While the industry maintained positive revenue growth through the recession, profit margins took a hit
Los Angeles, CA (PRWEB) September 14, 2012
The Global Cosmetics Manufacturing industry is a dynamic one, characterized by a high degree of innovation and the introduction of new and reformulated products. According to IBISWorld industry analyst Nikoleta Panteva, "The past five years have been no exception, despite declining per capita disposable income in key markets." Due to consumers' tightened purse strings, industry revenue grew only 1.5% in 2009, the midst of the economic recession. Profit also suffered, falling to a low of 7.5% of revenue during the year, from a prerecessionary level of 10.7% in 2007, as shoppers opted for lower-priced personal care products.
Demand from emerging economies and aspirational shoppers has also kept the industry growing over the past five years, with revenue increases averaging 3.2% per year to reach $233.3 billion by the end of 2012. Industry operators have consistently expanded their portfolios to cater to underserved markets, where average incomes are well below the average product price. Moreover, to capture the growing aspirational shopper market (i.e. consumers who spend $300 or less per designer purchase), firms have integrated high-end cosmetic brands under their umbrellas. "In addition, operators have responded to changing consumer preferences for chemical-free cosmetics formulas by introducing and reformulating popular products like shampoos, makeup and lotions," says Panteva. IBISWorld expects these efforts, along with improving economic conditions, will drive growth for the Global Cosmetic Manufacturing industry during 2012, with revenue increasing 4.6%.
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. Merger and acquisition (M&A) deals of interest over the past decade that have served to change the face of the Global Cosmetics Manufacturing landscape include Procter & Gamble's takeover of Gillette, L'Oreal's acquisition of The Body Shop and Coty's acquisition of Unilever's fragrance division. Other key drivers underlying the ongoing spate of M&A activity include the expansion of geographic footprints, diversification into new product categories or market segments and the exploitation of new technologies, including greener processes. At the same time, IBISWorld anticipates the continued entry of new players from growing markets, such as India, China, South Korea, Indonesia and Brazil.
As per capita disposable income rebounds more strongly over the five years to 2017, the industry will experience even stronger growth. IBISWorld forecasts revenue will climb at a healthy rate over the next five years. Armed with deeper pockets, consumers - especially those in developed markets - will be more willing and able to spend on higher-priced products, leading to higher average profit margins for operators. Additionally, players' efforts to cater to emerging economies will also continue to pay off, further boosting industry growth. For more information, visit IBISWorld’s Global Cosmetics Manufacturing industry report page.
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IBISWorld industry Report Key Topics
This industry comprises companies that prepare, blend, compound and package toilet preparations personal-care products, including perfumes and fragrances, hair care, makeup, oral care, personal hygiene and skin care. Players in this industry are large multinational organizations that operate around the globe. Industry product is predominantly sold in downstream grocery, mass merchandisers and specialty retail stores.
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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