| KN24035 |
| KEY NOTE Plus : Cosmetics and Fragrances : March 2005 |
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This report covers: cosmetics and fragranes
| Executive Summary |
| 1. Market Definition |
| REPORT COVERAGE |
| MARKET SECTORS |
| Cosmetics |
| Fragrances |
| MARKET TRENDS |
| An Ageing Population |
| EU Regulation |
| The Parallel Market |
| ECONOMIC TRENDS |
| Population |
| Table 1: UK Resident Population Estimates by Sex (000), Mid-Years 1999-2003 |
| Gross Domestic Product |
| Table 2: UK Gross Domestic Product at Current and Annual Prices (£m), 1999-2003 |
| Inflation |
| Table 3: UK Rate of Inflation (%), 1999-2003 |
| Unemployment |
| Table 4: Actual Number of Unemployed Persons (million), 1999-2003 |
| Household Disposable Income |
| Table 5: Household Disposable Income Per Capita (£), 1999-2003 |
| MARKET POSITION |
| The UK |
| Table 6: Consumer Expenditure on Miscellaneous Personal Care Goods and Services (£m), 2000-2004 |
| Overseas |
| 2. Market Size |
| THE TOTAL MARKET |
| Table 7: The Total UK Market for Cosmetics and Fragrances by Sector by Value at Current Prices (£m at rsp), 2000-2004 |
| BY MARKET SECTOR |
| Cosmetics |
| Table 8: The UK Cosmetics Sector by Subsector by Value at Current Prices (£m at rsp and %), 2004 |
| Facial Make-Up |
| Eye Make-Up |
| Lip Products |
| Nail Products |
| Fragrances |
| Table 9: The UK Fragrances Sector by Subsector by Value at Current Prices (£m at rsp and %), 2004 |
| OVERSEAS TRADE |
| Overview |
| Table 10: Imports and Exports of Beauty or Make-Up Preparations for the Skin, Toilet Waters and Perfumes by Value (£m), 2000 and 2003 |
| Imports |
| Table 11: Imports of Beauty or Make-Up Preparations for the Skin, Toilet Waters and Perfumes (£000), 2003 |
| Intra-EC Arrivals |
| Extra-EC Imports |
| Exports |
| Table 12: Exports of Beauty or Make-Up Preparations for the Skin, Toilet Waters and Perfumes by Value (£000), 2003 |
| Intra-EC Dispatches |
| Extra-EC Exports |
| 3. Industry Background |
| RECENT HISTORY |
| Background |
| INDUSTRY SYNOPSIS |
| NUMBER OF COMPANIES |
| Manufacturers |
| Table 13: Number of UK VAT-Based Enterprises Engaged in the Manufacture of Perfume and Toilet Preparations by Turnover Sizeband (number), 2004 |
| Retailers |
| Table 14: Number of UK VAT-Based Enterprises Engaged in the Retail Sale of Cosmetic and Toilet Articles by Turnover Sizeband (number), 2004 |
| EMPLOYMENT |
| Manufacturers |
| Table 15: Number of UK VAT-Based Local Units Engaged in the Manufacture of Perfume and Toilet Preparations by Employment Sizeband (number), 2004 |
| Retailers |
| Table 16: Number of UK VAT-Based Local Units Engaged in the Retail Sale of Cosmetic and Toilet Articles by Employment Sizeband (number), 2004 |
| REGIONAL VARIATIONS IN THE MARKETPLACE |
| DISTRIBUTION |
| High-Street Stores |
| Multiple Grocers |
| Specialist Retailers |
| Les Senteurs |
| Lush Cosmetics Ltd |
| Penhaligon's |
| The Perfume Shop |
| Rituals |
| Sephora |
| Virgin Cosmetics |
| Direct Selling |
| HOW ROBUST IS THE MARKET? |
| LEGISLATION |
| EC Cosmetics Directive |
| Other Legislation |
| KEY TRADE ASSOCIATIONS |
| British Fragrance Association |
| The British Society of Perfumers |
| COLIPA |
| Cosmetic, Toiletry & Perfumery Association |
| Society of Cosmetic Scientists |
| 4. Competitor Analysis |
| THE MARKETPLACE |
| MARKET LEADERS |
| Manufacturers |
| Avon European Holdings Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Estée Lauder Cosmetics Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| L'Oréal (UK) Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Procter & Gamble Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Unilever Group |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Table 17: Financial Results for the Unilever Group (£m), Years Ending 31st December 2002 and 2003 |
| Retailers |
| The Body Shop International PLC |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Table 18: UK and Republic of Ireland Financial Results for The Body Shop International PLC (£m and number), Years Ending 1st March 2003 and 28th February 2004 |
