| KN24033 |
| KEY NOTE COSMETICS AND FRAGRANCES PLUS : AUGUST 2003 |
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This report covers: cosmetics, fragrances, toiletries, perfumery, facial make-up, eye make-up, lip products, lipsticks, nail care products, nail varnish, perfume, eau de parfum, eau de toilette, eau de cologne, beauty industry, face powder, blushers, highlighters, foundations, mascaras, eye shadows, pencils, kohls, skincare, male fragrances, fine fragrances, mass fragrances, beauty aids, unisex fragrances, labelling chemicals, hair products, hairdressing & beauty treatments, mens' fragrances, EU Cosmetics Directive, Animal Testing,
Companies, Labels and Associations covered include: COSi, Cosmopolitan Cosmetics, Superdrug Stores, The Body Shop, Boots, COLIPA, Cosmetic, Toiletry & Perfumery Association, Lancaster Group, L'Oréal, Merchant Retail Group, Penhaligon's, Revlon, Superdrug Stores, E'spa, Estée Lauder, Etro, Harvey Nichols, Lever Fabergé, Avon, LVMH Moët Hennessey-Louis Vuitton, Shiseido Company Ltd, Unilever Group, Hutchison Whampoa, Kruidvat Berheer BV, Proctor & Gamble, Calvin Klein, clinique, Clive Christian, Elizabeth Arden, Estée Lauder, Hugo Boss, Lacoste, Lacoste, Lancôme, L'Oréal,
| Executive Summary 1 |
| 1. Market Definition 10 |
| REPORT COVERAGE 10 |
| MARKET SECTORS 10 |
| Cosmetics 10 |
| Fragrances 10 |
| MARKET TRENDS 11 |
| Outsourcing 11 |
| Use of Preservatives 11 |
| Botanical Hydroponics 11 |
| Nutraceuticals 11 |
| MARKET POSITION 12 |
| The UK 12 |
| Table 1: Consumer Expenditure on Miscellaneous Personal-Care Goods and Services (£m), 1998-2002 12 |
| Europe 12 |
| 2. Market Size 13 |
| THE TOTAL MARKET 13 |
| Table 2: The UK Market for Cosmetics and Fragrances by Value at Current Prices (£m at rsp), 1998-2002 13 |
| BY MARKET SECTOR 13 |
| Cosmetics 13 |
| Table 3: The UK Market for Cosmetics by Sector by Value at Current Prices (£m at rsp and percent), 2002 14 |
| Face Make-Up 14 |
| Eye Make-Up 14 |
| Lip Products 14 |
| Nailcare Products 15 |
| Fragrances 15 |
| Table 4: The UK Market for Fragrances by Sector by Value at Current Prices (£m at rsp and percent), 2002 15 |
| OVERSEAS TRADE 16 |
| Table 5: UK Balance of Trade in Beauty or Make-Up Preparations for the Skin, Toilet Waters and Perfumes by Value (£m), 2000 and 2001 16 |
| Imports 16 |
| Table 6: UK Imports of Beauty or Make-Up Preparations for the Skin, Toilet Waters and Perfumes by Value (£000), 2001 17 |
| Intra-EU Arrivals 17 |
| Extra-EU Imports 17 |
| Exports 18 |
| Table 7: UK Exports of Beauty or Make-Up Preparations for the Skin, Toilet Waters and Perfumes by Value (£000), 2001 18 |
| Intra-EU Dispatches 19 |
| Table 8: UK Intra-EU Dispatches of Beauty or Make-Up Preparations for the Skin by Country of Destination by Value (£000), 2001 19 |
| Extra-EU Exports 19 |
| 3. Industry Background 20 |
| RECENT HISTORY 20 |
| NUMBER OF COMPANIES 20 |
| By Turnover 20 |
| Table 9: Number of UK VAT-Based Enterprises Engaged in the Manufacture of Perfumes and Toilet Preparations by Turnover (£000 and percent), 2002 21 |
| By Number of Employees 21 |
| Table 10: Number of UK VAT-Based Local Units Engaged in the Manufacture of Perfumes and Toilet Preparations by Number of Employees, 2002 22 |
| REGIONAL VARIATIONS IN THE MARKETPLACE 22 |
| DISTRIBUTION 23 |
| High Street Stores 23 |
| Multiple Grocers 23 |
| Direct Selling 23 |
| HOW ROBUST IS THE MARKET? 24 |
| LEGISLATION 24 |
| EU Cosmetics Directive 24 |
| Animal Testing 25 |
| Other Legislation 25 |
| KEY TRADE ASSOCIATIONS 25 |
| British Fragrance Association 25 |
| COLIPA 25 |
| Cosmetic, Toiletry & Perfumery Association Ltd 26 |
| Society of Cosmetic Scientists 26 |
| EXHIBITIONS 26 |
| 4. Competitor Analysis 27 |
| THE MARKETPLACE 27 |
| MARKET LEADERS 27 |
| Manufacturers 27 |
| Avon European Holdings Ltd 27 |
| Financial Results 27 |
| Estée Lauder Cosmetics Ltd 28 |
| Financial Results 28 |
