6 - Facial moisturisers 44,1 44,4 45,3 46,2 47,1 48,9 - Nourishers/anti-agers 29,7 30.0 30.6 31,2 31,8 33,3 - Facial cleansers 35,1 35,4 35,7 36,3 36,9 38,1 -- Liquid/cream/gel/ 28,8 29,1 29,4 30.0 30.3 31,2 bar cleansers -- Facial cleansing wipes 6.0 6.3 6.3 6.3 6.6 6.9 - Toners 16,5 16.5 16,8 17,1 17,7 18.0 - Face masks 0.3 0.3 0.3 0.3 0.3 0.3 - Lip moisturisers 0.0 0.0 0.0 0.3 0.3 0.3 Body care 48,9 49,8 50,4 51,9 53,4 55,2 - Firming/anti- 3,9 3,9 3,9 4,2 4,2 3.5 cellulite body care - General purpose body 45.0 45.6 46,5 47,7 49,2 51,0 care Hand care 12.0 12.0 12,3 12,6 12,9 13,2 Skin care 186,6 188,7 191,7 195,6 200,7 207.0


13. DEPILATORIES

Depilatories reached sales of US$85,2 million in 2003, up nearly 7% on 1998 and about 1% on 2002 in current value terms. Volume growth was significantly higher due to price cuts by the major manufacturers.

This quick recovery in the sales was attributed to the increasing interest of women in depilatories as an alternative to going to beauty salons for hair removal. This switch was due to women cutting down on expenses as a result of the financial crisis. Therefore, contrary to other cosmetics and toiletries sectors, depilatories to some extent benefited from the crisis.

Until the 1990s, most women opted to remove body hair by sugaring. This is a traditional method of removing hair with a sugar-based product that was usually made in the home.

The introduction of women's razors and blades and pre-shave products was also important in stimulating retail sales, together with intensive advertising conducted by the multinational companies, such as Reckitt Benckiser Sanayii ve Ticaret AS for its Veet brand.

Disposable razors held the bulk of retail sales of women's razors and blades although the number of brands offered was very limited indeed. New triple blade-shaving systems launched by Gillette, on the other hand, attracted consumers but achieved lower sales values due to their high prices in the last couple years of the review period.

Sales of women's pre-shave products garnered US$7,2 million in 2003, which represented about 8% of total depilatories sales. Pre-shave products are still largely unknown to the majority of consumers in Turkey. Women were not in the habit of buying pre-shave products, as they normally shaved using soap or body washes and did not feel the need to buy an extra product specifically for shaving.

The consumption of these products was limited to consumers from high income groups living in the big cities. The lack of distribution and the lack of awareness of most consumers of these products was the main reason for this limitation.

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Gillette Sanayi ve Ticaret AS, Reckitt Benckiser Sanayii ve Ticaret AS and Sesu Kozmetik San AS accounted for a combined value share of 58% of total sales in 2003. The remaining share was held by a number of smaller firms.

Both the multinational and local manufacturers were active in depilatories over the review period. In 2001 and 2002, the competition was based on price discounting and promotions. However, in 2003, the leading companies competed by increasing their product ranges, quality and packaging, which they backed with intensive advertising. Meanwhile, smaller local and multinational companies continued to target middle- and lower-income groups through their price promotions. The products of the leading manufacturers benefited from widespread retailing activity throughout the country.


Higher growth over the forecast period

Euromonitor expects depilatories to reach sales of US$99 million by 2008, representing constant value growth of 16.9% on 2003. Depilatories is expected to be the most dynamic sector of the cosmetics and toiletries industry over the forecast period. Newly developed, easy to use and time saving products are expected to stimulate the demand for depilatories.

Although women preferred using a sugary wax product called 'agda' or going to beauty salons for hair removal over the review period, sophisticated retail depilatory products have enabled depilation at home which is more time and cost effective. It is projected that the demand for these products will increase with better retailing activity and advertisements in order to raise the awareness of consumers. In 2002, there were about 12 million females in Turkey between the ages of 15 and 35, which translates into strong potential for growth in this area.

Table 19 Forecast Retail Sales of Depilatories by Subsector: Value 2003-2008

US$ million 2003 2004 2005 2006 2007 2008

Women's pre-shave 7,2 7,2 7,2 7,2 7,5 7,8 Women's razors and blades 22,5 22,5 22,8 23,4 24.0 26,6 Hair removers/bleaches 55,8 57,3 59,1 61,5 64,2 67,2 Depilatories 85,2 87,0 89.4 92,1 95,4 99,6


14. SUN CARE

The retail sales of sun care products reached US$23,1million in 2003, representing current value growth of 2% on the previous year.

Sun care products experienced annual value growth of between 8% and 11% between 1998 and 2001. This growth was directly related to the growing awareness of consumers in Turkey on the danger of sun damage due to the increasing number of television programs and articles in the press.

It is mainly the young population of Turkey which is interested in sun care products. Nonetheless, over the review period, the older consumers also began to use these products as a result of the fear of skin cancer. In 2003, the increasing numbers of tourists visiting Turkey pushed the sales of these products further in value terms.

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Following the economic crisis, the Turkish government attached a great deal of importance to the promotion of Turkey to attract the interest of tourists in order to achieve growth in the economy. As a result, the number of tourists visiting Turkey increased in 2002 and 2003 which helped the increases in sales volumes of sun care products. There are increasing number of tourists coming from abroad and also some from the larger cities of Istanbul and Ankara to the seaside of western and southern Anatolia. This was a very important factor in generating demand for sun care products, since both foreign and local tourists buy such products.

