EU Cosmetic Industry Analysis
Introduction
Cosmetics products are essential consumer commodities that are needed in everyone’s life
besides the normal traditional cosmetic products like make ups and perfumes. Cosmetics also
include hygiene products like soaps, shampoos and tooth-care products.
The European cosmetics market is growing at a very fast rate and it’s currently dominating the
world’s cosmetic market. The European cosmetic industry represents about 30% of the global
cosmetic market. The total EU market sales revenue equals to approximately the combined
market for both the US and the Japanese market. In the year 2010, the average revenues from the
cosmetic market totaled to €67 billion while Germany led the individual countries within the EU
community with revenues totaling to €12 billion. France, UK, Italy and Spain totaled to €11
billion, €10 billion, €9.5 billion and €8 billion respectively. (Global Insight 2007) These figures
have contributed favorably to the GDP growth of these countries. Germany’s, UK’s and France’s
GDP growth registered significant growth before 2007 and after the financial crisis of the year
2008 – 2009. www.euromonitor.com
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The US and the Japanese market accounted for €40 billion and €30 billion respectively for the
year 2010. The other markets like Indian, Arabian, Chinese, Brazilian and the Russian Market
are continuously expanding and are motivated by the increased interest in cosmetic products in
their countries population. (Colipa 2010) The markets are expected to increase by 8.8% in
future.
The average historical growth of the EU27 countries global cosmetic market grew by 4.4% on
average in the last ten years and the growth in the market trend is expected to increase to 8.8% in
some EU countries. (Colipa 2010)
The personal care products in the European market such as shampoos, hair conditioners and
soaps are mostly found in the maturity stage of their product life cycle hence the major brands
are facilitated to grow by capturing the market sales and trends of the competing brands which
results in additional marketing costs. (Nielsen 2004) The marketing strategies that have evolved
from the emerging markets from the Asian market indicate that most soap markets are still in the
growth stages of the product life cycle. http://epp.eurostat.ec.europa.eu/
The distributional channels that have contributed to the success of the cosmetic markets in
Europe are the supermarkets and the retail outlets that are located in major shopping malls in EU
countries and whose supplies are obtained or imported from the factory’s premises. The
exogenous producers have been facilitated by well educated and informed consumers as a result
of the growth of effective media campaign, good communication and transportation networks.
State of the art technology and talented advertising have also facilitated the growth of the
cosmetic market in European countries. (Global Insight 2007)
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The key success factors have been the key strategies adopted by the companies entering the
emerging markets. These companies acquire the manufacturing plants and make agreements with
the local companies that have effective distribution networks which are already functional.
Alternatively, they have used the licensing agreement to capture the distribution networks of
existing local manufactures to distribute their products in the market.
To increase their profitability in these markets, the EU traders in cosmetic products have adopted
the cost leadership strategy to pursue the concept of economies of scale in acquiring the
preferential raw materials and other resources that are required in the manufacturing process.
They have exploited different sources of cost advantages and also formulated and branded their
products in a way that makes them comparable to their rival products from other firms.
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References
Global Insight, 2007, A study of the European Cosmetic Industry, EU Directorate General for
Enterprise and industry
Nielsen, A.C., 2004, Emerging Worldwide Markets in Personal care
Colipa (The European Cosmetic Association), 2010, Colipa Activity report 2010, Science,
Beauty and Care Innovation for Sustainable Future.
Euromonitor International.
