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Beauty and Personal Care in Russia

Russia personal care market: Expansion of premium cosmetics to drive growth


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2014-01-29 02:44:03 - Beauty and Personal Care in Russia - a new market research report on companiesandmarkets.com

The Russian economy has recovered after its recent crisis and sees an increase in incomes together with a lower rate of unemployment and relatively low inflation in 2012. Despite the positive economic climate, consumers remain highly price sensitive when it comes to mass beauty and personal care products. At the same time, more and more Russians start to buy premium cosmetics. Slow economic growth and continuing inflation make Russians price cautious thus limiting growth of the beauty and personal care market.

Russian consumers continue to be much more rational in terms of spending and save money more carefully than before the crisis. However, they are ready to pay money for guaranteed quality supported by brands. In 2012, the premium segment was

 

 

the fastest growing supported by the widening penetration of chained retailers selling high-end brands. However, following a weak economy in 2011, the upper-mass segment saw relatively successful development in Russia in 2012 when brands from companies such as L´Oréal, Henkel and Beiersdorf showed better performance than the economy brands from most local manufacturers.

Natural marketing claims remain very attractive to most consumers in Russia. Among the most popular ingredients were minerals, collagen and herbal components of different types. Many Russians closely watch various blogs and forums about beauty and personal care products where people share their experience of using beauty and personal care products and compare them. In addition, Russians closely watch ingredients used in products and are attracted by those that are claimed, for example, to be sulphate and paraben free. However, sometimes a claim about just one natural ingredient is enough to ensure a product´s popularity despite any other chemical content.

2012 sees a significant increase in the presence of drugstores in towns while the value share of direct selling falls. The share of store-based retailers continued to grow, as direct selling saw another year of negative performance. Health and beauty retail chains and grocery retail channels saw continuous consolidation with beauty chains selling the largest share of beauty products in the country. Internet retailing is gaining popularity as major beauty retail chains develop their own online stores.

The market is expected to show a solid growth rate, which will be mainly driven by expansion of premium cosmetics in the regions and via the internet. However, greater competition between retailers and the ability to compare prices between retailers using online stores should put downward pressure on prices. Moreover, in 2012 Russia became a WTO member which means import taxes will be reduced over the next few years and should make foreign manufacturers more competitive. This will lead not only to foreign companies being able to sell their products more cheaply but it should also mean cheaper prices of imported raw materials used in production in Russia; thus WTO membership may significantly reduce the cost of production not only for foreign companies but also for domestic manufacturers.

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Mike King
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