Sales topped €1 billion in 2003 and Euromonitor has attributed the growth as being largely due to increased prices per purchase, partly stemming from unit price increases brought about by certain macroeconomic factors in the country, and partly due to an increasing concern for quality among Portuguese consumers.
Studies show that the Portuguese are increasingly concerned with their appearances, and are becoming more willing to spend extra sums on products which match their specific needs.
With a general increase in consumer awareness, some industry analysts argue that value growth may rise further in the future, given that Portuguese consumers are still being faced with new products with ever more specific functions.
Sun care remains most dynamic sector
Sun care was once again the most dynamic sector in Portugal in 2003, with sales registering a current value growth level of around 14 per cent, as the sector grew to a value total of nearly €50 million for the year.
Sales are being driven by several factors: the government and manufacturers are launching continuous campaigns to raise awareness of the dangers of the sun, which is boosting growth. Similarly, products are becoming more sophisticated and geared towards different skin needs, often incorporating moisturisers and aftersun formulae in the sun protection itself, which is leading to higher average unit prices.
Over the review period as a whole, sun care grew by around 80 per cent, demonstrating the effect of increased awareness on the market in Portugal. Traditionally sun care has not been as significant in Portugal as in neighbouring countries with similar climates, as levels of education and awareness were low, and sun protection was often considered to be necessary only for those with particular sensitivity. This traditional viewpoint is now changing, however, as reflected in the dynamic growth rates over the review period.
Hair care of prime importance in Portugal
Manufacturers and distributors are benefiting from increased awareness among Portuguese consumers, as education levels rise and the Portuguese come into closer contact with more specific and premium products for hair care. The market developed strongly over the review period, with growth of nearly 50 per cent in current value terms since 1998, and positive growth continued in 2003, at around 8 per cent.
Hair care is by far the largest sector in the cosmetics and toiletries market, with sales of nearly €240 million in 2003 alone, nearly one quarter of the total cosmetics and toiletries value.
Products are widely available, in many different formats and types, and hair care is now considered to be a necessity among almost all Portuguese consumers.
Sales were boosted in particular by an increase in specific types of hair care, geared towards different hairstyles and types of hair, which is beginning to be more of a concern among Portuguese consumers. Once again, the trend of buying more premium products at a higher unit price is having a positive effect on sales.
Supermarkets strengthen hold over distribution
The distribution of cosmetics and toiletries is taking place in supermarkets and hypermarkets more frequently than at the beginning of the review period. Around a third of sales were made through these larger, more modern outlets in 2003, compared with just over a quarter in 1998.
The convenience and ease of use provided by larger shopping outlets, often incorporated in shopping centres or malls, has proven to be a winning strategy for Portuguese consumerism.
Many consumers do their weekly shopping at large distribution outlets, purchasing everything they need for the week, and then only visit local stores for emergency purchases. Cosmetics and toiletry needs are increasingly being served by these larger outlets.
Euromonitor's findings echo the results of a study carried out in the UK by retail analysts IGD. As reported by CosmeticsDesign.com, shoppers in the UK are also increasingly making supermarkets their destination for non-food as well as grocery shopping, but whereas a third of Portuguese consumers purchase their toiletries in supermarkets, this with figure rises to two-thirds for UK consumers, perhaps indicating a future trend for Portuguese shopping habits.
However, direct sales are also an important distribution method, with a tenth of the distribution share, with companies such as Avon and Oriflame leading the market in Portugal. Specialists also continued to be an essential distribution channel in 2003, with approximately 16 per cent of sales.
L'Oréal Portugal leads fragmented market
The market for cosmetics and toiletries is fairly fragmented in Portugal, but the main player is L'Oréal Portugal, with an estimated 20 per cent of the value share in 2003, reflecting a minor increase against the previous year. Lever is the second largest player in the market in Portugal, with around 11 per cent, followed by Beiersdorf with around 7.5 per cent and then Colgate-Palmolive with 7.3 per cent.
The market is extremely competitive, with the main sectors being subject to continuous new launches and product innovation, in order to maintain the loyalty of a fickle consumer group.
The Portuguese are increasingly opting for products manufactured by large, multinational companies, as these brands become more widely available and gain a greater reputation for quality.
MBB Teixeira is the largest domestic company in Portugal, but holds less than one percent of the total value share.