Up until the recent recession, Ireland boasted an economy that posted exponential growth year on year. In fact just a few years ago the country evolved from being one of the poorest countries in western Europe to one of the richest, according to some studies.
?However, with the credit crunch taking no prisoners, Ireland has lost its footing somewhat. And with The International Monetary Fund stating in its annual health check in June last year that Ireland was suffering the severest recession of any advanced economy, and with bank losses predicted to reach €30bn (£35bn) over the next two years, it seems the storm is far from over.
Uncertain times ahead
?The severity of Ireland’s economic downturn is not surprising when taking into account the country’s high level of dependence on the US. Ireland is not only reliant on the US for imports but also, thanks to its low tax rates, several US multinationals have chosen the Emerald Isle as the ideal base for their headquarters, creating jobs and bolstering the Irish economy. When the performance of these multinationals deteriorated following the economic crisis, Ireland was inevitably affected – with the accompanying drop in the Irish property market doing nothing to help the situation.
The Republic of Ireland is one of the least densely populated countries in the EU, alongside Estonia, Slovenia, Latvia and Lithuania. That said, while most of these other countries have seen a decline in inhabitants over the past three year period, Ireland has actually seen steady and substantial growth – rising from a population of 4.253m in 2006 to 4.444m people in 2009.
But despite the growth in the population, the sales value for the C&T market has had a definite fall from grace over the same period, according to data from Colipa, the European trade association for cosmetics and toiletries. Starting with a market size of €0.567bn in 2006, there was a small but encouraging rise to €0.584bn in 2007. However, as the credit crunch took hold sales dwindled and 2008 posted a fall to €0.576bn – a loss of 1.4% during that period.
The most popular cosmetics brands in Ireland come from the global multinationals, with Procter & Gamble and Unilever dominating the market.
But there is still room for local companies to make their mark. Launched in 1993, Irish Breeze Ltd is one of the few companies to manufacture toiletries in Ireland (much of Ireland’s C&T trade is heavily dependant on imports), however its offering is limited to wipes, cotton wool and soaps. The Irish Breeze soaps do however sell well on the domestic market and as a result the company also recently launched its BabyKind range for infants.
Penchant for US goods
Looking at retailers, traditional Irish stores like Arnotts, Dunnes and Brown Thomas account for the majority of C&T sales, with health and beauty retailer Boots also an extremely popular choice. However, as new and cheaper stores such as Aldi have started to come over from abroad, retailers have had to rethink their marketing strategies, with some of them struggling to cope.
When it comes to cosmetics, US brands sell particularly well in Ireland. Jo Somerville for the Irish C&T distributor Cofri Cosmetics says: “One of the best selling brands we distribute is Smashbox, which is really popular here. Smashbox arrived in Ireland from the US about ?four years ago and it has established itself as the direct competitor to MAC Cosmetics over here which has been a best seller in Ireland for years. The vast majority of cosmetic products in Ireland are imported because we are not historically a manufacturing country so that plays a part.”
Indeed, looking at the Irish cosmetics market, no local manufacturer has, as yet, been able to establish itself as a mainstream brand which is perhaps disheartening. One of the major challenges that Ireland faces is to successfully promote its local industry. Across all industry sectors, the country only has a few Irish companies with annual revenues of above t1bn, a notable example being the air carrier Ryan Air, and there are just a handful of small companies that manufacture make-up products.
Among them, Ri’ Na Mara Irish Seaweed Cosmetics was founded in 1986. The company strives to use natural ingredients and essential oils and all products are paraben-free. Barbara Campbell, sales and marketing manager for the company, explains the efforts the company is making to support local business: “In the current climate, where jobs have become such an issue in the country, the ‘Guaranteed Irish’ government campaign which promotes goods made in Ireland has had a resurgence in popularity and we have thus become more active in supporting this.”
