International cosmetics firms queue up to enter Russian market

By Guy Montague-Jones

- Last updated on GMT

Related tags: Cosmetics, Russia

Russia's booming economy is feeding demand for beauty products
making the country a highly attractive destination for
international cosmetics companies.

Lipotec is the latest big name to target the Russian market. The ingredients supplier has just struck a deal with cosmetics distributors NovaCom to sell its products in the country. Spain-based Lipotec cited its international expansion plans and increased demand for cosmetics in Russia as the reasons for the new agreement. Booming market for cosmetics​ Indeed, according to Euromonitor, the retail value of the Russian cosmetics and toiletries market increased 106.3 per cent at current prices between 2002 and 2007 to $11.6bn (RUB269.5bn). This translates into annual growth of 15.6 per cent. Lipotec is not alone in developing its Russian presence in recent weeks. L'Oreal has unveiled plans to invest €45m to build a factory near Kaluga city that will serve Russia's hair care market. Sales of shampoo and conditioner have been stagnant in many developed European markets but in Russia hair care is one of the strongest of the principal product categories. It has enjoyed average growth rates of 14.4 per cent between 2002 and 2007 and contributed 24.9 percentage points to the 106.3 per cent growth in the overall cosmetics and toiletries market in that period. Alcan, L'Oreal and Lipotec make Russian moves ​ Another company to have made significant investments in Russia recently is Alcan Packaging. It announced this week that it has bought a 7,000 m2 factory near Moscow that will specialize in the manufacture of tubes for the cosmetics market. The company said the acquisition will help it pursue its growth strategy of serving customers in Russia as they develop new products and enter new markets. Such a flurry of activity from cosmetics players in the region reflects the potential that international companies see there. The market has expanded considerably and consistently in the last few years but still has plenty of potential for further growth. According to data from Euromonitor, the three biggest cosmetics firms in Russia operate on a direct sales platform that is often associated with developing markets. The top three are Avon, Oriflame and Mary Kay in order of size.

Related topics: Market Trends

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