“The most beautiful makeup of a woman is passion. But cosmetics are easier to buy”, said late French designer Yves Saint-Laurent, and according to the numbers, the cosmetics (beauty) industry is poised for further growth, especially in the Middle East and Africa.
Value of retail sales of beauty and personal care was estimated at USD 25.5 billion in 2014 by global market intelligence company Euromonitor International. In fact, the Middle East and Africa are predicted to be the world’s second fastest growing beauty market, and Euromonitor forecasts the value of the MEA region’s beauty and personal care market will grow 4.25 percent annually to reach more than USD 30 billion in 2018. The data from the Institute of Personal Care Science of Australia shows the global cosmetics market is worth USD 334 bn, while Euromonitor put total global value for overall beauty in 2013 at USD 454 bn.
Maher Makarem, general manager of Madi international Qatar, one of the Middle East’s leading distributors in the beauty industry that originated in Kuwait, says: “It’s all about looking beautiful and attractive and it’s turning into an obsession. It’s no longer just about inner beauty. Looking beautiful and feeling good plays a major role in a woman’s life – be it a housewife or a working lady, looking good is always on their mind.
Beauty is limitless. Women want their hair, skin and even nails to look beautiful. And let’s not forget makeup. Today, the exposure we are witnessing because of access to social media and different means of communication means looking beautiful is now a priority for women creating an increased demand for all beauty products,” states Makarem.
According to him, there is the room for further growth. “Especially if brands keep up with the trends and continue to offer new and high-quality products. They also need to focus on offering a wide variety of perfumes to keep up with the world’s leading perfume brands.”
Fragrances are the most popular product among MEA buyers – they spent around USD 5 bn on perfumes last year (around USD 3 billion just in the GCC region), while at the global level, the fragrances and perfumes market is expected to reach USD 45.6 bn by 2018. Industry insights show the average spend on cosmetics and fragrances in the GCC is around USD 334 per person.
Every year more than a thousand new perfumes are launched around the world (in 2013 there were 1,492 new fragrances on the shelves), and in this competitive, innovative and dynamic sector it is not easy to find new customers, despite the fact that per capita consumption of perfumes in the Gulf region is among the highest in the world.
Salim Kalsekar, managing director of Dubai-based fragrance manufacturer Rasasi Perfumes, a company whose presence in the market dates as far back as 1979, explains how home-grown brands are dealing with strong international competition. “It’s certainly true that international brands are targeting the Middle East, specifically the GCC, as it is a very lucrative market for cosmetics.
Rasasi’s benchmarks have evolved over the years and we are no longer competing with local brands alone. While international brands drive consumer desirability through huge marketing spends, Rasasi’s core focus remains on quality and our legacy of four decades of mastery over Oriental perfume blends. Our knowledge of the finest traditions of Oriental perfumery and expertise of almost 40 years of blending scents gives us an unmatched insight into the art of creating fragrances best suited for this region,” states Kalsekar.
He adds that Rasasi’s unique insight into consumer preferences stems from being a part of the culture of the region. “We have developed as a brand along with the development of the region, something that places us ahead of the learning curve. While our consumers tastes are constantly evolving, they are still very much rooted in traditional values.
Rasasi has a strong research and development division which invests heavily in studying the changing market trends. Its product development and state-of-the-art production processes are key to enabling the company not only meet the ever-evolving tastes of today’s consumer, but also to set new trends in the regional perfume industry.
“Rasasi’s perfumes aspire to offer a blend of tradition and modernity, values and aspirations, dreams and rich lineage that the region’s people are proud of. Our customers are global citizens who are appreciative of the trajectory and success of their respective nations, yet hold their heritage close to their hearts. The fact that we have a very wide and loyal customer base is a strong source of pride for us,” he states.
The biggest beauty products consumers are residents of Saudi Arabia, Iran and UAE – in these countries, according to Euromonitor, consumers spent USD 9.5 bn on beauty products last year and they hold 37 percent of the market. Saudi Arabia holds the largest market share by value and growth at USD 4.5 bn or 17.6 percent market share, and it is expected to grow by 11 percent annually.
Saudi women spend an average of USD 3,800 per year on cosmetics, so the sales of skincare products are expected to increase by 26 percent and reach more than USD 500 mn, while on perfumes, according to some reports, Saudi residents spend a staggering USD 1.4 bn. Oud-based perfumes, with their sweet, aromatic scent are the most popular, and the Gulf is considered the fastest growing market in the world for Oud perfumes, whose hefty price – it can reach up to USD 800 for a 12-gram Oud oil bottle – is not an obstacle.
