Are you sure?

Aging population bad news for the UK Cosmetics and Fragrances Industry

Research and Markets has announced the addition of Cosmetics And Fragrances Market Report Plus 2007 to their offering.

Retail sales of cosmetics and fragrances, as covered by this report, increased in value by 5.1% between 2005 and 2006, with fragrances showing the stronger growth. Value growth in the sector of decorative cosmetics was hampered by a slight downturn in sales of cosmetics other than face make-up, sales of which had increased. Growth in expenditure on most consumer goods, particularly that on luxury goods, slowed significantly as recent interest rate rises have taken the base rate to the highest level in 6 years, amid concerns over inflation. It is anticipated that value growth in the coming years will be modest since figures from National Statistics confirm that expenditure on beauty products and treatments is discretionary and tied in with disposable income; the 10% of households in the lowest gross income group spend a weekly average of just £3.50 compared with those in the highest income group who spent an average of £19.40 in 2005/2006.

However, percentage penetration of cosmetic products and fragrances is high, with a survey undertaken for this report revealing that 89.7% of women used fragrances and 80.4% use lipsticks. Younger respondents tend to use products more than older respondents so, ostensibly, the UK's aging population does not bode well for the industry. It is a fact, nevertheless, that older people maintain a pride in their appearance and frequently have the disposable income to indulge in premium products. Another demographic influence on the future of the cosmetics industry is the growth of the minority ethnic population so companies are increasingly expanding their ranges to suit different skin textures and colorings. Such personal care manufacturing companies at the forefront of developing this market include L'Oreal and Avon, and the diversified multinationals, Unilever and Procter & Gamble. Although the UK has a trade deficit in fragrances and cosmetic products, it is one that, in contrast to previous years, decreased from 2004 to 2005 as the value of exported goods increased at a faster rate than the value of imported goods. Principal trading partners are France, Germany, the Republic of Ireland, Italy, Spain and the Netherlands.

According to the European trade association, COLIPA, the European cosmetics industry consists of around 4,000 manufacturers, mostly small and medium-sized enterprises, which create employment — directly and indirectly — for more than 350,000 Europeans. In common with other markets, the European cosmetics and fragrances industry, on both the manufacturing and retailing sides, has its sights on expansion in the developing markets of Asia, Eastern Europe and Russia, and South America. For example, The Body Shop saw comparable store sales in Malaysia and Indonesia both growing by 17% in its financial year ending 25th February 2006. While Eastern Europe may still represent a small region for the industry, it is one with great potential in which to increase sales, particularly in Poland, the Czech Republic, Hungary and Slovakia. (digital50.com)