has a strong influence in Germany. It hadan excellent year in 2012/2013 withsignificant growth across most categories.Bundesverband Parfümerien, the umbrellaorganisation of the German perfumeryindustry, posted a turnover increase of 3.6%for 2012. The big winners were colourcosmetics with an increase of 7.4%,followed by women’s fragrances (+3.7%),facial skin care (+3.3%) and men’s care(+2.5%).

VKE Kosmetikverband, whichcomprises 60 mid-priced andpremium C&T companies,announced very similar results,with a 3.9% increase to t1.951bnin 2012. Again colour cosmeticswas the most successful category,up 5.3%, followed by women’sfragrances (+4.5%), men’s care(+4.1%) and facial skin care(+3.5%).

SMALL GAINSLooking at the IKW figures moreclosely, hair care and styling,traditionally the biggest C&Tsegment, grew 0.7% to t3.018bn.

IRI Germany’s retail figures confirm aslender increase of 0.2% to t1.66bn in2012. Styling products, on the other hand,slipped 5.2% in value and 5.1% in volume.

The market is split between theinternational brands like L’Oréal’s Elvitaland Garnier’s Fructis, P&G’s HerbalEssences and Aussie, Unilever’s Dove and

The German C&T market registered asolid if unexciting performance in 2012.According to industry association IKW,turnover for the entire market grew 1.4% toa total of t12.85bn. And although Germanywas affected by economic difficulties lastyear, the consumer market is in pretty goodshape. Propensity to buy is high, especiallywhen compared to other Europeancountries, and the average Germanconsumer spent t131 on C&T in 2012, anincrease of t2 on the previous year.

MARKET DYNAMICSThe biggest and most importantretail channel for C&T is thedrugstore market, and the twochains DM and Rossmanndominate. Both have strong ownlabels, which in many sectors arestarting to attack the market shareof the big retail brands.

Organic brands are also playingan increasingly important role inthe German beauty market. Thecertified organic C&T sectorregistered double digit growthrates in 2012/2013 and there areplenty of certified organic labelsacross all product categories.

The luxury C&T market alsoDM’s own label brands, like Alverde(left) are growing market share

November 2013 SPC 29

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HoldingsteadyA stable economy and burgeoning organic and own brand sectors have helpedGermany’s C&T market remain in the black, while other European markets falter.Annemarie Kruse reports from Berlin

TABLE 1: GERMANY: C&T MARKET,2012

Value +/-%wm

Total 12,851.0 1.4Hair care/styling 3,018.0 0.7Skin/body care 2,796.0 0.6Oral hygiene 1,390.0 1.5Colour cosmetics 1,379.0 2.0Women’s fragrances 1,071.0 2.8Bath/shower 850.0 4.5Deodorants 735.0 2.0Men’s fragrances 523.0 3.3Soaps/syndets 366.0 0.0Aftershave 162.0 -2.8Shaving preps 109.0 -1.0Foot care 153.0 -4.0Depilatory products 154.0 4.3Baby care 142.0 3.1Source: IKW

eye gel and a 4-in-1 moisturiser and inMarch, Lavera introduced the three-skuMen Sensitive, a range especiallyformulated for men with sensitive skin.

The rather utilitarian bath & showersector registered the biggest increase lastyear, growing 4.5% to t850m. IRIconfirms that the category has been doingwell, with an increase of 2.6% tot757.02m in 2012. Shower products wereespecially popular, growing 4.3% in valueand 3.3% in volume.

The market is dominated by Germanlabels like Kneipp and Weleda, Merz’sTetesept, Dresdner Essenz, Beiersdorf ’sNivea, Schwarzkopf & Henkel’s Fa,Unilever’s Dove and of course DM’s Baleaand Alverde ranges, and Rossmann’sSynergen and Alterra brands.

The wellness and home spa trendcontinued to make waves in this segment,as did products based on exotic andinternational beauty rituals. Tetesept’s bathadditive ranges, for example, are dividedinto “health” products (herbal formulationsfor colds, aches and pains) and “wellness”additives, including the Bath of the Worldsline and the Sinnensalze range, whichcombine colour therapy witharomatherapy. In terms of shower products,limited editions were very visible. Springeditions were dominated by floralfragrances and spicy winter concoctions aremuch in evidence, both among the ownlabel ranges and the retail brands.

RETAIL DIVERSIFIESThe perfumery channel faced much thesame problems as in previous years. Theindependent stores continue to struggleagainst the market presence of the Douglaschain, which is the German market leader.

market reportgermany

foundation category, hybrid productsoffering coverage and anti-ageingingredients were popular and in eye make-up, cream shadows and eye pencils sawgrowth. The lip category, meanwhile, wasdominated by lightweight textures, liquidlip tints and gloss balms. A major growthdriver was nail polishes, especially effectpolishes like crackling top coats, sandeffects, gel effects and nail art products.