| L'Oréal (UK) Ltd 28 |
| Financial Results 28 |
| LVMH Moët Hennessey-Louis Vuitton 29 |
| Financial Results 29 |
| Procter & Gamble Ltd 29 |
| Financial Results 29 |
| Unilever Group 29 |
| Financial Results 30 |
| Retailers 30 |
| The Body Shop International PLC 30 |
| Financial Results 31 |
| Table 11: The Body Shop International PLC — Financial Results for the UK and the Republic of Ireland (£m), 53 weeks to 3rd March 2001 and 52 weeks to 2nd March 2002 31 |
| The Boots Company PLC 32 |
| Financial Results 32 |
| Merchant Retail Group PLC 33 |
| Financial Results 33 |
| Table 12: Merchant Retail Group PLC — Turnover by Division and Pre-Tax Profit (£000), Years to 31st March 2001 and 30th March 2002 33 |
| Superdrug Stores PLC 34 |
| Financial Results 34 |
| OUTSIDE SUPPLIERS 34 |
| Raw Materials 34 |
| Fragrances 34 |
| Preservatives 35 |
| Processing Machinery, Packaging and Components 35 |
| Research and Development 35 |
| Anti-Counterfeiting 36 |
| Own-Label Suppliers 36 |
| ADVERTISING AND PROMOTION 36 |
| Main Media Advertising Expenditure 36 |
| Table 13: Main Media Advertising Expenditure on Cosmetics and Fragrances (£000), Year to September 2002 37 |
| Cosmetics 37 |
| Table 14: Main Media Advertising Expenditure on Cosmetics by Type of Product (£000), Year to September 2002 38 |
| Premium Face Make-Up 38 |
| Table 15: Main Media Advertising Expenditure on Premium Face Make-Up by Brand (£000), Year to September 2002 39 |
| Premium Eye Make-Up 39 |
| Table 16: Main Media Advertising Expenditure on Premium Eye Make-Up by Brand (£000), Year to September 2002 39 |
| Premium Lipstick 39 |
| Table 17: Main Media Advertising Expenditure on Premium Lipstick by Brand (£000), Year to September 2002 40 |
| Premium Colour Cosmetics Ranges 40 |
| Table 18: Main Media Advertising Expenditure on Premium Colour Cosmetics Ranges by Brand (£000), Year to September 2002 41 |
| Mass-Market Face Make-Up 41 |
| Table 19: Main Media Advertising Expenditure on Mass-Market Face Make-Up by Brand (£000), Year to September 2002 42 |
| Mass-Market Eye Make-Up 42 |
| Table 20: Main Media Advertising Expenditure on Mass-Market Eye Make-Up by Brand (£000), Year to September 2002 43 |
| Mass-Market Lipstick 43 |
| Table 21: Main Media Advertising Expenditure on Mass-Market Lipstick by Brand (£000), Year to September 2002 44 |
| Mass-Market Colour Cosmetics Ranges 44 |
| Table 22: Main Media Advertising Expenditure on Mass-Market Colour Cosmetics Ranges by Brand (£000), Year to September 2002 45 |
| Nailcare Products 45 |
| Table 23: Main Media Advertising Expenditure on Nailcare Products by Brand (£000), Year to September 2002 46 |
| Fragrances 46 |
| Table 24: Main Media Advertising Expenditure on Fragrances by Type of Product (£000), Year to September 2002 46 |
| Women's Premium Perfumes and Fragrances 47 |
| Table 25: Main Media Advertising Expenditure on Women's Premium Perfumes and Fragrances by Brand (£000), Year to September 2002 47 |
| Women's Premium Fragrance Ranges 48 |
| Table 26: Main Media Advertising Expenditure on Women's Premium Fragrance Ranges by Brand (£000), Year to September 2002 49 |
| Men's Premium Fragrances and Toiletries 49 |
| Table 27: Main Media Advertising Expenditure on Men's Premium Fragrances and Toiletries by Brand (£000), Year to September 2002 50 |
| Unisex Premium Fragrances 50 |
| Women's Mass-Market Fragrances 51 |
| Men's Mass-Market Fragrances and Toiletries 51 |
| Table 28: Main Media Advertising Expenditure on Men's Mass-Market Fragrances and Toiletries by Brand (£000), Year to September 2002 51 |
| Men's, Women's and Unisex Mass-Market Fragrances 51 |
| Recent Promotions 52 |
| Avon 52 |
| Calvin Klein 52 |
| Clinique 52 |
| Clive Christian 52 |
| Elizabeth Arden 52 |
| Estée Lauder 52 |
| Hugo Boss 52 |
| Lacoste 53 |
| Lancôme 53 |
| L'Oréal 53 |
| Unilever Cosmetics International 53 |
| 5. Brand Strategy 54 |
| COSMETICS 54 |
| The Leading Brands 54 |