Fuelled by strong economic growth, further increase in disposable income levels and widening internet access, lifestyle trends are changing very fast in the Kingdom and social media and beauty bloggers play an important role in consumer behavior – a bad review can be a death sentence for some products, especially in the region where the demand for quality is increasing.
Saudi Arabia has the most hair and beauty salons in the region – the hair care market is expected to reach USD 708 mn by 2017. Among most preferred beauty brands for skincare by Saudi women is Christian Dior among premium brands and Nivea body among mass brands, Max Factor is top makeup mass brand, and Yves Saint Laurent is the first among premium ones, while Arabian Oud dominates premium fragrances, and Axe, mass produced ones.
Despite popularity of Arabian perfumes, various studies confirm that global beauty players are dominating the market. That is confirmed by Makarem: “The demand for Middle Eastern brands is relatively lower as of now. The brand image of global perfumes is implanted as higher quality products in the minds of consumers. But trends are constantly changing and with the right approach, this can definitely change in the future.”
Besides Saudi Arabia, other GCC countries also have high consumption of beauty products. In Bahrain, the fragrance and cosmetics market continues on a growth curve with sales around USD 29.9 mn in 2014, and in Qatar, according to last year’s figures from the Ministry of Development and Planning Statistics (MDPS), Qatari household average monthly spend on personal care was around USD 686, while non-Qatari household spend around USD 110 a month. But the average Qatari household surveyed was made up of 8.7 people, which is more than twice the average expat household of 4.3 people.
The overall Health and Wellness market in Qatar is expected to grow at a CAGR of 28.2 percent during 2012-2017, while the cosmetics and fragrance market in Qatar has grown at a CAGR of 33.2 percent during 2006-2012. Thanks to a young population which is reportedly spending around USD 400 on beauty and personal care, like in Saudi Arabia and the UAE, fragrances have the largest market contribution of 54.2 percent by revenue.
According to Kalsekar, among fragrances, finished sprays are very much in demand. “But the true connoisseurs of perfumes prefer concentrated perfume oils, dhanel ouds, mukhallats and high-end bukhoor for the sheer luxury of their aromas. These products epitomise the magical and evocative fragrances of Oriental perfumes in their full bloom,” he explains.
UAE is the largest in the region with regard to per capita spending: residents are on average willing to spend USD 163 on beauty and personal care products while last year’s market value was USD 1.1 bn. The UAE’s beauty and cosmetics market is growing fast with overall spending expected to reach USD 1.3 bn by 2017.
Tourism plays an important part in beauty spend, especially in Dubai, where beauty products are purchased as gifts, in particular well-established premium Arabian fragrances. UAE’s total exports of perfumes and cosmetics in 2012 was USD 318 mn, while the top markets for perfumes were Oman, Netherlands, Singapore and Hong Kong.
One of the studies found out that one in ten consumers in the UAE spends almost USD 17,000 a year on cosmetics, and as in Saudi Arabia, beauty salons are flourishing – there are thousands of them just in Dubai, with regular customers visiting as often as twice a week. Those salons sell around 15 percent of skincare products in the UAE, while supermarkets sell around 35 percent. The skincare market, which made 13 percent of total sales (USD 3.1 bn) in the Middle East and Africa in 2013, is expected to reach USD 219 million in 2018 just in the UAE.
Natural and organic skincare segment in the UAE will be worth USD 100 mn by 2016 according to market analyst Organic Monitor, and the market for natural and organic cosmetics in the Middle East and Asia grows at 20 percent per year. Trends are for sure, moving towards organic cosmetics. “The trend is really moving towards health. The awareness is now higher than ever and there is a high demand for natural unadulterated products that are healthy,” says Makarem.
An important segment of the cosmetic market in the MEA region is halal cosmetics. A recent TechNavio report stated the global halal cosmetics market is expected to grow at a CAGR of 13.67 percent over the period 2015-2019, driven by the growing Muslim population worldwide. But the market is still considered niche, despite its rapid growth and present value – the Institute of Personal Care Science of Australia estimates the global halal cosmetics market at USD 13 billion annually.
In the Middle East the halal cosmetics market is estimated to be worth USD 2 bn, and according to industry experts, 25 percent of the cosmetics sold in the Middle East are halal certified. But most halal-certified beauty products come from small and medium-sized enterprises.
Makarem says there is room for producing halal cosmetics in the region, but only if demand and awareness in the Muslim community increases.
“Most of the products present in the region are already halal, i.e. free of alcohol, against animal-cruelty, pork/pork residue/pork fat free,” adds. He is not confident the halal cosmetic is set for global growth, since most globally produced cosmetics are already free from the above-mentioned ingredients. “Organic beauty products are what the consumers demand these days,” concludes Makarem.