The study, Global Cosmetics and Toiletries 2004, published by the Kline Group, presents sales and market data across 20 product categories in 16 countries and shows that sales of skin care and hair care products were the main drivers of growth, mainly boosted by increasing penetration in developing countries.
"Europe is the largest market for cosmetics and toiletries, but countries like Argentina, Brazil, Russia, and China are showing the highest rates of growth," says Carrie Bonner, industry manager for the Consumer Products practice for Kline's research division.
All four of these countries saw their sales at the manufacturer level expand by double-digit rates in 2004, according to Kline's study. Argentina increased its sales by more than 17 per cent last year, albeit from a small base. This contributed to overall growth of nearly 12 per cent for the Latin American countries examined in the study.
While on a regional basis, Asia had an increase in cosmetic and toiletry sales of less than 4 per cent, impressive advances were made in the region's two largest markets - China and India. From 2003 to 2004, these markets saw growth of 12.5 per cent and 7.7 per cent, respectively, and together surpassed the $10 billion mark.
Bonner also notes that marketers of cosmetics and toiletries have eyed the developing markets in Asia, Latin America, and Eastern Europe and their growth potential for some time. Penetration rates for some personal care products are still relatively low, especially in rural areas. But leading marketers are now starting to capitalize on the new opportunities represented by these developing markets.
"Channels of distribution are developing quickly, and a greater variety of consumer products are becoming more readily available to more people," Bonner said. "We expect to see strong growth in these countries over the next five to ten years as marketers look outside of the mature regional markets for new sources of revenue."
Skin care products represent the largest product category examined in Kline's study and demonstrate the strongest growth from 2003 to 2004, estimated at nearly 5 per cent on a global basis. Hair care followed close behind, thanks in part to strong growth in Asia and Latin America.
Asia is the leading region in terms of skin care product consumption, accounting for approximately $17.5 billion in manufacturers' sales in 2004. While Japan accounts for the bulk of sales, China and South Korea each contributed more than $2 billion to the total and represent larger markets for skin care products than any single country in Europe.
"Even in developing countries, skin care is helping to drive overall market growth, and in the mature markets, the anti-aging trend is still going strong," says Bonner. "New formulas usually carry a high price tag, and consumers are willing to pay more for higher-performance products where they see added value."
In addition to covering sales by product category, each country-specific volume of Kline's study analyzes the market share of leading multinational companies as well as regional cosmetics and toiletries marketers.
"More companies are starting to look outside the mature markets in North America, Europe, and Japan for growth opportunities," says Susan Babinsky, senior vice president and head of Kline's Consumer Products consulting practice. "They're now extending their major brands to the developing markets, introducing regional varieties, or acquiring existing regional brands."
The report highlights industry experts belief that future growth in the global cosmetic and toiletries market will continue to be headed by major developing countries whose economic fortunes are strong at the moment.
This is contrasted by the growth rates in both the US and European markets, where the markets have been relatively stagnant. However, certain categories are expected to remain strong in the future, with recent reports highlighting the continued growth of natural-based products, anti-ageing products as well as premium products.
In addition to these categories, recent market reports have also highlighted the growing importance of the over 50s age group - a social category that is now richer than ever and increasingly fixated on personal appearance.