New product developments and overseas expansion will drive industry growth
Los Angeles, CA (PRWEB) October 18, 2012
The wide range of beauty products available through the Cosmetic and Beauty Products Manufacturing industry protects its participants from drastic changes in disposable income. According to IBISWorld analyst Radia Amari, “Fluctuating incomes do affect cosmetics, but essential goods like shampoos experience steadier demand.” Revenue for the industry dropped in 2009 (a mere 0.1%) for the first time in five years because of weakened economies worldwide. However, revenue turned around in 2010 and 2011; IBISWorld expects 2012 to display more positive figures, with revenue estimated to grow 2.2% to $54.9 billion, bringing the average annual growth rate to 1.3% over the five years to 2012.
Since 2008, the number of industry employees has steadily declined. Driven by the need to sustain profit margins, operators cut employment at an average annual rate of 1.7% to 53,619 workers over the five years to 2012. “The move helped players sustain average profit margins of 10.6% of revenue,” says Amari. The recession forced operators to reduce expenses in order to sustain margins, and employment was one of the easiest places to cut costs. The industry's growth has also prompted many operators to seek market opportunities overseas. Exports are expected to increase from 11.0% of revenue in 2007 to 12.8% in 2012. Overseas retailers depend on the appeal of American-made goods for their perceived high quality. Additionally, the weakness of the US dollar has made domestic products cheaper on the global market, increasing their appeal. Exports are forecast to climb to 14.7% by 2017.
Industry concentration measures the extent to which large companies dominate the industry. IBISWorld estimates that, in 2012, the top four industry participants will generate less than one-third of total industry revenue. This suggests a low level of concentration since the majority of market power is spread over a large number of operators. Additionally, US Census data indicates that 64.0% of all industry firms employ fewer than 20 workers, suggesting that the average size of a company operating within the Cosmetic and Beauty Products Manufacturing industry is relatively small. However, the level of industry concentration is gradually increasing. While there are a number of small players in the industry specializing in a small number of product lines to serve niche markets, major players in the industry will continue to expand and gain greater market control. Major player Procter & Gamble, for example, has well-recognized brands in a variety of markets, ranging from high-end fragrances via Dolce & Gabbana to everyday products like shampoo and conditioner via Vidal Sassoon.
The industry's diversity will keep its revenue growth steady over the five years to 2017, with revenue projected to increase at a steady average. Over the next five years, product developments and consumer preferences will likely drive some industry growth. Manufacturers are projected to earn higher margins due to product development and associated price premiums. Globalization will increase as large players like Procter & Gamble expand their foreign operations to bypass the stagnant domestic market.
For more information, visit IBISWorld’s Cosmetic & Beauty Products Manufacturing report in the US industry page.
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IBISWorld industry Report Key Topics
This industry prepares, blends, compounds and packages beauty products and cosmetics. Products included in this industry are perfumes, make-up items, hair preparations, face creams, lotions and other toiletries. Toothpastes are not included in this industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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