Women’s fragrances grew 2.8% tot1.071bn, according to IKW. IRI estimatesa similar increase, up 2.1% to t1.20bn. Themasstige market with celebrity and fashionfragrances from brands like Adidas, Puma,Tom Tailor, Betty Barclay, S.Oliver orMexx is traditionally very strong inGermany. One of the most interesting newfragrance introductions in 2012 came frombeauty brand Essence. The “Like A…”fragrance range comprises 11 variants. Withplayful and pretty packaging aimed atEssence’s target demographic of teens andtweens these fragrances have been doingwell. However, IKW has also noted acontinuing trend towards more expensiveand niche brands, which has driven thesegment as a whole.

Male grooming has long been one of thestalwarts of the German C&T market and2012 was no exception. According to IRIthis category, including face care, bath &shower and deodorants, grew 4.2% tot538.61m. Skin care was especiallysuccessful, growing 11% in value and13.5% in volume.

In the last year men’s ranges have shownfurther segmentation, with astrong focus on sensitive and oilyskin types and multipurposeproducts. As part of its generalrelaunch last year Nivea alsorestructured its Nivea Menportfolio, adding the six-sku SkinEnergy range. L’Oréal Men Expertlaunched Hydra Energy Xtreme,tagged as the first moisturiserespecially formulated for men withstubble, while DM’s Balea Men sub-brand introduced a 2-in-1 cream andaftershave in its Wakeup Call line-up.DM’s Alverde contributed a cooling

home grown labels such as Schwarzkopf &Henkel’s Gliss Kur and Schauma,Beiersdorf ’s Nivea, Kao’s Guhl and thedrugstore proprietary ranges, especiallyDM’s Balea. There was also an influx oforganic hair care ranges from Germanlabels including Weleda, Lavera and Sante,DM’s Alverde and Rossmann’s Alterra ownlabel brands.

According to IKW one of the maindrivers in hair care and styling was saloninspired product lines retailed at massmarket prices, like Henkel’s Syoss andP&G’s Wella Pro Series ranges. Anothermajor trend are hair oils and intensivetreatments, and in the last few monthsvirtually every hair care brand has launchedat least one oil product.

Skin and body care grew 0.6% tot2.796bn according to IKW. IRI confirmsthat facial skin care registered good growthin 2012, up 1.9% to t600.26m, and avolume increase of 0.9% to 552.42 millionunits. Products for mature skin showedstrong growth, reflecting the demands ofthe ageing German population.

BB creams were a major influence onthis segment and German brands includingNivea, Schwarzkopf & Henkel’s Aok, DM’sBalea and Rossmann’s Rival de Loop ownlabel ranges introduced BB and CC creamslast year. Certified organic C&T productsare also playing a major role in facial skincare launch activity. DM and Rossmannboth retail their own certified organicbrands and mainstream beauty brandscontinue to launch near-natural or certifiedorganic skin care ranges, like Kneipp withits new Kneipp Naturkosmetik or BCG’sDr. Scheller brand.

The colour cosmetics market was also ingood shape in 2012, growing 2% tot1.379bn. IRI figures for first half 2013confirm that face, lip and eye productsgrew 1.7% to t653.054m while volumeregistered an 0.7% increase to 102.05million units.

The fast-moving colour category isdominated by German brands and drivenby a constant stream of limitededitions. And although L’Oréal’sMaybelline and L’Oréal Parisregularly top the market rankings,the most exciting NPD comesfrom the German brands, especiallyfrom teen labels Essence, Catrice,P2 and Manhattan.

The BB cream trend also affectedthis sector and colour cosmeticsbrands have launched numerous BBproducts in the last year. In the

30 SPC November 2013

TABLE 2: GERMANY: LUXURY C&TMARKET, VALUE, 2012

+/-%Total 3.9Colour cosmetics 5.3Women’s fragrances 4.5Skin/sun care 3.5Men’s C&T 4.1Body care -3.1Source: Bundesverband Parfümerien

Numerous brands, including DM ownedBalea (right), have launched BB creams

In the last year men’s rangeshave shown signs of furthersegmentation

As a result smaller perfumeries frequently engage in an all-outpricing war, trying to gain market share by slashing prices andoffering discounts. Industry insiders are worried that this trend willcontinue to trivialise the luxury industry.

Another challenge facing the industry is online retail. Accordingto e-commerce industry association BVH, beauty was the secondmost successful German e-commerce category in 2012, growing58% to t950m while volume turnover increased 67% to 500million units.

