IBISWorld estimates that this industry will grow by an average annualised rate of 3.7% over the five year period to 2008-09. In recent years, it is possible that consumers have moved away from the higher end luxury/premium cosmetics and toiletries products in favour of cheaper alternatives.
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A number of market segments are currently near or at saturation point, namely hair care and fragrances, while others are becoming crowded, such as the natural body-care segment. This has been partly offset by the development of new markets/products such as cosmeceuticals, age-defying products, ‘male only’ or ‘teen’ products.
During 2007-08 and 2008-09, growth rates were slower than previous years, in line with a slight slowdown in household consumption expenditure. Providing a health benefit in addition to traditional cosmetic qualities, cosmeceuticals products have been a key growth area for many manufacturers who are now producing an increasing array of higher performance cosmeceuticals products with unique active ingredients.
IBISWorld forecasts that this industry will grow by an average annualised rate of 3.0% over the five year period to 2013-14. As this industry has reached the mature stage of its life cycle, modest growth is expected over the period to 2013-14. The mature status of the industry is also expected to influence employment rates, with moderate growth predicted.
In the short-term, industry profitability may be affected by volatile prices for chemical intermediate products and feedstocks, which will serve to add further pressures on already tight margins. Exports will continue to increase in importance as a source of income for the industry over the outlook period. Import penetration levels are also expected to continue their upward trend, to the detriment of the smaller players within the industry.
It is anticipated that growth rates will continue to vary substantially between different products. However in general terms, the ageing of the general population, combined with increasing community awareness of the importance of skin care is expected to benefit manufacturers whose products emphasise preservation and protection, rather than just cosmetic appearance.
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The male beauty market is thought to be an increasingly lucrative market and the outlook period will see a growing number of manufacturers target this market in line with continued fashion trends favouring “metro-sexuality”, “neo-masculinity” and “uber-sexuality”.
Having contacts within key markets.
High brand visibility is important in increasing sales of mass market cosmetics and toiletries.
Access to niche markets.
If not a major player, niche/ultra-niche positioning is important for success in this industry.
Having marketing expertise.
In this highly competitive industry, marketing and brand awareness are very important in gaining market share. However, this factor is somewhat less important in the niche and ultra-niche markets.
Production of goods currently favoured by the market.
Manufacturers must be aware and be able to adapt to fashion trends in order to remain competitive, although some of the larger manufacturers may set trends rather than follow them.
Ability to control total supply on market.
Significant market strength (if not a niche player) is important for adequate returns in this industry.
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