Last year Western European cosmetics and toiletries sales grew by 3.7 per cent compared to 2002 and North America by 1 per cent. But Eastern Europe grew by a whopping 11.6 per cent. Despite total sales still remaining a fraction of the total sales in those developed markets, the growth potential in Eastern Europe suggests that immature niche markets such as suncare could be goldmines.
Eastern European women are highly appearance conscious and most still remember the days when such products as are routinely found on their shelves today were remote luxuries, says Claire Briney in her report for markets information provider Euromonitor. The Eastern European woman is an eager consumer for the percieved upmarket standing of foreign products and domestic producers are willing to sell them. Sun care is no exception.
Sun care represents one of the least developed categories in the cosmetics and toiletries sector in an immature market. Total sales of sun care products across the region amounted to $162 million or 1.3 per cent of total cosmetics and toiletries sales in 2003. By comparison the more mature Western European market for sun care represented 3 per cent of total cosmetics and toiletries sales. Owing to that immaturity, growth in sun care in Eastern Europe has remained in the double digits since 1999. In 2003 sun care sales grew by 10.3 per cent.
The Eastern European market for sun care is unique in several respects, the report says. Direct selling is a more significant distribution channel than in other markets. Consumer awareness of the effects of sun exposure remains marginal but is fast growing. Foreign manufacturers dominate but local producers hold strong positions in some niche areas.
Direct selling represents 11.8 per cent of total sun care sales while in Western Europe the figure is 5.2 per cent. Avon and Oriflame are the largest direct sellers and rank 4th and 6th respectively in company share as a result. These companies have been very active at promoting sun care products and through direct contact with customers play a key role in increasing awareness of UV damage. Unlike Western Europe or North America, governments have not been as active in explaining the medical rationale for sun protection and direct sellers are acting as stand-in health care professionals.
Low SPF sun cream remains very common as consumer awareness still has a considerable way to go and price remains a deal breaker. The media which Eastern European women are confronted by may have slowly begun to emphasis the importance of sun protection but it has a way to go in explaining the concept of SPF. Higher SPF creams also carry higher prices and compounded with a lack of understanding, it is of little surprise that in Russia the most popular sun creams fall between SPF5 and 10. SPF30 is not commonly found on shelves and Eastern European manufacturers such as Kalina in Russia, which holds 2 per cent of sun protection sales, go up only to SPF20.
Also holding back growth of the higher SPF creams is the ongoing love affair of the Eastern European with a bronze glow. Tans are synonymous with holidays and holidays are synonymous with success and wealth. It is little wonder then that Eastern Europeans continue to flock to beaches and lakes during their summer holidays in search of a bit of colour to show off when they return. Tanning oils with a very low SPF therefore continue to be popular.
Most sales of higher SPF creams are made by foreign manufacturers, which attract consumers who are less price sensitive. Foreign companies dominate sun care in Eastern Europe with Beiersdorf the leader in the region holding 21.2 per cent of sales followed by L'Oréal and Johnson & Johnson. Beiersdorf was one of the earliest entrants into Eastern European sun care and has been one of the most active since in NPD and advertising.
Of Eastern European manufacturers, Polish firm Kolastyna has been the most successful, capturing 2.4 per cent of total sun care sales. Another successful Polish company has been Laboratorium Kosmetyczne Dr Irena Eris which took 12.2 per cent of self-tanning sales and ranks third behind L'Oréal and Beiersdorf. Domestic manufacturers largely compete on the basis of lower prices and therefore in volume terms take up a large slice of sales.
The report also points out that, although the Eastern European market for sun care may be immature, product launches have taken place at a rapid pace. The big news in several markets including Poland has been the launch of the spray format. In Czech Republic a spray format was launched which included beta carotene and in Hungary spray-on after sun and sun protection products were launched by Oriflame.
Self-tanning is the smallest sector within sun care but saw many new products added as manufacturers tried to get an early jump on competitors. Self-tan grew faster than either sun protection or after sun in 2003 although it remains a niche area targeted at the higher end of the market. Long and cold winters in many parts of Eastern Europe combined with an ongoing belief that a tan is attractive makes self-tan an area of interest for manufacturers looking to secure their future place. In Russia, L'Oréal Plénitude Sublime Bronze was launched, as well as new self-tanning products from Lancaster and Clinique. Domestic producers have not let the opportunity go unnoticed and have launched a slew of these products themselves.
The future appears sunny for sun care with growth forecasted for 2003-2008 at 37.2 per cent, said Briney. In sun care, after sun is expected to see the strongest growth at 41 per cent followed by sun protection and self-tan at 37.5 per cent and 22.8 per cent respectively. An ongoing lack of consumer awareness of the effects of UV on skin is the key factor in sun care's future in the region.
After sun is expected to experience the fastest growth as Eastern Europeans continue to sun bathe, requiring these products following sun exposure. As consumer awareness grows sales of sun protection are expected to pick up pace throughout the forecast period with the strongest growth expected in 2007 and 2008. Self-tan will see growth although in some countries low disposable incomes combined with high unit prices on these products will dampen its pace.
With total sun care sales in Eastern Europe expected to reach $222.3 million by 2008, manufacturers may find this market looks like a prime target for manufacturers.