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MP24008

MAPS COSMETICS AND FACIAL SKINCARE 1998

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Table of Contents

Executive Summary

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EXECUTIVE SUMMARY

The UK colour cosmetics and facial skincare market was worth £1,073 million in 1997, up by 25 percent on 1992 at current prices.

The market for colour cosmetics in the UK was adversely affected in the early 1990s by the trend towards a more natural look and the demographic shift away from high-spending teenagers towards older women. Older women tend to buy less in terms of volume but are often prepared to spend more on individual purchases and are more likely to opt for premium brands. There has been a drop in the number of younger women, especially in the 15-24 age range, which has restricted growth in the cosmetics market, as young women tend to experiment more with make-up and so are heavier purchasers.

The facial skincare market, on the other hand, has performed better, with growing concerns amongst both men and women about the damage that can be done to the skin because of environmental factors such as the sun and pollution as well as the natural effects of ageing. The increase in the number of older women aged 35 or over in the population at the expense of younger women has also helped to boost the skincare market.

Whilst animal testing has been a major concern to the cosmetics and facial skincare industry in recent years, with a continuing programme of research into finding alternatives for the testing of new ingredients, the issue is less high profile than in previous years. This is because many major suppliers of colour cosmetics and facial skincare, such as Boots, for example, now claim not to use products tested on animals anyway. Campaigning by retailers such as The Body Shop has raised awareness of the issue, but has also prompted the market leaders into adopting procedures that avoid animal testing.

There are problems however, as some products may not have been tested on a particular animal, but the ingredients may have been at some time in the past. The cosmetics and facial skincare industry has been accused of using misleading labelling of its products and so various campaigns have been mounted with the aim of highlighting these misleading claims. In November 1997 the British Government announced that it was banning the use of animal testing on all cosmetics products (but not their constituent ingredients), a move which was cautiously welcomed by consumer and animal rights groups alike.

In terms of the total market, colour cosmetics accounted for 56 percent of sales in 1997, with facial skincare accounting for the remaining 44 percent. The colour cosmetics market is further segmented into four major product categories, namely face, eye, lip and nail make-up. The largest sector is that of face make-up, which accounted for 36 percent of sales of all colour cosmetics by value in 1997. The eye make-up sector accounts for 27 percent of sales, whilst lip make-up accounts for just under a quarter of total sales, with nail make-up taking the remaining 13 percent.

Facial skincare can also be divided into four broad sectors, that of moisturisers, cleansing creams and lotions, toners & skin fresheners and other skincare products i.e. face packsmasks, facial scrubs and spot treatments. Within the total facial skincare market, moisturisers account for 59 percent of sales by value, with cleansers accounting for a further 20 percent.

The strongest growth in the last five years in colour cosmetics has been in the face and lip make-up markets, notably in the foundation and lipstick sectors. These sectors have both grown on the basis of extensive new product development, which has resulted in improved product formulations. In foundations, for example, the trend has been towards products that are longer lasting and transfer resistant, and which offer skin caring properties such as moisturising and sun protection.

The face make-up sector has grown by 24 percent between 1992 and 1997. The nail make-up sector suffered badly in the early 1990s from the trend towards a natural look that became widespread in the UK, and despite a recovery in the last couple of years, has declined by 17 percent in value between 1992 and 1997. The lip make-up sector, by contrast, has performed very well over the review period, up by 30 percent.

With many of the leading companies in the UK colour cosmetics and facial skincare markets based overseas, it is not surprising that a high proportion of new product development originates in countries such as the US and France, via the multi-national companies which dominate the UK market.

These companies include Procter & Gamble (Max Factor, Cover Girl and Oil of Ulay brands), Unilever (Elizabeth Arden, Pond’s, Vaseline Intensive Care), Coty Benckiser (Rimmel, Cutex, Sensiq, Coty), Estée Lauder, and L’Oreal (Plenitude, Synergie, Vichy, Lancome). This means that a large proportion of brands available in the UK are in fact global brands, with advertising and promotional budgets to match. The key exception to this is Boots who, with their No7 and 17 brands in particular, still manage to lead the UK market in terms of overall sales.

