Russian cosmetic sales achieves high growth

By Louise Prance

- Last updated on GMT

Cosmetic sales in Russia - and Western manufacturers active in the
market - are on the up thanks to a booming economy, GDP increase
and a decrease in unemployment.

Analyst for market research company Euromonitor International, Camilla Butler told CosmeticsDesign that, " Not only are western companies exporting to Russia but the leading players have invested in local production, such as Avon and Procter and Gamble.

This is testament to their belief in the market and the fact that Russia is indeed a major focus for the global players".

According to Euromonitor data, cosmetic and toiletries sales in Russian grew by 14 per cent in 2006, making it the fourth fastest growing market in the world.

Indeed, consumer spending on cosmetics is growing more rapidly in the Russian market than in Western Europe, which recently plateaued after previous growth spurts.

In recent years local companies have tended to focus on the lucrative skin care segment rather colour cosmetics.

However, Butler suggests that the tide is now turning and local manufacturers are tapping into the growing cosmetics trend.

" Local companies have begun finding their feet again in the last few years and are producing innovative products using some of the latest ingredients, Faberlic is a prime example.

However, the early and mid 1990s were very tough times for the local players, which was when most of the leading foreign players entered the market " she said.

With demand for cosmetic goods rising to such significant levels, larger multinational cosmetic players such as L'Oreal have placed heavy emphasis on this developing market for much of its sales strategy for 2007 - taking advantage of the current favourable legislation for the development of most retail channels.

However, with smaller independent retailers struggling to compete with big chain retailers for local government support, cosmetic manufacturers would be wise to strike up partnerships with bigger retail outlets in order to gain the most consumer awareness of their products - says the Euromonitor report, Retailing in Russia.

Skin care and fragrance sectors are predicted to continue to see the strongest growth between 2006 and 2011.

But it is the niche market segments that are advised to see the most dynamic percentage value growth over the five-year period.

Baby care and male grooming are pitted as two of the main niche markets to focus on within the Russian market, which is said to be surpassed by the booming Chinese market, by a seven per cent growth margin.

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