| Boots Group PLC |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Table 19: Financial Results for Boots Group PLC by Division (£m), Years Ending 31st March 2003 and 2004 |
| Merchant Retail Group PLC |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Table 20: Turnover for Merchant Retail Group PLC by Division (£000), Years Ending 29th March 2003 and 27th March 2004 |
| Superdrug Stores PLC |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| OUTSIDE SUPPLIERS |
| Research and Development |
| Raw Materials |
| Outsourcing |
| Processing Machinery, Packaging and Components |
| Information Resources |
| MARKETING ACTIVITY |
| Main Media Advertising Expenditure |
| Table 21: Main Media Advertising Expenditure on Cosmetics and Fragrances (£000), Years Ending September 2003 and 2004 |
| Mass-Market Cosmetics |
| Table 22: Main Media Advertising Expenditure on Mass-Market Cosmetics (£000), Year Ending September 2004 |
| Eye Make-Up |
| Table 23: Main Media Advertising Expenditure on Mass-Market Eye Make-Up by Brand (£000), Year Ending September 2004 |
| Lip Products |
| Table 24: Main Media Advertising Expenditure on Mass-Market Lip Products by Brand (£000), Year Ending September 2004 |
| Facial Make-Up |
| Table 25: Main Media Advertising Expenditure on Mass-Market Facial Make-Up by Brand (£000), Year Ending September 2004 |
| Nail Products |
| Table 26: Main Media Advertising Expenditure on Mass-Market Nail Products by Brand (£000), Year Ending September 2004 |
| Cosmetics Ranges |
| Table 27: Main Media Advertising Expenditure on Mass-Market Cosmetics Ranges by Brand (£000), Year Ending September 2004 |
| Premium Cosmetics |
| Table 28: Main Media Advertising Expenditure on Premium Cosmetics (£000), Year Ending September 2004 |
| Cosmetics Ranges |
| Table 29: Main Media Advertising Expenditure on Premium Cosmetics Ranges by Brand (£000), Year Ending September 2004 |
| Facial Make-Up |
| Table 30: Main Media Advertising Expenditure on Premium Facial Make-Up (£000), Year Ending September 2004 |
| Lip Products |
| Table 31: Main Media Advertising Expenditure on Premium Lip Products (£000), Year Ending September 2004 |
| Eye Make-Up |
| Table 32: Main Media Advertising Expenditure on Premium Eye Make-Up (£000), Year Ending September 2004 |
| Mass-Market Fragrances |
| Table 33: Main Media Advertising Expenditure on Mass-Market Fragrances (£000), Year Ending September 2004 |
| Men's Fragrances and Toiletries |
| Table 34: Main Media Advertising Expenditure on Mass-Market Men's Fragrances and Toiletries (£000), Year Ending September 2004 |
| Women's Fragrances |
| Table 35: Main Media Advertising Expenditure on Mass-Market Women's Fragrances (£000), Year Ending September 2004 |
| Men's and Women's Fragrance Ranges and Unisex Fragrances |
| Premium Fragrances |
| Table 36: Main Media Advertising Expenditure on Premium Fragrances (£000), Year Ending September 2004 |
| Women's Fragrances |
| Table 37: Main Media Advertising Expenditure on Premium Women's Fragrances (£000), Year Ending September 2004 |
| Men's Fragrances and Toiletries |
| Table 38: Main Media Advertising Expenditure on Premium Men's Fragrances and Toiletries (£000), Year Ending September 2004 |
| Men's and Women's Fragrance Ranges |
| Table 39: Main Media Advertising Expenditure on Premium Men's and Women's Fragrance Ranges (£000), Year Ending September 2004 |
| Unisex Fragrances |
| Recent Promotions |
| Avon |
| Chanel |
| Parlux Fragrances |
| Spark Seduction |
| Touch of Pink |
| Other Marketing Activities |
| Loyalty Card |
| Sponsorship |
| Marketing Award |
| Charitable Work |
| Exhibitions |
| Beautyworld |
| Cosmoprof |
| Health & Beauty America |
| Luxepack |
| World Perfumery Congress |
| 5. Brand Strategy |
| INTRODUCTION |
| The World's Most Valuable Brands |
| Table 40: Leading Global Brands of Cosmetics and Toiletries ($m), 2004 |
| FiFi Awards 2004 |
| Table 41: Winners of The Fragrance Foundation UK FiFi Awards, 2004 |
| Accademia de Profumo |
| RESEARCH FINDINGS |
| Table 42: Usage of Brands of Fragrances in the Last 6 Months (% of men and women respondents), 2005 |
| COMPANIES' BRANDS |
| Avon |
| The Body Shop International PLC |
| Boots |
| Estée Lauder |
| L'Oréal |
| LVMH Group |
| The Procter & Gamble Company |
| Unilever Group |
