Presentación Euromonitor [EDocFind.com]

8/9/2019 Presentacin Euromonitor [EDocFind.com]

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MARIA ELVIRA NUEZ FORERO

Euromonitor InternationalBeauty and Personal Care

2010 edition


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Euromonitor International

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Euromonitor InternationalAnnual Beauty and Personal Care Survey 2010 edition

Euromonitor International is currently updating its global survey of the Beauty andPersonal Care industries.

Our survey covers 80 countries and measures:

Market sizes

Value and volume sales in Retail and Manufacturer prices

Company and brand value shares

Forecasts to 2014

Data on distributor/wholesaler and retailer mark-ups

Retail distribution breakdowns by product category

With accompanying insights and quantitative and qualitative analysis

We would greatly appreciate you time and input into this years survey


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We would like you to take part in our trade surveybecause

We give all key opinion formers the chance to participate

We value your expert opinion on the market

We want to ensure that you are accurately represented

Please note that sources are not quoted directly. We strictly adhere to industry

guidelines on anonymity

We as industry analysts offer the chance to engage in a mutually beneficial

dialogue on the industry, an exchange of opinions on data and insights

Our preference is always to build a long term relationship with all key opinion

formers as we consolidate our position of the leading authority on the industry at

global level

We are happy to follow up our discussion with a summary of key findings fromthis years research


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Corporate strategy planning, product and brand management, consumer insights, competition strategies,

channel and customer management and supplier relationships


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Beauty and Personal Care: Key findings


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Global Snapshot

Industry Growth Shielded from Late Arrival of Recession

y Growth in the global cosmetics and toiletries market slowed to 5% in 2008, from 6% in 2007, on increased pricesensitivity among consumers. Already in 2008 there were sharp declines in selected leading countries and categories

such as North American fragrances and Japanese skin care and colour cosmetics. There was, however, offsettingbuoyancy in emerging markets due to their relative immaturity, and also because the effects of the global creditcrunch were felt with greater delay there than in developed markets.

y The full brunt of the global recession will be felt from 2009 onwards. In many countries, media coverage of theeconomic slowdown only gathered speed during the second half of the year, meaning that prior to that consumerspending was largely in line with that of previous years. As the bear market mentality set in among consumers,however, many beauty product manufacturers posted fourth quarter results that were far lower than those of the sameperiod the previous year. In 2009 the effects will be far more evident as growth of only 0.7% in constant terms is

forecast for the declines in premium sales. Western European premium sales (34% of global) grew by 3% in 2008versus 5% in 2007, but they will fall by an estimated -0.3% in 2009. As a result, global premium CT sales are expectedto contract by -1.3% in 2009.


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Global Snapshot

Categories' Resilience Varied Markedly Across Regions

y Deodorants and baby care were the best performers globally in 2008 with growth rates of 8% and 7% respectively.These two sectors, along with bath and shower, were also the only ones to outperform their percentage rise of the

previous year. Latin American's love for scents underpinned strong growth in deodorant roll-ons and sprays.Unwillingness by parents to give up quality on their children's products together with increased purchases for adultconsumption (baby lotion) boosted baby-care products demand.

y Premium cosmetics and toiletries bore the brunt of the impact of decreasing consumer confidence and disposableincome and rising unemployment rates. The category's growth rate more than halved to 2% in 2008, as consumerssacrificed luxury brands for mass or masstige alternatives.

y While global skin care spend slowed to 5.5% growth (7.1% in 2007), nourishers /anti-agers remained star performers,expanding by 9.7% or only 0.6 percentage points less than in 2007. This adds substance to the belief that most

consumers will sacrifice on many other fmcg's before they will alter their facial care routines.

y Other resilient sectors included under-developed men's grooming (-0.3 or +6.1% in 2008), and sun care that despitedeclining 1.3 percentage points, remained the most dynamic sector over the 2003-08 review period. Though globalhair care spending decelerated by 1.3 percent points and was the slowest growing category, the sheer magnitude ofthis relatively mature sector determined it was the second largest contributor to absolute value growth during thereview period.