| FRAGRANCES 54 |
| The Leading Brands 54 |
| Table 29: Penetration of Selected Leading Fragrance Brands by Sex ( percent of adults), 2002 55 |
| By Age 55 |
| Table 30: Penetration of Selected Leading Fragrance Brands by Age ( percent of adults), 2002 56 |
| By Social Grade 56 |
| Table 31: Penetration of Selected Leading Fragrance Brands by Social Grade ( percent of adults), 2002 57 |
| FiFi Awards 2002 57 |
| 6. Strengths, Weaknesses, Opportunities and Threats 59 |
| STRENGTHS 59 |
| WEAKNESSES 59 |
| OPPORTUNITIES 60 |
| THREATS 60 |
| 7. Buying Behaviour 62 |
| HOUSEHOLD EXPENDITURE 62 |
| Table 32: Average Weekly Household Expenditure on Toiletries and Soap, Cosmetics and Hair Products, and Hairdressing and Beauty Treatments by Gross Income Decile Group (£), 2000/2001 62 |
| CONSUMER PENETRATION 63 |
| Cosmetics 63 |
| Table 33: Penetration of Cosmetics by Type of Product ( percent of women), 2000 and 2002 63 |
| Lipstick 63 |
| Table 34: Penetration of Lipstick by Age and Social Grade ( percent of adults), 2002 64 |
| Eye Make-Up 64 |
| Table 35: Penetration of Eye Make-Up by Age and Social Grade ( percent of adults), 2002 65 |
| Foundation 65 |
| Table 36: Penetration of Foundation by Age and Social Grade ( percent of adults), 2002 66 |
| Nail Varnish 66 |
| Table 37: Penetration of Nail Varnish by Age and Social Grade ( percent of adults), 2002 67 |
| Face Powder 67 |
| Table 38: Penetration of Face Powder by Age and Social Grade ( percent of adults), 2002 68 |
| Blushers and Highlighters 68 |
| Table 39: Penetration of Blushers and Highlighters by Age and Social Grade ( percent of adults), 2002 69 |
| Fragrances 69 |
| Table 40: Penetration of Fragrances by Type of Product ( percent of women/men), 2000 and 2002 69 |
| Perfume and Eau de Toilette 70 |
| Table 41: Penetration of Perfume and Eau de Toilette by Age and Social Grade ( percent of adults), 2002 70 |
| After-Shave and Male Fragrances 71 |
| Table 42: Penetration of After-Shave and Male Fragrances by Age and Social Grade ( percent of adults), 2002 71 |
| 8. Current Issues 72 |
| MERGERS AND ACQUISITIONS 72 |
| COSi 72 |
| Cosmopolitan Cosmetics 72 |
| Superdrug Stores 72 |
| BOARD AND SENIOR MANAGEMENT CHANGES 72 |
| The Body Shop International 72 |
| The Boots Company 73 |
| COLIPA 73 |
| Cosmetic, Toiletry & Perfumery Association 73 |
| Lancaster Group 73 |
| L'Oréal 73 |
| Merchant Retail Group 74 |
| Penhaligon's 74 |
| Revlon 74 |
| Superdrug Stores 74 |
| NEW PRODUCTS 74 |
| The Body Shop International 74 |
| E'spa 74 |
| Estée Lauder 75 |
| Etro 75 |
| Harvey Nichols 75 |
| Lever Fabergé 75 |
| CURRENT CONCERNS OF THE INDUSTRY 75 |
| Testing of Cosmetics and Cosmetic Ingredients on Animals 75 |
| Counterfeiting and Unauthorised Markets 76 |
| Labelling 77 |
| Chemicals 77 |
| 9. The Global Market 78 |
| THE EUROPEAN MARKET 78 |
| Retail Sales 78 |
| Table 43: The Retail Market for Personal-Care Products in Selected EU Countries by Value (em at rsp, percent and e per capita), 2001 78 |
| Manufacturers' Sales 79 |
| THE PRINCIPAL GLOBAL COMPETITORS 79 |
| Manufacturers 79 |
| Avon Products Incorporated 79 |
| Table 44: Avon Products Incorporated — Sales by Geographical Region ( percent), 2001 79 |
| Estée Lauder Companies Incorporated 80 |
| Table 45: Estée Lauder — Net Sales and Operating Income by Geographical Region ( percent), 2002 80 |
| L'Oréal SA 80 |
| LVMH Moët Hennessey-Louis Vuitton 81 |
| Shiseido Company Ltd 81 |
| Unilever Group 81 |
| Table 46: Unilever Group — Turnover by Geographical Region (em), 2001 82 |
| Retailers 82 |
| The Body Shop International PLC 82 |
| US and Canada 82 |
| Table 47: The Body Shop International PLC — Financial Results for the US and Canada (£m), 53 weeks to 3rd March 2001 and 52 weeks to 2nd March 2002 83 |
| Europe, the Middle East and Africa 83 |
| Table 48: The Body Shop International PLC — Financial Results for Europe, the Middle East and Africa (£m), 53 weeks to 3rd March 2001 and 52 weeks to 2nd March 2002 83 |