Spa speciality
Another Irish brand that uses seaweed is Voya, which is the only Irish provider to the popular and ever growing spa market. “There are other spa brands in Ireland but they are mostly of US or European origin,” says Mark Walton, managing director of Voya.
“In the Irish market our indigenous ethos is appealing. Seaweed baths have been popular for over 300 years and at one time there were over 100 in Ireland alone. Unfortunately there are only a handful left. Seaweed baths, which include many hot seawater and seaweed treatments, are very popular in this country. In the past ten years we have seen the demand for our seaweed baths and other therapies expand rapidly, fuelled by the cultural shift to embrace traditional remedies along with a move towards organic wares, which is why our products are licensed by either The Soil Association or the USDA. Every Voya product and therapy contains extracts of our own certified organic wild seaweed, which has been sustainably hard-harvested, when ripe, by members of my own family.”
Showing characteristic Irish loyalty, Walton adds that Ireland does manufacture a few cosmetics, just not on the same scale as the rest of Europe. Most of the products produced are for the domestic market only and this is for a number of reasons.
He says: “The manufacturing costs in Ireland are very high as are labour and energy rates, professional services and rental costs, which inevitably affects the costs of production.
“This issue is not specific to the cosmetics industry alone. I would also argue that there has been a major move from many European countries to countries of lower cost for the production of cosmetics. But at Voya we would not be able to outsource our production because this would mean giving up our organic status and carbon footprint.”
Opportunity knocks
Despite the effects of the global economic recession hitting Ireland, the crisis has allowed some young entrepreneurs to shine through.
Due to most cosmetics being imported and therefore expensive, an Irish website called www.cheapmakeup.ie was launched last year to help combat this problem. The founder, 22 year old Amanda Sutton, says: “I felt that the price for cosmetics in Ireland was very high compared to England and the US – because there is not the same competition between retailers as in Ireland there are far fewer places for people to buy make-up.
“After visiting friends in Drogheda, in southern Ireland, and being amazed by the high price they pay for cosmetics, I decided to set up my website in response. People can now buy online at their convenience and have the items delivered to them free of charge saving themselves a considerable amount of both time and money.”
Sutton sells high-end cosmetics at discounted prices and sources items from various wholesalers to guarantee the best price. The stock is varied and the main lines on offer at the moment are Urban Decay and POP Beauty while new products are also making a mark such as those from Benefit and other cult brands. Sutton’s website sells everything at over 50% off the retail price, which is key to the business being a success in the current economy.
Talking from the spa industry perspective, Walton believes that the Irish consumer is surprisingly well versed in cosmetics and spa going while due to the recession and currency fluctuations there have been less US customers than usual. But the number of what he calls, “staycationers” in turn has increased, such as people who travel internally for short breaks and also visitors travelling from the UK and Europe.
There is no doubt Ireland is going through hard times and this is when manufacturers and retailers need to show their resilience and eliminate their weak spots. As Walton concludes: “It’s all about making the most of the available opportunities, even in a downturn. What counts is to offer original products that catch consumers’ attention.”
Peter Mark makes a mark on Irish hair care
' Peter Mark operates throughout the country with seven salons in Northern Ireland and 67 salons in the Republic of Ireland. Since the group was founded in 1961, Ireland has undergone dramatic changes. We are now a truly multicultural society and this is reflected in our sense of style and in the places where we look for inspiration. We are an extremely well travelled society now which takes hair trends from as far afield as Paris, Milan and London as well as the US and the Far East.
“The products we use are all from L’Oréal and we are actually its largest stockist in Ireland. We use Kérastase and Redken products, which are extremely popular with our clients and which sell very well through our salon network. We were also the first hairdressers to introduce the US brand Bumble&Bumble to Ireland.
“In the face of this most recent recession, like all businesses we have looked at our costs and at managing our overheads more effectively. Promotion plays a big part in our overall marketing strategy and we have always been aware of adding value for our clients. Given the current economic climate, the hair care and hair styling market in Ireland is developing well with salons that offer great service at a price that consumers are happy with. '
