Beauty and personal care: 2009 in review and beyond

2009 was a difficult year for the beauty industry, with growth in nearly every category being lower than that of the previous year. Growth in the global beauty and personal care market slowed to 4% in 2009, down from 5% in 2008. This was a result of increased price sensitivity and cutbacks in consumer spending, fuelling demand for cheaper brands and private label products. There were sharp declines in selected leading countries and sectors such as fragrances in North America and skin care and colour cosmetics in Japan. This was, however, offset by buoyancy in emerging markets due to their relative immaturity, and also because the effects of the global credit crunch were felt later there than in developed markets.

Poor performances in previously strong markets drag down global growth
One of the major disappointments in 2009 for the beauty industry was Eastern Europe. The region achieved buoyant value growth of 11% in 2008 but experienced a sharp slowdown in growth to just 4% in 2009. The dip was caused mostly by the recession-hit Russian and Ukrainian markets, which saw discretionary spending on beauty decline. Eastern Europe is only expected to achieve modest levels of growth over the next five years.

Whilst some markets showed resistance to the downturn by posting 2009 growth rates similar to those seen in 2008, the bad news was that it was primarily the countries with the highest value markets that suffered the most. Japan has become the problem child of beauty and personal care, being the slowest of the major markets to recover from recession. The country posted a decline in percentage terms in 2009 and is set to decline by a further US$2 billion over 2009-2014. The US also experienced a decline in 2009 and is set to stagnate in terms of absolute growth over 2009-2014 (just US$7 million for the whole period).

Round-up of notable category performances: the winners…

Baby care proved to be very resistant to the downturn, with global value growth of 7%. The sector posted stronger growth in most regions in 2009 than in 2008.

Deodorants performed better in 2009 than the previous year, also posting value growth of 7%. Sales were boosted by increased uptake in Asia and Africa and the Middle East, as well as by the Latin American penchant for using deodorants and body sprays as a substitute for fragrances.

Bath and shower registered unexpectedly high growth of 6% in 2009, fuelled by booming sales of liquid soap and hand sanitisers in markets affected by swine flu (Latin America posted 20% growth in 2009, for example), and consumers trading up from bar soap to shower gel and liquid soap in emerging regions such as Asia and Africa and the Middle East.

Oral care proved to be surprisingly resilient. The sector maintained its value growth of just over 4% in 2009, and sales in all regions except Eastern Europe remained virtually unchanged from 2008. This was a result of consumers buying into value-added products such as those with tooth whitening and enamel protection benefits.

 

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