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Regional Overview

Leading Regional Markets in Retreat

y Economies with advanced, integrated credit markets are suffering the brunt of the current economic downturn. Itis these countries that also enjoy the highest per capita consumption of cosmetics and toiletries, are mature,

sophisticated and price sensitive, andare being hardest hit, as consumers curtail overall expenditure.

y Though Canadians showed unwillingness to cut back in their personal care regimens, the overwhelmingincidence of the US within North America, resulted in an estimated -2.4% decline in the region's CT market in realterms (-0.4% in current prices) during 2008. Americans of all income levels began tightening their belts, leading tomassive discounting even in premium cosmetics (never seen before). The region's CT market is projected tocontract by a cumulative 1.7% over the next five years.

y In all, half of CT world sales are in leading markets that will contract or stagnate during the forecast period. CTsales in Japan fell -1.4% in 2008 as consumers reduced premium cosmetics purchases. Japan accounts for 40%of Asia Pacific's CT market, causing a sharp slowdown there over the next five years. For the largest fivecountries that together account for three quarters of the West European market, CT sales will either contract orcome to a near stand-still over the forecast period.


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Regional Overview

North America and Western Europe Suffer Hardest

y The CT market in North America is forecast to decline by US$1 billion in 2008-2013, driven by US premium cosmetics(-9%), fragrances (-17%) and colour cosmetics (-6%). The West European CT market will remain flat in 2009, though

France (17% share of regional CT sales) will fare worst, posting negative growth through 2011, and Germany (17%share) is expected to grow a meagre cumulative 0.9% during the forecast period. Italy, Greece, Sweden and Portugalwill also decline in 2009, to recover in 2010, while the UK, the Netherlands, Spain, Norway, Finland and Turkey willshow healthy growth rates.

y Private label has been a large beneficiary in the US (bath & shower, oral hygiene, baby and sun care) and in countriessuch as Germany, Netherlands, France, Spain and the UK, where major retailers show increasing sophistication intheir private label offer and are expanding their ranges to include natural and organic products (Carrefour, Tesco,Sephora, amongst others).

y Major branded manufacturers are responding differently across countries and sectors, as price points fall with newlaunches (US, premium cosmetics), or innovations in mature sectors such as hair care and skin care underpin unitprice growth in the Netherlands and Germany, or greater consumer segmentation reaps above-average value growthin Spain (+5 % in 2008).


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y The Japanese CT market is expected to contract by 5.1% or US$1.7 bn over the next five years, in constant valueterms. Although there are pockets of growth in 'preventive' products such as anti-ageing, oral care and sun care, as

well as depilatories, these are small in the overall context of the Japanese market. Consumers' trading down frompremium to mass and masstige products is affecting most sectors, but the bulk of the brunt is being felt in skin-care(excepting nourishers/anti-agers), and colour cosmetics, that are also the largest sectors (42% and 20%, respectively,of Japanese CT spend), where average unit prices are declining.

y The US CT market is expected to be US$1.6 bn smaller by 2013, however, this will be a comparatively modest 0.6%decline from 2008. The CT mix is less concentrated than in Japan as well as fragrances and men's grooming productstake a greater share of CT spend. Discounting and lower volumes in fragrances (80% are premium, and considered aluxury) will reduce the CT market an estimated US$970 mn by 2013. The men's grooming sector will be a growth

driver in the US, as young men become more comfortable with grooming regimens and the idea of cosmetics linestailored for men becomes more mainstream.

Regional Overview

US and Japan: Erosion in Share ofWorld Market to Accelerate


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Regional Overview

A Diverse Environment in Asia Pacific

y In 2009, Asian economies (ex-Japan) will grow their lowest since 2001, nevertheless, above 5%. Public debt has beenreduced (excepting India) and foreign reserves are mostly ample. A more rapid recovery than in other parts of the

world, should thus be possible as governments are better able to cope with recession through increased spending.The region remains dependent on and vulnerable to foreign investment flows.

y Skin care is the key sector taking up 37% of CT spend, and the share is higher in mature markets. Catering to Asianwomen's traditional preference for clear and pale skin, majors P&G, Amway, and L'Oral launched several newwhitening skin care products during 2008. Products with whitening function are penetrating into nearly every area offacial skin care - moisturisers, cleansers, toners, face masks, and even nourishers/anti-agers - as manufacturers seekto add extra benefits to basic functionality. Sales will slow sharply but the high importance of facial skin beauty willcontinue to make skin care the star performer of the Asia Pacific CT market (37% of projected five-year absolute

growth), followed by hair care (20% of absolute growth).


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Regional Overview

China Sees Highest Absolute Growth Potential

y Around half of CT purchases in developed Asia Pacific markets (per-capita CT spend above US$120) are premiumproducts, that will do poorly such as in Japan (US$252 CT per-capita spend) and Taiwan.

y In contrast, countries such as China and India, where premium product penetration is low, will see premium productsoutperforming mass even in the economic downturn. Broadly speaking, developing countries whose CT markets arevery large yet per capita CT spend remains low, will see the greatest absolute growth.


