But from a very small base
Healthy growth in the Middle-Eastern market for natural cosmetics is continuing in spite of political instability and social unrest, according to Organic Monitor, which predicts revenues will expand by about 20% this year. Natural cosmetic sales are said to be increasing at a fast rate in key country markets even though regional turbulence has curbed investment and consumer spending power.
The UAE natural cosmetics market is the largest in the region, comprising over half of total revenues. In other countries, demand is mainly concentrated in major cities, such as Riyadh, Kuwait City and Manama. The study finds affluent consumers and tourists generate most demand for natural and organic cosmetics in the region.
“The major drivers of market growth are growing consumer demand for ‘chemically-clean’ cosmetics and expanding distribution. Consumers are buying natural cosmetics as they become concerned about synthetic chemicals in cosmetics and toiletries,” says Organic Monitor. Product penetration is increasing in pharmacies, beauty retailers, and department stores.
However, growth rates are high partly because the market is growing from a small base, with natural products currently making up just 0.1% of cosmetic sales in the Middle East. Consumer awareness is still low while product prices are high and there is an absence of indigenous brands. In mainstream channels, there is also considered to be high competition from ‘pseudo-natural brands’, which are often cheaper and supported by large marketing budgets.
Korres and Neal’s Yard Remedies are market leaders in the region partly thanks to their distribution strategies. “Both brands are investing in concept stores, enabling them to educate consumers on their products and differences between conventional cosmetics, says Organic Monitor. “Direct marketing also gives these brands the advantage of fostering customer relationships and getting vital feedback.” Neal’s Yard is expected to become market leader if it continues to expand its retail network in the region.
As in Asia, the Middle Eastern market for natural cosmetics is considered fragmented in terms of retail structure for beauty products. In the naturals sector, low adoption rates are attributed to consumer confusion and inadequate distribution.
Possible solutions to overcome such market barriers will be discussed in the upcoming Sustainable Cosmetics Summit in Hong Kong, 7-8 November. Major topics on the Asia-Pacific summit agenda include strengthening consumer demand, market entry methods, certification & standards, distribution strategies and marketing challenges.