A Study of the European Cosmetics Industry

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Executive Summary - November 2007

A Study of the European Cosmetics Industry
Executive Summary

Prepared for: European Commission, Directorate General for Enterprise and Industry Prepared by: Global Insight, Inc.

November 2007

Executive Summary - November 2007

Contact Information

Emilio Rossi Managing Director Business Planning Solutions, Europe Global Insight, (Italy) srl. Via S. Maria Segreta 6 20123 Milan +3902 8648 130 emilio.rossi@globalinsight.com Antonia Prlic Principal 1 Adelaide Street East Suite 2505, P.O. Box 198 Toronto, Ontario, M5C 2V9 Canada +1 416 682-7312 antonia.prlic@globalinsight.com Robert Hoffman Senior Consultant 1 Adelaide Street East Suite 2505, P.O. Box 198 Toronto, Ontario, M5C 2V9 Canada +1 416 682-7311 robert.hoffman@globalinsight.com

Executive Summary - November 2007

I. Broad Market Study
An overview of the broad cosmetics industry (also referred to as the cosmetics and toiletries (C&T) industry) in the EU, Japan, China, and the U.S. reveals that Europe's market size is almost as large as the U.S. and Japan combined, due to its large population. In 2006, the U.S. cosmetics market was €38.2 billion, while Japan's was €23.7 billion and China's €8.2 billion. The total EU27 cosmetics market was valued at €63.5 billion in 2006. Among the EU countries, Germany has the largest cosmetics market, valued at €11.7 billion, followed by France (€10.4 billion), the U.K. (€10 billion), Italy (€8.8 billion), and Spain (€7.4 billion). Europe, U.S., China, Japan C&T Market Sizes, Retail Sales Price, 2006, Total market €136.2 billion

EU12, 5.9, 4% China, 8.2, 6%

Switzerland, 1.6, 1% Norway, 1.0, 1%

EU15, 57.6, 43%

Japan, 23.7, 17%

US, 38.2, 28%

Source: Euromonitor, COLIPA Statistics Working Group

Per Capita Spending The average EU27 per capita cosmetics spending is €128 per year. Denmark and Sweden have the highest consumption of cosmetic products at €171, followed by Spain at €169 and France at €166. Spending per capita is low in Greece and Portugal at just €121 and €104, respectively. Over the period 2000-06, there was sluggish per capita consumption growth in two of the large European markets, France and Germany, and somewhat better performance in Italy and the United Kingdom. In contrast, there was strong growth in the high per capita consumption countries like Denmark, Sweden, Spain, and Norway. Using a correction for purchasing power parity, per capita cosmetics spending was €174 in Japan, €127 in the U.S. and €24 in China. The table below outlines cosmetics spending


Executive Summary - November 2007

per capita in 2006, the compounded annual growth rate over the 2000 to 2006 period and spending in purchasing power parity terms for China, Japan, U.S. and the EU regions. Per Capita Consumption by Country and Region Country EU15 EU12 EU27 US Japan China C&T expenditure CAGR per capita (€), 2006 2000-2006 150 1.9% 57 6.8% 128 2.2% 127 -3.8% 186 -4.5% 6 4.0% C&T expenditure per capita (€) at US$ PPP, 2006 132 98 124 127 174 24

Source: Euromonitor, COLIPA Statistics Working Group

Buying Patterns and Shifting Trends As could be expected in a vast region with different tradition and cultures such as the EU, unique trends in buying patterns may be found in particular countries, as well as some common trends across the board. In most countries, there are growing concerns about skin cancer and exposure to harmful rays that has led to the growing use of sun care products. Anti-aging creams and anti-cellulite skin care products are in high demand among an aging population in the developed countries. There is also a widespread and growing diversity of cosmetics products for men – especially men's fragrances – and a growing demand for natural / organic products in most countries. The declining birth rate in many countries has led to a drop-off in demand for baby care products. It is interesting to note that technologically advanced products, such as...