24 SPC September 2019

While the spectre of Brexitlooms over the Britisheconomy and its beautymarket, the fundamentals ofits personal care product

sector live on. As the UK ponders leaving theEuropean Union (EU), maybe in October,commentators often cast a wary eye at Germanyto see how this economic engine of the EU isperforming – maybe to check whether Brexit isas big a business mistake as many experts warn.It is a good match-up in beauty terms. Bothindustries excel in creating quality products andtheir markets reward excellence in personal carelines with healthy sales.

COMMONALITIES & CONTRASTSThe growing preference for ‘naturalperfectionism’ or, simply put, the ‘no-make-upmake-up’ look, emerged as a dominant trendlast year both in the UK and in Germany, ananalyst from London-based market intelligencecompany Euromonitor International tells SPC.So much so that British cosmetics consumersadopted a ‘beauty diet’ in 2018, favouringsustainability over more garish consumerism(although not necessarily fewer overall sales),according to the analyst. And interestingly, evenbeauty bloggers like Lauren Curtis andSamantha Ravndahl – whose very raison d’être

UK-based organicbrand Naya Skincareis produced inGermany with thesupport of Cosmacon

is to encourage beauty buys – were askingconsumers to adopt a ‘spend less, waste less’mentality, the analyst notes. The key is “polished and smooth skin, which

explains the importance of foundation/concealerand highlighter, which are used for contouring”,the analyst says, adding: “It is about creating aneffect that is fresher and more natural.”Moreover, this minimalist look is further

fuelled by ethics, with consumers showinggreater concern for the planet and wastereduction. The Euromonitor analyst says: “Weshould expect to see more of this as the industryis under the spotlight for its social impact andenvironmental pollution.”Germany’s beauty sector is well placed to profit

from such sentiment, given it has a long historyin producing sustainable cosmetics and thusmajor brands, such as Dr. Hauschka, Weleda orKneipp. Due to the strengths of discounters suchas Lidl and Aldi among supermarkets,or drugstores Rossmann and dm-drogeriemarkt, top quality sustainable brands like Laveraor Alverde are comparatively cheap.“Value for money for the consumer of organic

cosmetics in Germany is hard to beat,” saysMichael Pfeiffer, founder of Pfeiffer Consulting,which has offices in Germany, Bulgaria and theUS, and specialises in quality and safety in thecosmetics industry.

country reports uk vs germany

QualityassuredThe beauty sectors in Britain and Germany arebanking on their reputations for qualitymanufacturing and sustainability. Poorna Rodrigo,Barbara Bierach and Keith Nuthall write

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The margins for the producers are slim andthis triggers the need to invest in the latesttechnology to stay competitive – “and that againraises the quality of production in the Germansector”, according to Pfeiffer.“Organic cosmetics in Germany

generally are well-tested, safe and based inscience,” says Sarah Zimmer, founder of NayaSkincare, an organic cosmetics brand establishedin the UK. Zimmer is based in London butproduces in Germany with the support ofCosmacon, a well-known laboratory for thecosmetics industry near Hamburg.Contrasts between the two countries include

that in Germany, the growth of nail productsales has slowed down because of the wideavailability of professional salons offeringservices at bargain prices. In the UK, whilefacial make-up has been influenced byconsumers wanting to obtain a more ‘au naturel’look, lip gloss sales have gone up because of aparallel trend following 1990’s fashion, whichaccentuates this lip product.

BOTH COUNTRIES IN FIGURESThe latest sales data from Euromonitor indicatesthat while the natural look trend maybeimpacting what consumers buy in the UK –overall beauty sales remain robust. While salesgrowth of colour cosmetics, deodorant,fragrance and skin care in 2017 fell 1.7% toUS$16.5bn, sales rose 5.3% last year to $17.3bn.Growth is forecast to slow to 3.4%, delivering$17.9bn in sales in 2019. However, the market isforecast to gain 5.9% in 2020 to reach $19bn,and 4.4% in 2021 to reach $19.8bn, accordingto Euromonitor data.Germany’s beauty sales are growing more

slowly, up 1.5% on average from 2013 to 2018,says personal care and soap industry associationIndustrieverband Körperpflege – undWaschmittel (IKW). In 2018, the sector’s growthrate was 1.8%, up from the previous year

to t13.8bn ($15.4bn). For the current year theindustry association projects a 2% growth rate.Segment by segment, the fastest growth

year-on-year in 2018 was in hair care, withrevenues of t3.1bn ($3.5bn) (up 5.1%), skin andface care to t3.2bn ($3.6bn) (+3.3%), dentalcare to t1.6bn ($1.8bn) (+2.2%), soaps andsyndets to t354m ($396m) (+2.6%), deodorantsto t757m ($846.2m) (+1.9%) and men’sfragrances to t516m ($577m) (+1.2%).Shaving products and aftershave sales shrank

to t201m ($225m) (-4.7%), as did decorativecosmetics at t1.8bn ($2bn) (-2%), shower gels att895m ($1bn) (-0.4%) and miscellaneous otherbeauty products at t425m ($475m) (-5%).IKW members are optimistic; 74% of

represented companies expect a “good” or“very good” future. “We develop products toaccompany consumers in their daily life,products that fulfil wishes and deliver onself-esteem and quality of life,” says Georg Held,Chairman of IKW and General Manager ofL’Oréal Germany.