| 6. Strengths, Weaknesses, Opportunities and Threats |
| STRENGTHS |
| WEAKNESSES |
| OPPORTUNITIES |
| THREATS |
| 7. Buying Behaviour |
| HOUSEHOLD EXPENDITURE |
| By Gross Income Decile Group |
| Table 43: Average Weekly Household Expenditure on Toiletries and Soap, Cosmetics and Hair Products, and Hairdressing and Beauty Treatments by Gross Income Decile Group (£), 2002/2003 |
| By Age of Head of Household |
| CONSUMER PENETRATION |
| Table 44: Usage of Cosmetics and Fragrances in the Last 12 Months (% of women/men), 2003 and 2004 |
| Cosmetics |
| Lipstick |
| Table 45: Usage of Lipstick in the Last 12 Months by Age and Social Grade (% of women), 2004 |
| Eye Make-Up |
| Table 46: Usage of Eye Make-Up in the Last 12 Months by Age and Social Grade (% of women), 2004 |
| Foundation |
| Table 47: Usage of Foundation in the Last 12 Months by Age and Social Grade (% of women), 2004 |
| Face Powder |
| Table 48: Usage of Foundation in the Last 12 Months by Age and Social Grade (% of women), 2004 |
| Blushers and Highlighters |
| Table 49: Usage of Blushers and Highlighters in the Last 12 Months by Age and Social Grade (% of women), 2004 |
| Nail Varnish |
| Table 50: Usage of Nail Varnish in the Last 12 Months by Age and Social Grade (% of women), 2004 |
| Fragrances |
| Perfume and/or Eau de Toilette |
| Table 51: Usage of Perfume and/or Eau de Toilette in the Last 12 Months by Age and Social Grade (% of women), 2004 |
| Male Fragrance and Aftershave |
| Table 52: Usage of Male Fragrance and Aftershave in the Last 12 Months by Age and Social Grade (% of men), 2004 |
| CHOICE OF FRAGRANCE |
| By Age |
| Table 53: Usage of Brands of Fragrances in the Last 6 Months by Age (% of men and women respondents), 2005 |
| By Social Grade |
| Table 54: Usage of Brands of Fragrances in the Last 6 Months by Social Grade (% of men and women respondents), 2005 |
| 8. Current Issues |
| CLOSURES, MERGERS AND ACQUISITIONS |
| Sephora |
| BOARD AND SENIOR MANAGEMENT CHANGES |
| Avon Products Inc |
| The Body Shop International PLC |
| Boots Group PLC |
| Estée Lauder |
| Gucci |
| Lacoste |
| L'Oréal (UK) Ltd |
| Parfums Givenchy |
| Puig France |
| Shiseido |
| Virgin Cosmetics |
| NEW PRODUCTS |
| Armani |
| Burberry Brit Red |
| Diorskin Ultra-Mat |
| Donald Trump, The Fragrance |
| easy4men |
| Liquid Karl |
| Miami Glow |
| Miss You Nights |
| Prada Eau de Parfum |
| Tease |
| FACTORS AFFECTING THE COSMETICS AND FRAGRANCES MARKET |
| Safety of Ingredients |
| Animal Testing |
| Counterfeiting |
| Blackmail |
| 9. The Global Market |
| HISTORY |
| MARKET SIZE |
| The EU |
| Table 55: Leading Western European Markets for Cosmetics, Toiletries and Perfumes by Value and Average Per Capita Expenditure (%, abn at rsp and E), 2003 |
| Non-EU Markets |
| Manufacturers' Sales |
| PRINCIPAL GLOBAL COMPETITORS |
| Avon Products Inc |
| Table 56: Global Sales for Avon Products Inc by Geographic Region (%), 2003 |
| Table 57: Global Sales for Avon Products Inc ($m), Years Ending 31st December 2002 and 2003 |
| The Body Shop International PLC |
| By Region |
| Americas |
| Table 58: Americas Financial Results for The Body Shop International PLC (£m and number), Year Ending 28th February 2004 |
| Europe, Middle East and Africa |
| Table 59: Europe, Middle East and Africa Financial Results for The Body Shop International PLC (£m and number), Year Ending 28th February 2004 |
| Asia Pacific |
| Table 60: Asia-Pacific Financial Results for The Body Shop International PLC (£m and number), Year Ending 28th February 2004 |
| Interim Results |
| Douglas Holding AG |
| Estée Lauder Companies Inc |
| Table 61: Global Sales for Estée Lauder Companies Inc by Geographic Region ($bn and %), Year Ending 30th June 2004 |
| L'Oréal SA |
| Table 62: Operating Profit of the Cosmetics Division of L'Oréal SA by Geographic Region (%), Years Ending 31st December 2003 and 2004 |
| The LVMH Group |
| The Procter & Gamble Company |
| Shiseido Corporation |
| 10. Forecasts |
| INTRODUCTION |
| The Economy |
| Gross Domestic Product |
| Table 63: Forecast UK Growth in Gross Domestic Product in Real Terms (%), 2004-2008 |
| Population |
| Table 64: Forecast UK Resident Population by Sex (000), 2004-2008 |
