Australian cosmetics market bounces back, after tough years

By Simon Pitman contact

- Last updated on GMT

Australian cosmetics market bounces back, after tough years

Related tags: International trade, Australia

The Australian market for cosmetics, perfumes and toiletries is showing distinct signs of bouncing back following some tough years of contraction, according to new data from IBISWorld.

Although the industry remains very small in comparison to the country’s overall economy, the report highlights the fact that, following a contraction during the period 2011 – 2012, the industry is now back to respectable growth levels.

IBISWorld researchers estimate that in the period 2014 – 2015, the industry will achieve year-on-year growth of 2.4% to reach a total value of AUD$960.m.

Gains in both the domestic and export markets

The figure takes into account the fact that the industry has experienced gains, both in the domestic market and from exports to international exports.

However, the industry remains relatively small, with IBISWorld researchers estimating that during the 2014 -2015 period, total demand for cosmetics, toiletries and fragrances should hit the AUD$2 billion mark.

The size of the Australian cosmetics industry highlights the fact that it is still very much dependent on imports, reflecting the global nature of the industry, but also the fact that there are not many domestic manufacturers.

Poor economy has held back growth

The fact that the industry remains relatively small is underlined by the industry growth over the past five years, through to 2014 – 2015, which the market research company puts at just 0.6%.

“Growth has been constrained by poor economic conditions, tightened consumer discretionary spending, heightened competitive pressures and falling retail prices,”​ said IBISWorld analyst Arna Richardson.

Likewise, Richardson also points out that the strength of the Australian dollar has translated into a higher level of parallel imports, which has in turn affected downstream retail sales.

Strength of the 'made in Australia' label

But she also points out that, despite the strength of the Australian dollar, exports of cosmetics products still made headway of late, serving to contribute significantly to the market growth.

What is driving the sale of those products is the marketability of the 'Made in Australia' label, which Richardson points out is attributable to the many natural and organic brands that have successfully traded on a ‘clean and green’ image.

Pointing to the future, the IBISWorld research team believes that, despite market maturity, the willingness for Australian companies to buy into these kind of green brands is likely to sustain healthy levels of growth over the next few years.

Related topics: Market Trends

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