Players will cater to consumers in emerging markets, bolstering revenue growth
Los Angeles, CA (PRWEB) March 25, 2013
The Global Cosmetics Manufacturing industry is a dynamic one, characterized by a high degree of innovation and the introduction of new and reformulated products. The past five years have been no exception, despite declining per capita disposable income in key consumer markets. Due to consumers' tightened purse strings, industry revenue grew only 1.5% in 2009, the midst of the global recession. Profit also suffered as shoppers opted for lower-priced personal care products. The mounting focus on naturally derived toiletries has also underpinned industry performance over the past five years. “Operators have responded to changing consumer preferences for chemical-free cosmetics formulas by introducing and reformulating popular products like shampoos and lotions,” says IBISWorld industry analyst Radia Amari. “Global cosmetics manufacturers are also focusing on natural makeup options, a growing industry segment.” Developing natural makeup products has been difficult because of different challenges like pigment load and ease of application; however, new technologies are emerging that are eliminating some of these challenges.
Demand from emerging economies and aspirational shoppers has also kept the Global Cosmetics Manufacturing industry growing over the past five years, with revenue increases averaging 3.0% per year to reach $243.0 billion by the end of 2013. “Industry operators have consistently expanded their portfolios to cater to underserved markets, where average incomes are well below the average product price,” adds Amari. Moreover, to capture the growing aspirational shopper market (i.e. consumers on a budget seeking designer purchases), firms have integrated high-end cosmetic brands under their umbrellas. IBISWorld expects these efforts, along with improving economic conditions, will drive industry growth during 2013, with revenue increasing 2.4%.
In 2013, IBISWorld estimates that the industry has a moderate level of concentration. Industry concentration has gradually increased over the past five years, in line with acquisitions, whereby large multinational corporations acquire smaller companies. Merger and acquisition (M&A) deals of interest over the past decade that have served to change the face of the industry’s landscape include major player Procter & Gamble's $57.0 billion takeover of Gillette, L'Oreal's acquisition of the Body Shop, the purchases of Kanebo and Molton Brown by Japanese-based Kao, 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 novel delivery systems and new greener technologies and processes.
As per capita disposable income rebounds more strongly over the five years to 2018, the industry will experience even stronger growth. 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 prepares, blends, compounds and packages toilet preparations and 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 products are 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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