Traditionally, suntans were perceived to aid human health in Turkey and it was believed that the sun could protect people from most illnesses. However, this perception is changing and an increasing number of people are realising that the sun can do more harm than good, unless adequate steps are taken to protect the skin. Turkish consumers became more aware of the dangers of being exposed to the sun and the risk of skin cancer over the review period, thanks to a combination of advice from doctors and informative leaflets produced by manufacturers.

The sales of aftersun products reached a value of US$3,6 million in 2003 which represents positive growth of more than 2% on 2002 .

Before the economic crisis, aftersun experienced considerable growth rates. There are limited manufacturers competing within aftersun due to the lack of awareness of consumers of these products in Turkey. Lack of adequate competition made companies less active in promoting and advertising their products. Ultimately, this left many people unfamiliar with aftersun products.

However, the entrance of Evyap during the review period played an important role in increasing the awareness of consumers as the company advertised its aftersun products together with its sun protection products.

Self tanning products are mostly unfamiliar to the consumers in Turkey due to the lack of competition, limited brands and poor retailer activity. These products are consumed by only upper income groups as they are available in the big department stores of the big cities. Moreover, a large proportion of Turkish consumers has dark skin and feels no need for these products.

During the review period, sun care was dominated by four multinational companies Lorepar Kozmetik, Johnson & Johnson Sihhi Malzeme Sanaii ve Ticaret AS, Eczacibasi-Beiersdorf Kozmetik Urunleri San ve Ticaret AS and Tanning Research Laboratories Inc taking a combined value share of almost 67% in 2003. Foreign companies led sales, importing their products via their subsidiaries within Turkey. Competition was not that fierce in that there were few companies in Turkey and growth potential remains very high. Almost all companies present in Turkey focused their activity mainly on sun protection products, both in advertising and in the diversification of the product range offered. During the review period there was no private label activity in sun care.

Premium versus Mass

Mass sun care products are dominant across sun care and they increased their volume and value share over the review period. Fewer people could afford to buy premium products due to the economic crisis, which decreased levels of disposable income considerably, even amongst the upper income groups.

The most popular mass brands in 2003 were Nivea Sun (Eczacibasi-Beiersdorf), Piz Buin (Johnson & Johnson), Ambre Solaire (Lorepar Kozmetik), Hawaiian Tropic (Tanning Research Laboratories) and Arko (Evyap). Mass products actually increased their share by more than two percentage points between 1998 and 2003 to account for 89% of total value sales in 2003.

People in high income brackets were the main purchasers of premium sun care products, which were generally available only in larger cities and holiday resorts. Given that premium products are very expensive, only consumers in the highest income groups can afford to buy them. However, in 2001 some people with high incomes and employed in finance and media either lost their jobs or were forced to were forced to take pay cuts or unpaid leave. Given that some of them were consumers of premium products, their weakened position in adverse economic conditions decreased the demand for such products.

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The most important premium brands available in Turkey at the end of the review period were Estée Lauder, Lancôme and Osmose. These brands were advertised in women's magazines and interested consumers were well aware of their presence in Turkey.

Table 20 Sun Care Premium vs Mass Analysis 1998/2003





Increase in the sales expected on the contrary to the review period

Sun care products are expected to grow by nearly 16% in constant value terms over the forecast period to reach a value of US$26,7 million by 2008. Sun care experienced a negative current value growth over the review period as the result of the economic crisis, decreasing disposable incomes and decreasing unit prices. However, the economy is well on the road to recovery and thus positive growth is expected.

The increasing awareness of consumers on the dangerous effects of the sun, the increasing number of television programs and press articles warning consumers to use sun care products, and the interest of the young population in the new types of products developed over the review period, will stimulate demand for sun care over the forecast period. The expected increase in the number of tourists visiting Turkey for their holidays will also be one of the leading factors driving retail sales of sun care products.

Local companies are expected to enter sun care over the forecast period with low-priced brands. This will lead multinationals to launch products with additional benefits such as anti-ageing or anti-cellulite in order to remain competitive. These products were only available in some of the premium brands over the review period. New formats such as wipes are also likely to make an entrance. However, these products will be mostly used by tourists visiting Turkey as it will take time for these products to become familiar to local consumers.

Rapid recovery in unit prices expected

Sun care products are projected to see volume growth of nearly 15% over the forecast period and constant value growth of 16%, showing a recovery in the unit prices. The prices of sun care products are not expected to shoot up but will gradually increase over the forecast period. However, the expected entrance of local companies and the competition over the forecast period will restrain prices from increasing more significantly.

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Table 21 Forecast Retail Sales of Sun Care by Subsector: Value 2003-2008

US$ million 2003 2004 2005 2006 2007 2008

Sun protection 19,2 19,5 20,1 20,7 21,6 22,2 Aftersun 3,6 3,9 3,9 4,2 4,2 4.5 Self-tanning 0.3 0.3 0.3 0.3 0.3 0.3 Sun care 23,1 23,7 24,3 24,9 25,8 26,7


COSMETICS AND TOILETRIES IN TURKEY 2004 - … report analyses the market for Cosmetics and...

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