Despite increasing competition, revenue will fare better as disposable incomes rise.
New York, NY (PRWEB) March 21, 2014
The Cosmetic and Beauty Products Manufacturing industry is a mature one, providing widely accepted and necessary personal care products (such as shampoo and lotions) to downstream consumers. Revenue growth is determined by demand from wholesalers and retailers, which is ultimately driven by consumer spending, tastes and preferences. However, due to significant pressure from less expensive imported products, industry revenue has grown only 0.9% per year on average to an estimated $1.9 billion in the five years to 2014. A decline in per capita disposable income during the recession damaged demand for the Cosmetic and Beauty Products Manufacturing industry's high-margin luxury products. However, sustained increases in consumer confidence are expected to underpin revenue growth of 1.8% in 2014.
Profit margins (i.e. earnings before interest and tax) are slim for the average operator, totaling 4.3% of revenue in 2014. According to IBISWorld Industry Analyst Jocelyn Phillips, “The high and rising price of crude oil, which represents a key input in the industry's many petroleum-derived products, has cut into industry profitability over the past five years.” Coupled with intense competition, industry firms have been forced to innovate and invest in product development to maintain profit margins.
In the past five years, consumer demand for organic products has continued to rise, urging more companies to introduce natural products. At the same time, imports satisfy 93.2% of domestic demand for cosmetics and beauty products, up from 89.0% in 2009. As the Canadian dollar has appreciated, foreign-made industry products have become relatively less expensive domestically. IBISWorld expects this trend to continue over the next five years as the Canadian dollar continues its upward trend; by 2019, imports are projected to satisfy 91.6% of the industry's domestic demand.
“Revenue growth is also expected to pick up in the next five years,” says Phillips. Per capita disposable income is expected to continue rising slowly, resulting in stronger downstream demand from wholesalers and retailers. At the same time, however, the world price of crude oil is expected to rise more slowly, buoying profit margins and keeping prices to consumers low. As companies take advantage of these market conditions to introduce consumers to more niche, organic and high-end products, IBISWorld expects industry revenue to grow.
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
The Cosmetic and Beauty Products Manufacturing 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, toothbrushes, soaps and body washes 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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