| FORECASTS 2005 TO 2009 |
| Table 65: The Forecast Total UK Cosmetics and Fragrances Market by Sector by Value (£m at rsp), 2005-2009 |
| MARKET GROWTH |
| Figure 1: The Total UK Cosmetics and Fragrances Market by Value (£m at rsp), 2000-2009 |
| FUTURE TRENDS |
| Employment |
| Legislation |
| 11. Company Profiles |
| Avon European Holdings Ltd |
| The Body Shop International Plc |
| Boots Group PLC |
| Estée Lauder Cosmetics Ltd |
| L'oréal (uk) Ltd |
| Merchant Retail Group Plc |
| Procter & Gamble Ltd |
| 12. Company Financials |
| 13. Further Sources |
| Associations |
| Publications |
| General Sources |
| Government Publications |
| Other Sources |
| Bonnier Information Sources |
| This Key Note Market Report Plus covers women's colour cosmetics that are primarily used for adornment, and male and female fragrances. Between 2003 and 2004, retail sales of cosmetics and fragrances, as covered by this report, increased by an estimated 3.2% to £1.6bn at retail selling prices (rsp). Growth in expenditure on most consumer goods, particularly on luxury goods, slowed significantly over this period as five interest rate rises had the desired effect of curbing personal spending in 2004. |
| BMRB International Ltd's Target Group Index (TGI) survey found that usage of perfumes and/or eau de toilette is high, with 88.5% of women using these products in 2004. At 77.1%, lipstick was the most widely used cosmetic item. However, figures from National Statistics confirm that expenditure on beauty products and treatments is discretionary and tied in with disposable income. In 2002/2003, households in the lowest 10% by gross income decile group spent a weekly average of just £2.60 on toiletries and soap, cosmetics and hair products, and hairdressing and beauty treatments, compared with an average of £14.70 among those in the highest gross income decile group. |
| The leading manufacturers in the cosmetics and fragrances industry are the global consumer goods groups Procter & Gamble and Unilever, as well as more specialist companies such as L'Oréal and Estée Lauder. All of these companies require substantial resources to maintain a product's market position, let alone launch a new one in such a competitive marketplace, and large amounts are spent on main media advertising. For example, in the year ending September 2004, main media advertising expenditure on women's premium fragrances alone was £38.8m. Perfume is much more commonly worn now than previously and over 100 new variants are launched each year. Many of these are endorsed by famous names, including Jennifer Lopez, Britney Spears and US businessman Donald Trump. |
| Although Western Europe and the US remain the main marketplaces for cosmetics and fragrances, those in Eastern Europe and China are growing rapidly. The UK has a trade deficit in beauty or make-up preparations for the skin, toilet waters and perfumes, and this increases year-on-year as the value of imported goods rises at a faster rate than those that are exported. In addition, the UK industry faces strict legislation and increasing controls, with the safety and efficacy of its products constantly under question. Even so, the UK has yet to follow the example of the Canadian city of Halifax, where the wearing of all fragrances in most indoor public places — including municipal offices, libraries, hospitals, courts, classrooms and buses — is prohibited. This is because synthetic fragrances are blamed for Multiple Chemical Sensitivities (MCS) syndrome (although this is not a recognised condition). Commenting on the growth of alarmist stories in the UK, the Chairman of the Cosmetic, Toiletry and Perfumery Association (CTPA) said that it is crucial that risks are viewed in perspective and warns that `the rising tide of unnecessary regulation [is] draining the resources of the industry in the UK, reducing competitiveness and diverting resources away from innovation'. |
| Over the next 5 years (to 2009), the value of the cosmetics and fragrances market is anticipated to grow modestly. |
Text © 2005Key Note
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Last updated by Amanda Porteous 2005