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y The cosmetics and toiletries market in Eastern Europecontinued to grow a steady, rapid pace in nominal

terms, but significant rises in inflation sharply erodedthe real value of sales. Real growth of CT sales forthe largest 15 countries (97% ofEastern Europe's CTspend) slowed to an estimated 0.9% in 2008 from justover 3% in 2007.

y The repercussions of the global credit crunch were feltfully in 1Q 2009 with collapsing commodity prices,exports and credit access. The region's economy is

expected to contract by 4%, with slight recovery in2010 (+0.8% real GDP growth). The downturn will besharper in CIS states including Russia, the Baltics andHungary. The region's recovery is constrained byinflated fiscal budgets and in some cases largecurrent account deficits, requiring financial rescues bythe IMF and government donors.

y In 2008, CT markets contracted in Ukraine (-0.4%),Czech Republic, Hungary and Latvia, while Russia

slowed down sharply. Poland, stands out as a bastionof stability, with steady, even if, low growth (+2%2008). Romania's CT market also did well (+4%2008).

y For the region as a whole CT sales will grow amodest 1% in constant prices in 2009, recoveringover the forecast period, driven by Russia, Ukraineand Poland. Annual growth will average 2% over the

next five years, one of the lowest amongst emergingmarket peers.

Regional Overview

Eastern Europe: Nominal Growth Masking Sharp Deceleration


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y Lack of a credit/debit culture shielded consumers in MEAfrom the global credit crunch, and the pace of growth in

CT sales actually accelerated during 2008 to a nominalrate of 10%, from 8% in 2007.

y The collapse of oil prices and global economic downturn,will reduce 2008-13 growth to 2.4% vs 1.8% globally. CTsales of US$13.7 billion are only 4% of the globalmarket, the smallest region, and lowest average percapita spend (US$11.6).

y Saudi Arabia and UAE are expected to fare best, as

surpluses from windfall oil revenues allow them towithstand the crisis. Iran, however, is expected to fareworst as reduced government subsidies (in fuel,electricity and water) bite into discretionary spend.Nigeria, with unofficial unemployment at 40%, will see asharp reduction in its share of the CT pie.

y CT sales began decelerating in the mature MEA marketsduring 2008. Israel (US$149 per capita spend) slowed to

10-year low as discounting hit hair care and fragrances,its largest sectors, and move to masstige impacted skincare and colour cosmetics.

y South African consumers will be recovering from sharpincreases in food, electricity and fuel prices in 2008, andCT spend will slow markedly.

MEAMajorMarket Performance

SalesUS$ mn

Growth %2008/07

CAGR%2003-08

CAGR%2008-13

MEA - Total 13,736 9.6 7.7 2.4

South Africa 2,396 11.7 9.2 2.4

Saudi Arabia 2,174 11.2 9.2 4.4

Iran 2,045 6.6 6.8 -6.2

Israel 1,088 2.9 7.7 2.2

UAE 834 13.7 9.7 7.3

Egypt 600 8.8 9.7 1.4

Morocco 523 7.7 5.3 6.3

Algeria 327 7.9 7.2 4.4

Kenya 273 9.0 9.4 0.9

Nigeria 255 5.5 9.7 -1.4

Tunisia 150 11.0 7.0 6.4

Cameroon 78 4.7 6.2 2.0

Other ME

A 2,992 11.8 6.4 3.7

Regional Overview

Middle East and Africa: Resilient but Not Immune


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y After the region's 2002 financial crisis, most countries(except Argentina, Venezuela) followed orthodox policies,

thus Latin America is well placed to withstand the globaleconomic downturn. Brazil, will contract in 2009 on externaldemand factors, but swiftly return to growth in 2010.Mexico's reliance on the US (76% of exports) will slow itseconomic recovery.

y Latin America's CT market grew the fastest globally in 2003-08 (12.3% CAGR), and in absolute terms (US$23 bn toUS$52 bn). Hair care continued to dominate CT spend (23%of total).

y The hair care market, is relatively mature and slowing in therecessionary environment. In Brazil, rising use ofprogressive blow-dry in beauty salons, that requires reducedfrequency of hair washing to achieve smooth and straighthair, is dampening demand for shampoos, conditioners andcolourants (an estimated 65% of Brazilian women have curlyor afro hair type).

y The increasing quality of mass fragrances (86% of total),climate and cultural factors, and innovative marketing andsegmentation, will drive fragrance sales in 2008-13. In 2009,specialist retailer O Boticario, successfully launchedCapricho Day&Night targeting teen girls with two fragrancesthat create a third when mixed, and introduced a winningCapricho cosmetics range. Direct seller Avon has developedtwo skin care ranges to target low-income women (AgelessResults), and middle-to-high income (mainly older) women

(Avon Renew Ultimate), while adding nourishing/anti-ageingbenefits to its colour cosmetics ranges.