| Asia Pacific 84 |
| Table 49: The Body Shop International PLC — Financial Results for Asia Pacific (£m), 53 weeks to 3rd March 2001 and 52 weeks to 2nd March 2002 84 |
| Hutchison Whampoa 84 |
| Kruidvat Beheer BV 84 |
| 10. Forecasts 85 |
| INTRODUCTION 85 |
| The UK Population 85 |
| Table 50: The Projected UK Population by Age Group (000), 2002 and 2007 85 |
| The Economic Climate 85 |
| FORECASTS 2003 TO 2007 86 |
| Table 51: The Forecast UK Market for Cosmetics and Fragrances by Value at Current Prices (£m at rsp), 2003-2007 86 |
| MARKET GROWTH 87 |
| Figure 1: The UK Market for Cosmetics and Fragrances by Value at Current Prices (£m at rsp), 1998-2007 87 |
| 11. Company Profiles 88 |
| The Body Shop International Plc 89 |
| THE Boots Company Plc 91 |
| Estée Lauder Cosmetics Ltd 93 |
| L'oréal (uk) Ltd 95 |
| Merchant Retail Group Plc 97 |
| Procter & Gamble Ltd 99 |
| 12. Company Financials 101 |
| 13. Further Sources 103 |
| Associations 103 |
| Publications 103 |
| General Sources 103 |
| Bonnier Information Sources 104 |
| Government Publications 105 |
| Other Sources 105 |
This report focuses on women's colour cosmetics (face make-up, eye make-up, lip products and nailcare products) and on perfumes and fragrances for men and women. The UK retail market for these products grew by 4.4 percent between 2001 and 2002, to a value of £1.46bn.
Consumers base their choice of cosmetic or fragrance on the image of a particular brand, as well as on the product's function. Fashion plays a key role in defining this image, and in-store presentation and method of distribution are also important factors. According to International Flavors & Fragrances, the failure rate for new fragrances is approximately 90 percent after the first year and 99 percent after 3 years, so for a fragrance to maintain its popularity for decades, as have brands such as Chanel No. 5 and Miss Dior, is no mean feat. Vast promotional expenditure is necessary to sustain an established brand, let alone launch a new one. In the year to September 2002, for example, £34.2m was spent on advertising women's premium fragrances alone.
On the retail side, the market leader, Boots, is coming under increasing pressure from the grocery multiples, but its attempts to differentiate itself and specialise in more premium markets have yet to prove particularly successful. The Perfume Shop chain (owned by the Merchant Retail Group), on the other hand, goes from strength to strength, recording a 178 percent increase in profit in its most recent half-year reporting period - a period that did not even include the lucrative Christmas season.
The fact that the UK has an ageing population is a disadvantage for a market in which young people are the heaviest consumers. However, today's older consumers have a greater interest in personal appearance than their predecessors - and, most importantly, have the disposable income to purchase premium products that claim miraculous results. Innovation is the key in this mature and competitive industry, and recent years have seen a plethora of products claiming preventative and restorative qualities. The consumer base will also continue to increase as children become interested in their appearance and in fashion at an ever-earlier age.
BMRB International's 2002 Target Group Index (TGI) survey found that lipstick and female fragrances were used by the vast majority of women in the UK, and male fragrances by almost three-quarters of men, but figures from the Office for National Statistics (ONS) confirm that expenditure on beauty products and treatments is discretionary. Accordingly, the industry - along with many others - will be hoping that the forecast downturn in the UK economy is short-lived.
Text © 2003 Key Note
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Last updated by Amanda Porteous July 2003
