Elizabeth Arden eyes China market

By Simon Pitman

- Last updated on GMT

Related tags: Elizabeth arden, Cosmetics, Economy of the people's republic of china

Elizabeth Arden is making clear moves on the China market for
cosmetic and fragrances, with a 50 per cent jump in sales in the
past two and a half years spurring the company on to buy up its own
distributor in the region.

The company's Geneva offices confirmed that it had bought up the company Leroy distributions, based in Shanghai, for an untold sum and that the new company would be renamed Elizabeth Arden Shanghai Cosmetics & Fragrance Ltd.

The Northern Asian region, which for the company also includes Korea, Japan and Hong Kong, is of huge interest to the company because of the massive growth in consumer spending in China over the last couple of years.

Announcing better than expected quarterly results last month, the company said that its encouraging performance in China meant that the market was now a 'priority' for its future business.

For the quarter ended June 30, Elizabeth Arden​ reported a loss of $4.5 million, compared with a prior-year loss of $28.5 million and net sales are expected to growth at between 8 and 12 per cent for the rest of 2006.

Elizabeth Arden will be well placed to tap into this growth, too, as Chinese consumers move away from inexpensive domestic brands that are often perceived to be low quality, towards the more glamorous top-end western cosmetic and fragrance brands.

A recent report from Euromonitor​ highlighted the most recent trends in the China skin care market. The report stated that luxury anti-aging treatments - of which Elizabeth Arden has built a representation as a leading player - were becoming more and more popular.

With the China economy showing no signs of a slow down, the increased spending power of consumers is expected to drive the growth of skin care products in China by a further 88 per cent to 2009, reaching an estimated CNY 47.12 billion ($5.8bn) - growth Arden will be looking to tap in to.

Currently the total cosmetics industry in China tops CNY 50 billion ($6bn) and is expected to reach CNY 80 billion by 2010. This growth is being driven by an increased distribution of wealth in China, which is also seeing smaller towns and cities enjoying the unrivalled boom in consumer spending.

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