The year 2010 looks better, and several operators, in particular from the supply side, have already noticed a marked upturn. According to Eurostaf, “from 2011, the market should resume with growth rates close to those experienced between 2004 and 2007. However, this general picture hides contrasted situations”.

Emerging and developing countries

In geographical terms, perspectives for growth appear very different from one region to another. Western Europe, the world’s biggest cosmetics market, North America and Japan, still represent the bulk of sales. But these markets are mature, with important penetration rates for all product categories. Growth in these countries should remain moderate, with the possible exception of the men’s market.

In contrast, Eastern Europe, Latin America and Asia (excluding Japan) are developing very rapidly. Among the emerging markets, three of them already rank among the 10 largest consumers of cosmetic products: Brazil, China and Russia. Brazil even stands first for hair care products, and perhaps also for perfumery.

Hence, no wonder if cosmetics giants focus their efforts in these new markets. For L’Oreal, these markets should represent 50% of the group’s sales in less than 10 years. Furthermore, while the group already operates 60% of its activity outside Europe, this proportion should increase to 90%. Actually, L’Oréal intends to attract and retain nearly one billion new customers. A strategy of growth that is shared by many others: such as Yves Rocher, who intends to develop outsourcing and to open offshore production facilities to better serve Indian, Chinese or Korean woman, or by Shiseido, who wants to increase the share of overseas markets in its turnover from 35% today to 50% by 2017.

Sustainability and ecology

Although they remain marginal in terms of market share, organic and natural cosmetics continue to surge and appear crisis-proof. According to a recent study by Kline, the natural and organic cosmetic market posted another double-digit growth in 2009, and its compound annual growth rate since 2004 exceeds 15%.

Nothing indicates that this growth should be interrupted, especially as natural products are also very popular in emerging countries. Brazil is already the world’s second largest consumer of natural cosmetic products and Indian and Chinese traditions promise a good potential to naturals.

Segments and ranges

As far as the different market segments are concerned, skincare products appear as the strongest propeller of growth while makeup, hair care products and hygiene products should experience a more moderate progress, finds Eurostaf. However, the potential of makeup is very strong in Asia, including Japan. From this point of view, with the purchase of Bare Escentuals, Shiseido appears to win on all fronts, acquiring a specialist of natural makeup, which holds strong positions in North America and a good growth potential ins Asia.

The crisis has also increased the disparities between levels of ranges: prestige and high-end ranges suffered while mass-market ranges were more resistant.