The emerging economies are going through a painful structural readjustment, and, as a result, the emerging middle class (a key engine of growth for the beauty and personal care industry over the last decade) is losing some of its swagger.
In China, the combined pressures of a cooling economy and more aggressive competition from homespun and South Korean brands are squeezing all the big multinationals. Tellingly, newly released data from Euromonitor International shows growth in China’s beauty and personal care market dropped below 9% last year (at fixed U.S. dollar values), its weakest performance in two decades.
Market conditions are tougher still in Brazil and India. In both cases, middle-class consumers have been trading down across a raft of beauty and personal care categories. The negative tilt in market conditions in India has taken the industry by surprise.
Power Shift Delayed
According to the latest forecasts from Euromonitor International, spending on beauty and personal care in the emerging markets will be higher than in the developed markets by 2018. A year ago, this power shift had been expected to take place in 2016, but the choppier economic waters have held things back. The key point, however, is that emerging markets, overall, still present a myriad of opportunities for growth into the medium and long term, despite the trickier operating conditions.
Strengths Emerging
There were also some strong individual emerging market performances last year. For example, sales of beauty and personal care in Indonesia climbed 16%, fueled by a booming middle class in secondary cities such as Balikpapan, Borneo. Across the emerging markets, the big challenge is in adapting a planning strategy to the changing climate, and in tailoring products and marketing to the specific profile of consumers.
Editor’s note: To read the full market report, see the May 2014 issue of GCI magazine or visit www.GCImagazine.com.
