Polish Cosmetics Market Continues to Grow Steadily

According to “Non-food retail Poland 2006,” a report just released by the research and consulting firm PMR, the value of the Polish cosmetics market has been rising steadily. In 2005 it grew by 3.1% and will expand by 3.5% by the end of 2006. At the end of the current year, the largest drugstore and perfumery chains will count 900 shops in all.

(PRWEB) October 11, 2006 -- According to “Non-food retail Poland 2006,” a report just released by the research and consulting firm PMR, the value of the Polish cosmetics market has been rising steadily. In 2005 it grew by 3.1% and will expand by 3.5% by the end of 2006. At the end of the current year, the largest drugstore and perfumery chains will count 900 shops in all.

Based on PMR’s estimates, the Polish cosmetics market was worth PLN 8.7bn at the end of 2005, expanding by 3.1% on its 2004 value. Its growth was primarily fuelled by the country’s better economic climate and the Poles’ rising buying power. Year by year, Poles are earning more and, thus, spending more on cosmetics.

As incomes increase, so too do demand for and spending on cosmetics. Nevertheless, both are still relatively low in Poland. According to PMR’s report, the average per capita monthly spending on beauty products and make up amounted to approximately PLN 28 (€7) in 2005, that is, three to four times less than in Western Europe.

Poland is the only country in Europe to have an excise duty levied on cosmetics (currently in the amount of 10%), which means that cosmetics, especially luxury products, are 10-20% more expensive in Poland than in Western Europe. “The abolition of the excise tax, announced for January 2007, should precipitate lower cosmetics prices and higher cosmetics sales, both in volume and value terms,” Patrycja Ciosek, a PMR analyst and one of the report’s authors, asserted. Based on PMR’s forecasts, by the end of this year, the Polish cosmetics market will grow in value by 3.5% to approximately PLN 9bn. In 2007, assuming that the excise duty is lifted, it should bloom by 4-5%.

In Poland, luxury cosmetics and perfumes are distributed by brand stores and by perfumeries such as Sephora, Marionnaud and Douglas. Middle and lower shelf cosmetics are sold in hypermarkets, supermarkets, drugstores, shops specialising in sales of cosmetics and other chemical products e.g. cleaning agents, multi-branch stores, kiosks, pharmacies, and food shops. A significant percentage of cosmetics retail directly to the consumer. The leaders in this market segment are Avon, Oriflame and Amway.

In the opinion of PMR analysts, in 2005 hypermarkets and supermarkets were responsible for executing approximately 48% of sales of the entire cosmetics and perfume market. Drugstore and cosmetics shops accounted for 30% of the total market, and approx. 4-5% of the products were distributed through pharmacies.

At the end of last year, the largest drugstore and perfumery chains collectively operated 724 outlets. Based on PMR’s forecasts, their aggregate storecount should expand to approx. 900 outlets by year end, i.e. an increase of nearly a quarter.

According to the report, Drogeria Natura is the most numerous drugstore chain in Poland. It has 242 company- and franchise-owned stores, 37 more than its largest competitor Rossmann. Meanwhile, Rossmann is market leader in terms of sales revenue, with turnover of PLN 913m in 2005.
Currently, the Polish market is home to seven foreign chains. In the opinion of the report’s authors, new banners might well descend on Poland in the upcoming years. “Till recently, The Body Shop chain of Britain was the most likely new entrant. At the top of this year it was acquired by the French cosmetics concern L’Oreal. The French have upheld the chain’s expansion plans, and will open the first Body Shop in Warsaw’s Zlote Tarasy shopping centre in the autumn of this year,” Patrycja Ciosek added.

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