Despite increasing competition, revenue will fare better as disposable incomes rise.
Los Angeles, CA (PRWEB) February 07, 2013
The Cosmetic and Beauty Products Manufacturing industry is a mature one, providing widely accepted and necessary personal care products to downstream consumers. Revenue growth is determined by demand from wholesalers and retailers, which is ultimately driven by consumer spending, tastes and preferences. During the five years to 2012, industry revenue has grown at meager 0.7% per year on average to an estimated $1.7 billion. “A decline in per capita disposable income in 2009 hurt industry performance from 2009 to 2011 due to weakened demand for high-margin luxury products,” says IBISWorld industry analyst Nikoleta Panteva. “Still, sustained increases in disposable income are expected to underpin revenue growth of 2.9% in 2012.”
Profit margins (i.e. earnings before interest and tax) are slim for the average Cosmetic and Beauty Products Manufacturing industry operator. The high and rising price of crude oil, which represents a key input in most industry products, has cut into industry profitability over the past five years. Coupled with intense competition, this scenario makes for a tough operating environment. Internal competition exists among operators on the basis of price, quality and ingredients. Over the past five years, the focus on organically-derived inputs has risen, urging more companies to introduce natural products. Industry participants also face external competition from imports. Imports satisfy 94.9% of the domestic demand for cosmetics and have risen from 89.2% over the past five years. “As the Canadian dollar has appreciated, gaining strength against its trading partners' currencies, foreign-made goods have become relatively cheaper domestically,” adds Panteva. “In 2009, the Canadian dollar gained significant strength over the US dollar, causing imports to jump.” IBISWorld anticipates this trend will continue over the next five years as the domestic currency continues its upward trend.
Over the past five years, market share concentration has increased due to major players' ability to thrive in difficult operating environments. Well-recognized brand names like those of Unilever and Procter & Gamble, the availability of non-discretionary products (e.g. shampoo and sunscreen) and strong bargaining power with upstream suppliers have allowed the industry's largest players to grow even as other manufacturers have suffered.
Revenue is also projected to fare better over the next five years. Per capita disposable income is expected to continue rising slowly, resulting in stronger downstream demand from wholesalers and retailers. Nevertheless, competition will remain a key feature, pushing operators out of the industry. For more information, visit IBISWorld’s Cosmetic and Beauty Products Manufacturing in Canada industry report 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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