Details:
1. The Russian perfumery and cosmetic market as one of the largest consumer markets in Europe.
The Russian perfumery and cosmetic market is one of the largest consumer markets in Europe and continues its dynamic development. While the western perfumery and cosmetics industry did not show radical growth during a relatively long time, Russian consumers continued to spend money on perfumery and cosmetics even during the economic crisis. However, changes nevertheless affected the Russian cosmetics market.
Consumers started to choose goods more consciously and thoughtfully. The Russian market have been growing with «double digit growth» since 1995.
Polyphonic perfumery and cosmetics Russian market proved to be less influenced to hard tectonic hits of the global economic crisis than the other market, showing moderate growth rates - 8% per year.
The cosmetics market in Russia withered global economic slowdown without any severe dent and posted year-on-year positive growth. The expanding cosmetics product lines and focus on untapped regions rescued the industry from negative growth and demand reduction. Various segments, particularly perfumery, have contributed strongly to the overall market developments. The Russian cosmetic market is expected to grow at a CAGR of 12.6% till 2012.
The Russian perfumery and cosmetic market has witnessed phenomenal growth till the beginning of the financial crisis that emerged towards the end of 2008. Cosmetics & perfumery industry has witnessed 10.3% annual growth in 2008, with total industry sales value surpassing US$ 9 Billion mark for the first time in 2009. Industry experts foresee this figure will grow by 7-8%. Cosmetics (USD 1.7 billion), hair care products (USD 1.5 billion), oral hygiene (USD 1.3 billion), skin care (USD 1.3 billion) and perfumes (USD 1.2 billion) are the largest market sectors. Rising purchasing power, entry of large international cosmetic giants, favorable consumer behavior and well-established distribution network have transformed the cosmetic industry landscape in Russia over a period of time.
2. Exhibitions and market opportunities.
Dynamic development of the Russian perfumery and cosmetic market attracts specialists from different countries and spheres of activity in view of the necessity to speak on today and to look into the future. XVII International Perfumery and Cosmetic Exhibition Intercharm 2010 became a platform for effective communication of industry professionals. A place where businessmen contacts are established and new opportunities are discovered.
INTERCHARM is one of the very few exhibitions that give all market players the real opportunity to fulfill their business-tasks in a very short time period: to present products and novelties, to establish sales channels, to establish business contacts, to inform and train professionals, to expand number of contacts with owners and managers of salon business.
InterCHARM 2010 geathered 834 companies from 25 countries such as: France, Germany, Spain, Italy, Republic Taiwan, China, Poland, Lithuania, Latvia, Estonia, South Korea, Turkey, the USA, Canada, India, Israel, Pakistan, Bulgaria, Holland, the United Arab Emirates, Singapore, Russia, Belarus, Ukraine. Hungary has been presented at InterCHARM for the first time this year. More than 2625 brands were presented
Experts say:
3. Financial aspect of Russian perfumery and cosmetic market
According to the Russian perfumery and cosmetic association, average rates of the market’s growth will make 6 % in 2011-2017. By 2016–2017 years the potential capacity of the Russian market will achieve 15-18 billion dollars. The given growth is probable due to increase of purchasing power of the and growth of middle class and development of the market in the region. So far on average Russian woman spends 120 USD on cosmetics and perfumery per year.
Specialized retail makes the biggest share in perfumery and cosmetic production sales - 26.6%, supermarkets - 16.8% and hypermarkets (9.4%). Direct sales are gaining momentum significantly, getting closer to a specialized retail - 24.2%. “Open air markets” are only 9% of the industry in total, and this figure is constantly decreasing. Internet is the smallest share today (2%), while remaining a promising trend.
Make-up cosmetics is the most mature market sector and the largest one with 1,7 bln. USD. According to the statistics, an average Russian woman consumes much more make-up than an average European woman.
Premium fragrances constitute the major part of sales value of perfumery segment in Russia. Fueled by increasing incomes and cultural shifts, the premium perfumery segment is fast gaining popularity especially in urban areas. Particularly upper middle class consumers now prefer high priced premium perfumery products over general fragrance offerings. It is anticipated that the trend will continue to accelerate segment growth in coming years, and will witness various new players entering the market. The volume of the market will be 9 bln. USD by the end of 2012.
Apart from perfumery, other emerging segments like sun care, male grooming etc have shown tremendous market performance and received wide acceptance among the Russian consumers within a few years of their market inception. A very small percentage of the population in Russia enjoyed sunscreen cosmetics 15 years ago, and now it breaks all the sales records with a lot of brands represented. The segment of self-tanning products is developing most actively (by 20% per year). Besides, the sales of multifunctional sun protection products of premium class are expected to increase with increasing income levels and aggressive promotional strategies of
companies.
We should not expect any radical leaps in the hair care and oral hygiene market sectors. These segments are developing largely through the opening of new sub-segments and filling niches. The direction of niche products, such as whitening stripes, toothpastes for smokers and some others (products of everyday routine in the West), is still at the stage of initial development, a way to go to the mass consumption.
Dynamical development of the perfumery and cosmetic market and growth of incomes of the population has positively influenced on a level and model of consumption of perfumery and cosmetic products in Russia. For the past couple of years when all industries have experienced decline in production and sales, perfumery and cosmetics market has made it through crisis without serious losses. Even though all companies have faced challenges, many of them have come up with new ways to meet the needs of their customers and worked out new competitive advantages.”
Resume
Experts place Russia as one of the favorable destinations for cosmetic industry investments among the emerging cosmetics markets worldwide, which gives positive outlook for industry in the long run.