Amid economic turmoil and political change, Greece’s cosmetics market has been sliding overall, but ‘natural’ beauty still shines for consumers. Michael Kosmides reports from Athens
With Greece on the brink of financial default, and consumer spending power diminishing, the country’s consumers are less concerned about looking their best, at a time where they are being forced to cut down on even the essentials – thus posing a challenge for the Greek cosmetics industry.
Greek consumers have been changing their spending habits in terms of cosmetics since 2009, according to business services and market research group ICAP, which noted a 4% drop in sales for cosmetics in the country that year. Last year’s figures did not show any improvement, with Euromonitor International registering a 12% drop in sales value in the country’s colour cosmetics category alone. While the cosmetics market is expected to continue to grow overall in both western and eastern Europe, according to Euromonitor, Greece seems to be the only country where all personal care markets are projected to drop in value – the market is expected to lose from t9.2m in colour cosmetics to t33.2m in premium cosmetics by the end of 2011.
Theodoros Giarmenitis, president of the Hellenic Cosmetic Toiletry and Perfumery Association (PSVAK), tells SPC that there has been a 25% drop in sales in the first six months of 2011. “We used to have around 4% growth, but that has stopped since last year,” says Giarmenitis.
“Consumers buy cheaper products and they are now after offers; looking for value for money”, says Giorgos Mantzavelas, marketing director for beauty giant Avon’s cosmetics operation in Greece. “We have asked them why they don’t spend as much on cosmetics and whether it had anything to do with the products. The only reply we got was that they don’t have as much money anymore, and they spend it to pay taxes and basic necessities such as food instead.” Euromonitor has also noted the trend towards “more rational purchases and value-for-money choices”, and that “the recession in Greece has been a major impediment to development in the category [of colour cosmetics], given that [they] are indulgence purchases and not essential ones. Falling disposable incomes and the increasing need to reduce spending lead consumers to restrain budgets spent on colour cosmetics”.
Giarmenitis says that out of all cosmetics sectors, premium cosmetics have unsurprisingly been hit the hardest by Greece’s financial woes. “Nobody will pay t80 to t100 for a cream today – they just go to the supermarket and buy a cheaper one, sometimes of the same brand. Premium cosmetics are sold only when – every one to two months – the big retailers offer them on discount, sometimes at 25%,” he said.
In this very competitive and at-risk market, ICAP says that Greece’s cosmetics retail stores are competing with each other quite aggressively both in terms of price (for non-specialist stores) and on levels of personal service (regarding selective distribution cosmetics stores), with the economic crisis affecting “mostly the single [small local] stores and [to a lesser extent] the big chains”.
According to Euromonitor, US-based skin care, cosmetics and perfume giant Estée Lauder continues to be Greece’s leader in colour cosmetics, with its brands (including MAC, Clinique and Estée Lauder) enjoying a high level of consumer awareness and loyalty in Greece. Following Lauder is L’Oréal Hellas SA, which offers brands such as L’Oréal Paris and Maybelline New York. Direct seller Avon Cosmetics Greece Ltd stands in third place in terms of sales rankings by value.
So while the Greek cosmetics market is not exactly booming, not everyone is struggling during this crisis. In fact a report from March this year from the Athens Laboratory of Research in Marketing shows that the ‘natural’ cosmetics market – dominated by Greek natural products exporting brands Korres and Apivita – has demonstrated surprising growth, with more than 26% of buyers having increased their spending since last year, and nearly 66% not cutting down on spending. Only 7.5% of natural cosmetics buyers actually spent less on these products containing organic ingredients in the last year.
“The natural beauty industry has truly blossomed over the last few years. We pay more attention to what goes on our skin, and people are savvier than before and do their own research regarding ingredients and efficacy,” says Korres spokesman George Anthoulakis.
Growth in this area has not only been seen in Greece either, he says, but internationally as well, with sales “raised to 36% in 2010 from 30% in 2009” and Korres products are now “available in 30 countries, with presence in over 4,000 points of sale, in cities such as Tokyo, LA, Milan, Berlin, Sydney and Hong Kong.”
And while Greeks are buying cosmetics sparingly overall, Anthoulakis adds that even in Greece’s current financial state, the country still witnessed a rise in sales of anti-ageing skin care products between 2009-2010. He highlights Korres’ Quercetin & Oak anti-ageing and anti-wrinkle night cream as an especially popular product in the country. Interestingly too, says Anthoulakis, Korres has also noted another consumer behaviour shift witnessed in other Greek markets. “Overall, consumers tend to support Greek produce now more than ever, but they are not prepared to compromise – thus their buying decision is driven by product performance, price and origin in that order,” he says. “In our case, being Greek is something we have communicated from day one, 15 years ago. It’s not a competitive advantage that we are now putting forward in light of the current climate”.
So although the Greek cosmetics market environment looks rather bleak at the moment, Anthoulakis says he is optimistic about the future, especially when it comes to more natural products. “There is great potential in the natural beauty industry given the advances in technology, the vast variety of beneficial natural ingredients and the continuous scientific research unveiling new territories to be explored,” he adds.