Europe's most lucrative market right now? Russia!

22-Jul-2014 - Last updated on 23-Jul-2014 at 10:50 GMT

Despite European data showing a 0.8% sales drop, the Russian perfumery and cosmetics industry is still proving to be prosperous with a growth rate reaching 11% in 2013.

In a report comprised by the largest trade show dedicated to the beauty industry in Russia, InterCharm Moscow, sales of cosmetics in Russia have managed to remain at the same pace in the first half of 2014.

The proportion of imported and domestic products in the Russian market is still in favor of foreign producers with imports accounting for 70% of daily cosmetics and 100% of the luxury segment.

Among main importers of cosmetics goods in Russia are France (24.4%), Germany (11%), Poland (6.9%), Italy (6.8%) and USA (6, 2%).

“The cultural attitude towards cosmetics, the curiosity for novelties and the openness to new techniques and products still make Russia a market where investments and efforts are well rewarded in terms of steady growth and positioning,” says Carlo Baiesi of hair care brand, Barex Italiana.

Cosmetic segment breakdown of investment

According to InterCharm's research, despite Russian producers posing serious competition to their Western counterparts in terms of shampoos; the share of imports is still high - 37% with import leaders of Romania (42.3%), France (13.7%) and Italy (8.8%).

The hair care segment overall grew by 7.4% to reach USD 354.1 million with the undisputed leader being Germany with 64.4%, as Italy followed close behind with 14% and France at 9.7%.

France remains the leader in the perfumery segment with 58.8% of the products imported in Russia in value terms. Thereby, the volume of supplies rose by 23.3% versus 2012 totaling to USD 293.3 million.

In regards to the colour cosmetics imports, France is again leading the way with Poland and the US following closely behind, whose share accounted for more than half of the total make-up import.

2016 forecast

Over the next two years Intercharm's research predicts a stable or slightly decreased pace of retailers’ sales revenue growth in Russia.

There will also be a decrease in demand for premium products, with a shift towards a preference for more middle-market and mass-market products.

The report also indicates that there will be an increase in retail prices of cosmetics due to increased prices of imported products and raw materials and acceleration of market consolidation and increased competition in major cities.

Finally, the report suggest there will be a rise of the influence of drogeries and single-brand boutiques on selling natural cosmetics and increased sales of cosmetics in drugstores.