TRENDS AHOY With e-commerce and m-commerce channelsgrowing in both Britain and Germany, retailtrends are developing fast in both countries.The entry of British apparel retailers into thebeauty sector is one noteworthy trend. Spanishmajor Zara expanded its beauty range in theUK in December to include a line of 12Ultimatte lipsticks, the Euromonitor analystsays, adding: “We expect non-beauty retailerswill continue to shake up the market, pushinnovations and develop larger product ranges.”The increase in the opening of monobrand

and pop-up shops, using technology, games andimmersive designs to engage customers, isanother trend. In October 2018, US cosmeticgiant Estée Lauder-owned Too Faced openedthree new shops in Dartford, Stratford (east

September 2019 SPC 25

The UK and Germany, thebig 3 (2018)

Source: Euromonitor International

Skin care $3.87BN

Colour cosmetics

Fragrances

Skin care

Hair Care

Fragrances

$3.12BN

$2.52BN

$5.12BN

$3.57BN

$2.71BN

The UK and Germany,highest year-on-yeargrowth categories (2018)

Source: Euromonitor International

Sun care +5.3%

Bath & shower

Fragrances

Skin care

Hair Care

Colour cosmetics

+4%

+3.8%

+5.4%

+4.8%

+3.2%

uk vs germany country reports

Both industriesexcel in creatingquality productsand theirmarkets rewardexcellence inpersonal carelines withhealthy sales

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26 SPC September 2019

country reports uk vs germany

retailers. According to IKW, in Germany,chemists (pharmacies) are still the mostimportant retail outlets for cosmetics of all sortswith 48.1% of total revenue, followed byperfumeries with 16.4%, supermarkets (13.3%)and pharmacies (9.4%).

SIGNATURE PRODCUTSProducts made with natural, ethical ingredients following the ‘clean trend’ are becoming asignature of cosmetics production in bothBritain and Germany.Britain, of course, was home to ethical

cosmetics innovator The Body Shop, which isnow owned by Brazilian company NaturaCosméticos. The brand continues to innovateout of is UK premises, with recent new linesincluding White Musk Flora Eau De Toilettethat the company says comes with a “modernand daring twist on our cruelty-free musk that’s100% vegan”; and Fresh Nude BB Cream –a multi-tasking beauty balm.UK-based bio-designed skin care brand

Elequra is also known for taking naturals to newlevels – and its new Radiance Accelerator Serumis a good example. It containsmicroencapsulated pure retinol (the wrinkle-smoothing super ingredient), two estersof vitamin C, which activate on the skin forlasting protection from free radicals; niacinamide, which works on enlarged poresand skin tone; and, finally, periwinkle – a novelnatural ingredient for skin care, which, says thecompany, boasts impressive pigment-correctingabilities.British skin care brand Sister & Co. Skin Food

says it “uses the perfect grade of raw coconutoil, cold-pressed at a small organic farm on theSri Lankan coast”, to make products such asTrue Cleanse Oil, Body Melts and rose andcardamom-enriched lip tonic.In August 2018, London-based British-Dutch

consumer goods company Unilever targetedethical and environmentally consciousmillennials with the launch of its new LoveBeauty and Planet (LBP) brand. “The newbeauty range is Unilever’s first new personalcare brand in 20 years and was inspired by thefirm’s Sustainable Living Plan,” says Ecovia

London) and Oxford, offering what it called“interactive playgrounds” for its shoppers in theUK. These, for instance, enabled consumers toconduct mascara swaps and personalisepackaging with engraving, and included rafflesand draws. And US brand Morphe opened itsfirst UK retail store in 2018, also in Stratford(London), and two more this year, one inBirmingham and the other in Liverpool.Likewise, department stores are investing

more in revamping their beauty spaces.Selfridges welcomed digital-only brand TrinnyLondon, founded by fashion expert TrinnyWoodall, into its stores in 2018. This is a “signalfor department stores that one of the waysforward in boosting sales perhaps is bywelcoming small indie brands”, theEuromonitor analyst adds.In Germany, e-commerce is really booming.

Management consultancy McKinsey observed ina note on the country’s beauty market:“Historically, large legacy brands have ruled theindustry. Recently, however, born-digital brandshave become the big growth story.” The consultants claim that from 2008 to 2016,

colour cosmetics challenger brands grew theirGerman sales by 16% a year, four times as fast aslegacy companies. They now account for 10% ofGermany’s colour cosmetics market, up from4% in 2008.Leading German cosmetics retailer Douglas

has heard the message. Its acquisitionof Pfedelbach in Baden-Württembergbased perfume chain Akzente in 2018 wasmainly aimed at its successful online shopparfumdreams. According to consultancy A.T. Kearney, online

revenue in Europe from cosmetics will grow 8%year-on-year in 2019. By the end of 2017,German online fashion shop and pastmail-order giant Otto started to list about 1,000products from L’Oréal; in March 2018, Germanonline shoe shop Zalando started sellingcosmetics online, presenting 4,000 beautyproducts for women. Finally, Avon followed suit,opening a German online shop in October2018.Still, traditional shopping is far from dead.

French chain Sephora, for instance, is alsoworking the German marketplace, on andoffline. Last September, its first German shopopened in Munich with a planned roll-out in 14urban centres.According to a 2018 study by market

researcher POSpulse in Berlin, few Germanconsumers buy cosmetics exclusively online:62% of a surveyed 1,000 consumers prefer tobuy beauty products via traditional retail outletsand 35% shop both on and offline. Bricks-and-mortar stores, of course, offer instantavailability, the opportunity to try out productsand a wide range of choice – reasons cited byGerman consumers wanting to use physical

Historically,large legacybrands haveruled theindustry;recently,however,born-digitalbrands havebecome the biggrowth story

Ethical UK high streetstalwart The Body Shopcontinued to innovate in2019 with new launchesincluding its 100% veganWhite Musk Flora Eau De Toilette

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