Innovation providing impetus for cosmetics sales growth

- Last updated on GMT

Related tags: Cosmetics, Procter & gamble

A new report has hailed the emerging winners in the global
cosmetics market as those who continue to use product innovation as
their main feature in driving sales growth - proving particularly
important in an ever crowded retail environment. Tom Armitage
reports.

According to analysts Euromonitor​, 2003 sales growth was not only driven by a sizeable number of product advances, but also by the fact that cosmetics manufacturers and marketers are becoming more acute to the needs of the niche consumer.

For instance, an increasing number of manufacturers are developing products designed to target specific consumer groups, defined by age, sex, race - and even those with particular physical conditions, such as sensitive skin.

Once again, emerging markets appear to be proving the most rewarding areas for cosmetics manufacturers. "Markets such as Russia and Vietnam showed the strongest growth in 2003"​, claims Karine Peyre, cosmetics and toiletries analyst for Euromonitor, which she believes is the result of "rising levels of disposable income and improving retail infrastructure. These two factors have combined to encourage consumers in urban areas to trade up to higher-value products."

Again proving no surprise to the cosmetics industry, the US market has seen consumer confidence undermined by weak labour markets - despite the US amassing nearly a quarter of global market sales in 2003. The weak labour market and an increasingly consolidated cosmetics sector have both been blamed on price decreases, a trend which has also impacted several European markets, including Germany.

The report also confirms the continuing cosmetics market domination of conglomerates L'Oreal, Procter and Gamble (P&G) and Unilever, who together amassed a 28 per cent share of total sales.

P&G has witnessed the biggest increase in its share of the global cosmetics sector, particularly fortifying its position across Europe and Latin America after acquiring the Wella group earlier this year. P&G hope the move will enable it to tap into the highly lucrative hair care sector.

The report also mentions that Sun care cosmetics products retained their status as the most dynamic area of growth in 2003, as a result of hotter than average summer temperatures. This sector has proved the hypothesis that increased sales lie in category innovation - new product launches, with a serious of "value-added" features, including the incorporation of skin-replenishing ingredients and the introduction of spray and gel products, have all proved popular among consumers.

In contrast, the bath and shower products and oral hygiene sectors did not quite live up to expectations, primarily due to the growing maturity in several product areas, including bath additives, bar soap, and talcum powder.

Manufacturers, however, appear to remain unfazed by the increasing maturity of some cosmetics sectors, continuing to launch more expensive, value-added products onto the market in a bid to maintain sales momentum.

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