Adding e-commerce as a distribution channel is especiallyimportant for independent retailers. However, many perfumeriesfind it difficult to come up with an attractive online presence to actas a virtual shop window. As a result the online beauty market inGermany is still comparatively unexplored. And Douglas’ own webstore, which was launched in 2001, is still the biggest C&T retailer.However, in 2012 several new online perfumeries appeared on themarket with new retail concepts and the avowed intention ofgrabbing some serious market share.

Whether this strategy will work remains to be seen sinceDouglas itself announced a major relaunch of its online store in thenear future. The relaunch is part of a new marketing strategy forthe Douglas group, which has had a rather exciting year.

In December 2012, US investment group Advent Internationalacquired the majority of Douglas’ shares. And in June 2013, thecompany announced a new corporate strategy: invest some t500minto positioning Douglas as European market leader, extend thebrand portfolio by sourcing new trend and luxury labels, focuseven more on the online business and tie all of this together with anew brand identity in time for the Christmas financial quarter.

The retailer is also currently eyeing French perfumery chainNocibé as a potential acquisition. The deal would create the largestperfumery chain in France if it were to go through.

DRUGSTORE DIFFICULTIES2012/2013 was also a tempestuous year for the German drugstoremarket. After years of falling turnover, German market leaderSchlecker finally declared bankruptcy in early 2012.

As part of Schlecker’s retail empire, drugstore chain Ihr Platzdrugstore also went bankrupt. And while Schlecker’s Europeansubsidiaries were sold off to different international retailers, thehome business failed to find any investors. By summer 2012, all ofthe 6,000 German Schlecker outlets and 490 Ihr Platz stores wereclosed down or sold off and a total of 25,000 employees had losttheir jobs.

This large scale bankruptcy has shaken up the entire C&Tmarket. In late 2012 several German discounter and supermarketretailers began to increase their C&T line-up in a bid to grab someof Schlecker’s market share. However, the big winners have turnedout to be DM, the current market leader, and Rossmann.

The German department store sector, meanwhile, continued

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Product piracy continued to be a major problem for theGerman perfumery and luxury industry. In 2012, Germancustoms police intercepted pirated cosmetics worth w22.7m atthe country’s borders. In comparison, the figure for 2011 wasw1.3m, which equates to an increase of 16,000%.

Considering that the authorities can only open so manyshipments and that online platforms, which are popularmarketplaces for pirated goods, are even more difficult tomonitor, it is possible that the actual figures for piratedcosmetics are even higher.

PRODUCT PIRACY

with its gentle decline in 2012/2013. Although the perfumerysections of the department stores are important retail channels forpremium beauty, the distribution channel as a whole has beenstruggling for years, losing market share to perfumeries anddrugstores.

There are only two department store chains on the Germanmarket, Karstadt and Kaufhof. The Karstadt group currentlycomprises 86 department stores and luxury stores includingKaDeWe in Berlin. In 2010, US investor Nicolas Berggruenacquired Karstadt. After first announcing ambitious expansionplans, the new owner then began to cut costs – and jobs – acrossthe chain. Industry insiders feared yet another sale since theretailer’s premium properties make the group attractive to investors.

However, in September 2013, Austrian investor René Benkojoined Berggruen (buying the majority of shares in the sports andpremium stores) and now Karstadt is in a more stable position.Over the last 12 months several of the bigger stores weremodernised. Karstadt is also starting to invest into multi-channelretail and finally launched a web shop this year. However, industryobservers say that there is still no cohesive retail concept for thestore chain so Karstadt’s future remains uncertain.

Kaufhof, with some 105 stores across Germany, belongs toGerman retail giant Metro group. Like its competitor, Kaufhof hasbeen struggling over the last ten years although its stores tend tooffer a more premium shopping experience than the averageKarstadt store.

Even so, Metro (which itself is not in the best financial shape)had announced in 2008 and again in 2011 that it was puttingKaufhof on the block. The situation has become a little morerelaxed in the last two years; Kaufhof launched an online store,which is doing well and its CEO recently announced that he wassatisfied with the chain’s performance in 2012. However, at theannual shareholder’s meeting in May 2013, Metro group reaffirmedits intention to sell off Kaufhof eventually.

POSITIVE PREDICTIONSAll things considered the outlook for the German C&T market isquite promising. IKW believes that the market will remain stable in2013 and might even show a slight increase. BundesverbandParfümerien is also cautiously optimistic and Kosmetikverbandeven expects a turnover increase of 2.5%-3% for 2013.

Compared to other European markets, the German economy isin good shape. Germany is a country with low FMCG prices,especially for food and cosmetics, which means a strong and stablepropensity to buy. And according to a recent consumer climatestudy by market research company GfK, Germans are generallyoptimistic about the future and happy to spend money – at leastfor now.

germanymarket report

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