A review of the cosmetics industry

2 min read

Mordor Intelligence’ report on the global cosmetics products market, hinted at new opportunities and offered critical insights on the industry. Here, we look at the growth opportunities in the cosmetics industry.

The cosmetics industry worldwide remains a rather urban-driven phenomenon. The proliferation of the cosmetics industry is related to the level of urbanization in a region, and consumption patterns hinge on end-users’ disposable incomes.

People in urban areas have three times more disposable income than people in rural areas. This has led to more people migrating from rural to urban areas, contributing to the increasing consumption.

The cosmetics market in developed regions has reached a saturation point. In contrast, developing nations like China and Brazil have witnessed a rapid increase in urbanization. Furthermore, changes in lifestyle have boosted the growth of the cosmetics industry, and both countries witnessed the most dramatic market growth in 2015. The Brazilian beauty and personal care market grew by nearly 7% in 2015. In line with the rapid economic development, the Chinese beauty and personal care industry in China also underwent a significant transformation during the last half-decade. In a nutshell, Brazil and China remain extremely lucrative markets for cosmetics and are prime targets for major players looking to expand their global footprint.

Cosmetics industry in Brazil

Typically, high excise duties and limited distribution networks force Brazilians to purchase premium cosmetics from abroad. Thus, the internal mass market can expand and flourish without any limitations. And, an increase in disposable income has given rise to a new category of consumers in the country – the middle class – who are driving maximum sales. In 2002, 15 million consumers had an annual income between USD 5,000 and USD 25,000. This figure doubled in the 2000s. Perfumes are the fastest growing category in Brazil, while hair care products make up more than one-fifth of the total cosmetics sales.

Cosmetics industry in China

China’s stable and continuous economic growth has significantly increased household disposable income levels in the country. The last five years saw the disposable income level double. The rapidly growing Chinese middle class has made a far-reaching impact on sales volume and consumption patterns for beauty and personal care products, particularly in the premium segment. E-commerce and other internet channels have also influenced distribution networks, boosting cosmetic consumption in the (previously untapped) Central and Western provinces.

Changing preferences of the urban population

With better education and better pay, people in emerging countries understandably spend considerable sums to maintain their health and wellness. They devote more attention to grooming and maintaining personal hygiene. This tendency provides better opportunities for cosmetics manufacturers to expand and leverage the growing market.

Shifting consumer preferences reflect a wider acceptance of currently under-represented product lines. The continuing focus on sun protection products will fuel the development of new products that have better, long-lasting benefits. The consumer’s demand for products with natural ingredients will trigger the need for organic goods in the cosmetics industry.

The last five years have seen a stagnation in the sales of cosmetics in developed markets such as the United States. Manufacturers have capitalized on growing consumer interest in the health and wellness segment to improve sales and are investing in new products, which contain natural ingredients.

Most consumers associate high quality and good health with organic ingredients, while chemicals are perceived with a rather jaundiced eye. This perception has triggered the demand for natural additives and ingredients in cosmetics.

For instance, the possible carcinogenic effects of phthalates and triclosan used in hair care and oral hygiene products, besides color cosmetics, compel customers to switch over to alternative products containing natural ingredients.

In the long run, organic cosmetics and green packaging will provide tremendous growth opportunities for the growth of the cosmetics industry.

What are your thoughts on the subject? Share your opinions, experiences, and comments in the section below. Alternatively, write to us.

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