The British owned Boots The Chemist accounts for 17.5 percent of the colour cosmetics market with its No7 and 17 brands combined and has a share of just over 13 percent of the facial skincare sector. Skincare products are also sold under the Botanics, Skin Kindly and Natural Collection sub-brands. Unilever was the second largest cosmetics company until it sold its interests in Rimmel, Sensiq and Cutex to the Benckiser Group in 1996. The leading brand in facial skincare is now Oil of Ulay, owned by Procter & Gamble, with a share of just under 13 percent of the market by value. Other key players include Avon, L’Oreal and The Body Shop.

There is a very high ratio of advertising to sales in the cosmetics and facial skincare market in the UK, worth an estimated 6.3 percent of sales of colour cosmetics and over 8 percent in the facial skincare sector in 1996. The leading brands all advertise regularly on television and in the women’s press and overall expenditure has increased steadily since 1992 to over £33 million in 1996 for colour cosmetics and an estimated £39 million for facial skincare.

The launch of L’Oreal’s Perfection range in 1994 caused a significant increase in activity with other manufacturers following suit and investing heavily in major campaigns. In 1997 one of the biggest spenders has been Procter & Gamble with the £2 million launch of the Oil of Ulay colour cosmetics range to compete against the likes of Boots No7. Rimmel also spent heavily in 1997 to relaunch its cosmetics brand.

Exclusive research carried out for MAPS by NOP in October 1997 found purchasers of colour cosmetics were in general most likely to be aged between 15-34, in the ABC1 socio economic groups, single, in full or part time work and living in private rented accommodation. This is significant as it is this age group that is set to decline over the next five to ten years and so manufacturers will need to work hard to stimulate sales amongst older age groups.

The most popular item purchased in the previous three months was lipstick, with 60 percent of the sample buying, four percentage points down on 1995. Lipsticks are still the most popular items purchased as they need to be replaced frequently because they are re-applied more than other types of make-up. The next most popular type of make-up was mascara, bought by 48 percent of respondents, and then foundation, bought by 46 percent of respondents.

The least popular item was false nails, bought by only 5 percent, although this figure has more than doubled since 1995 when only 2 percent had purchased. Only 9 percent of respondents claim never to use make-up and a further 12 percent use make-up but had not bought any of the listed items in the past three months.

Boots still dominates the retail distribution of cosmetics and facial skincare with a share of over a third of sales in 1997, and is particularly strong in the self selection sector. Department stores still dominate sales of premium cosmetics and facial skincare brands and are the second most important distribution channel overall. The grocery multiples have increased their share of the cosmetics and facial skincare market in recent years, and now account for 5 percent of total sales of colour cosmetics and 15 percent of sales of facial skincare products.

Direct selling is still important in the cosmetics and facial skincare market, with Avon remaining the leading supplier of cosmetics in this sector. Sales of cosmetics and facial skincare via retailers such as The Body Shop have suffered somewhat because of the sale of products claimed to be cruelty free by leading retailers such as Boots and the major supermarkets.

In terms of product development, many consumers now regard the inclusion of skincaring properties into cosmetics as a basic requirement, especially to older women who are more concerned about the effects of ageing and prolonged exposure to the sun. In this way, the colour cosmetics and facial skincare sectors have moved closer together, especially with reference to the moisturisers and face make-up sectors. The highly technical nature of many of the ingredients included in facial skincare products has meant that many claims have been made about products, which cannot always be scientifically backed up, but nevertheless help to sell the product.

The outlook for the colour cosmetics and facial skincare market is relatively positive with the total market forecast to reach £1,408 million by 2001, an increase of 31 percent over 1997. The colour cosmetics sector alone is projected to reach £738 million by the year 2001 at current prices, representing growth of 26 percent on 1997. Sectors such as face and lip make-up are expected to show the strongest rates of growth in colour cosmetics as the population ages.

The facial skincare market will grow more strongly, by 37 percent over the same period, to reach £670 million in 2001. The moisturisers sector is likely to experience the strongest growth as people look to delay the effects of ageing on their complexions and as an increasing proportion of men start to buy skincare products.

Text © 1998 MAPS

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