Even though the financial situation saw Russian consumers become more careful with their spending, they continued to opt for high value-added products such as cosmetics, with brands like Dior, Chanel and L’Occitane performing well.
Market on the mend
According to market research firm ReportsnReports, the Russian economy continued to recover after the recession in 2009, with GDP reaching pre-crisis value by the end of 2011, accompanied by decreasing unemployment and rising disposable incomes.
Consumers became more careful, looking for an optimal price/value ratio when purchasing beauty and personal care products; although many continued to purchase the products they tried during difficult economic times if the experience met their expectations.
According to the report, manufacturers also continued to exploit natural claims, stating they are the most attractive for consumers. Amongst the most popular ingredients were minerals, collagen and herbal components of different types.
Whilst younger consumers were reportedly more focused on innovative products containing proteins, amino acids, minerals or UV protection, older Russians were attracted by products bearing natural claims and containing herbal ingredients.
“Many of the Russian consumers consider products manufactured by domestic companies to contain less synthetic ingredients and to be more natural,” claims the market analyst.
ReportsnReports says this stereotype was successfully used by some domestic manufacturers, which was reflected in the general increase in retail sales of domestic manufacturers.
“When buying products bearing different claims, Russian consumers do not go too deep in terms of trying to find out the proportion of the natural oil or herbal component in the products they buy.”
The figures show that growth slowed in beauty and personal care in Russia in 2011 in comparison with the growth rates seen before the recession, but it is still a far from saturated market, and is expected to see further development.
Tightening macroeconomic conditions will not be very beneficial for global economics, and growth in consumers' disposable incomes is not expected to be high.
However, low unemployment and increased budget spending will fuel consumption in the country, and beauty and personal care is expected to see a constant value CAGR of 2 per cent over the forecast period.
Fragrances, salon hair care and other premium product categories are expected to be the main drivers of retail value growth in the forecast period.