Regional Overview

Latin America Set to Weather the Economic Storm


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Global Prospects

Masstige Beauty Will Continue to Accelerate

Key Issues Future Impact to 2013

Resiliencetorecession

y As growth in the industry's largest markets of the US and Japan is unlikely to rebound until 2013, focus will

remain on the BRICs. However, with Russia's economy being severely hit by the recession and the BRIC'spersonal care market expected to expand at a much lower pace than seen in the past, companyinvestments need to be more focused and targeted.

y The most prominent growth potential will be in the rapidly expanding skin care market in Asia (China'spremium skin care is set to increase by 11% by 2013), fragrances in Latin America (Brazil is expected toaccount for over half of the global absolute growth, an additional US$ 2.6 billion in the next five years), andhair care in China, India and Brazil, contributing with a combined extra revenue of US$ 2.9 billion by 2013,nearly a third of global absolute hair care growth.

y Sun care will continue to align itself with beauty, as many skin care operators venture into this segmentwith particular focus on anti-ageing benefits. The category's growth dynamics will remain largelyunscathed, with sun protection in North America and Asia posting highest revenue gains

y The only regions to show sustained growth in premium cosmetics in 2009 and most dynamic CAGR for thecategory by 2013 will be Latin America and the MEA (the latter should contribute with over half of totalabsolute growth in premium fragrances).

The rise of'masstige/focus onvalue

y As consumers increasingly look for better value, acceleration in masstige beauty (particularly successful inanti-agers) will continue, while companies focus on investing in more sophisticated formulations

y Consumers will continue to trade up from mass to more specialised, but slightly more expensive brands,

as well as trade down from department stores to the upper end of mass to benefit companies, such asP&G and Beiersdorf. While many are opting for lower priced brands, high quality and novelty continue tobe a key factor. The most successful brands will be those that offer something unique, but also put extraemphasis on value, while preserving the 'functional' benefits and a luxury status.

y The price points on certain premium products may need to come down in order to retain the mid-luxurymarket, as already evidenced by heavy discounting and promotional activity in the luxury arena.

y The interest in masstige alternatives to replace premium products will depend on the depth and length ofthe current recesssion. In many emerging markets, the current halt of the premiumization trend is likely toprove temporary as economies rebound.


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Global Prospects

Demand for Both Natural and Scientific Beauty Set to Thrive

Key Issues Future Impact to 2013

The rise ofcosmeceuticals

y

The trend towards high-tech formulations and improved product efficacy will continue to spiral, manyconsumers will opt for cheaper alternatives to cosmetic surgery procedures and salon beautytreatments. As concerns with health and ageing become increasingly prominent, medical-gradeefficacy and a doctor's seal of approval will become a key factor in purchasing decisions.

y At -home treatments are surging as consumers are tightening their belts. The expected rise in DIYbeauty treatments and devices, now spanning across not just luxury and doctor brands, but alsomore mainstream masstige offerings, will herald the evolution of cosmeceuticals.

y There is a backlash emerging against product inefficacy and safety, that can be constraining. As thedistinction between drugs and cosmetics becomes more ambiguous the formulations of cosmetics

will be under closer scrutiny and products are likely to be treated as strictly as pharmaceuticals.

Ingestiblebeauty

y The convergence between beauty and food will maintain its momentum. This will present furtherscope for development for both cosmetic and food/dietary supplement manufacturers.

y However, beauty foods require strong credibility for success. Ingredient formulations in drinks andfoods with beauty enhancing properties must be convincing and marketing should clearlycommunicate the exact benefits and efficacy of products (particularly in Europe and the US, whichare still lagging behind Asia).

y With footfall in department stores and high-end outlets falling, distribution and pricing strategies ofsuch products may have to be readdressed to ensure returns.

Demand fornatural, organicproducts

y Demand for natural/organic beauty products will continue to boom, as consumers become morefocused on safety and well-being, as well as more educated about product claims and labelling

y While a strong industry-wide impact will not be felt in the short term, certain categories, such asbaby care, deodorants and mineral make up have shown resilience in demand for natural productlines and look set to remain strong despite the recession. As more retailers tap into this trend andbranch out into natural cosmetics distribution through more mainstream outlets is bound to increase,fuelling further demand.

y However, the lack of a unified global standard for natural cosmetics will continue to be a hindrance

to growth and increasing consumer product awareness.


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