Switzerland enjoys an excellent reputation throughout the cosmetics industry thanks to the premium ingredients it uses in its products and the results of the extensive research and development it undertakes. Nadia Di Martino reports
A wealthy country by tradition, Switzerland has invested heavily in R&D over the years and thus many innovative and highly sophisticated C&T products have emerged from this small country.Premium quality ingredients are complemented by strict hygiene and safety rules plus the fact that Swiss companies focus largely on producing cosmetics tailored to specific needs. And it is the country’s wide range of expertise and modern production facilities that make this possible.
Although an affluent country, Switzerland’s financial fortunes have been mixed in the past. However, things have definitely taken an upturn in the past few years. In 2007, the Gross Domestic Product (GDP) of Switzerland grew by 3.1% compared to the previous year’s figure. This was mainly due to the positive development of the private sector and to the favourable export climate. The rate of unemployment also fell in 2007 to 2.8% from 3.3%.
The cosmetics sector in turn benefited from the good economic situation, with all new categories registering good growth in that year. In fact, since 2002, export volumes of Swiss cosmetics and perfumes have increased from CHF740m per year to CHF860m according to SKW, the Swiss Cosmetic and Detergent Association, with the Swiss themselves apparently spending more on cosmetics than ever before.
According to SKW, its data for 2007 shows that the largest segment of the Swiss market was that of facial skin care with a 19.8% market share and nearly 50% of sales in this segment going to either day or night creams. Body care also performed well, holding 19.7% of the market. Hair care followed with 13% of the market, 12.8% went to women’s fragrances, colour cosmetics took 12.3% and male products took 8.4%. Next came oral care at 8.1% and the final piece of the pie was taken by sun care at 3.7%.
Looking in more detail at SKW’s findings, the hair removal sector had the highest percentage rise, ranking ahead of self-tanning products, hair styling products and corrective products. Among the categories that didn’t fare so well were products like at-home hair kits, hair gels, sun protectors in a stick format and pre-shave/primer products.
Main attractions
The Swiss market benefited from lots of innovation and enjoyed many new launches in 2007. In facial skin care, specific treatments, cleansing products and day/night creams achieved the most noticeable rise in sales. The body care arena doubled its revenues from 2006 rising by 7.1% in value terms. This was thanks to deodorants, shower products and body lotions having an extremely lucrative year. Hair care continued in the positive steps of 2006 putting on 7.8%. Shampoos alone made up over a third of the total value in this segment. Hairsprays and gels also performed noticeably well, while fixing mousse was the only area that slid in value, not recovering from the losses it experienced in 2006. Oral care grew in value by 9% overall with specific products adding to the traditional toothpaste, toothbrush and mouthwash sales. Colour cosmetics made CHF300m in 2007, with eyeliner and powder dominating the category according to SKW. Sun protection lines rose by 5.7% totalling CHF90m, with record results for self-tanning products, which have become a favourite among the Swiss. “This is a sector where the level of innovation is at an all time high and for this reason we can forecast good growth for the future,” says Prisca Lack from SKW.
Female fragrances have experienced weak performances in Switzerland in the past ten years but in 2007 they managed to grow by a small but optimistic 1.8%. Male grooming has also taken off, growing by 6.2%, with facial skin creams and cleansing products being the most popular formats whereas all shaving products saw sales diminishing somewhat, surprising considering the category’s overall levels of success.
What crisis?
Despite the global economic crisis, Swiss cosmetics companies are optimistic about what 2009 will bring.
Michael Leuenberger, head of corporate communications at Weleda, is pretty confident about the future: “At Weleda we forecast for 2009 the same growth we had in 2008 – that is around 8-10% for the entire group.” Weleda, a Swiss company which launched in 1921 and is based on the biodynamic farming principles of philosopher Rudolph Steiner, saw turnover for 2007 standing at around CHF361m. “In 2007 our growth was 12% up on that of 2006 which is extremely promising,” comments Leuenberger. Explaining the reasons for these results he says: “In 2008 we didn’t feel the effect of the credit crunch too much because our consumers are very loyal to our brand. We are one of Switzerland’s largest natural and organic companies and this is a consistent advantage for us. While 30 years ago we were operating in a niche sector this is no longer the case. We now have large scale distribution in big retailers across Europe and are no longer just limited to pharmacies, which is where we came from, though this is still a key area for us. The Swiss are highly savvy consumers who want good quality products and are willing to pay handsomely for them. And if they have the choice they will more often than not buy Swiss products instead of international ones. There is a level of loyalty in the Swiss consumer that is unrivalled.”
Another company going strong in the Swiss C&T sector is Mibelle Cosmetics (Migros Group), which was founded in 1961 and today employs over 400 people. The company, based near Zurich, develops a range of C&T products including foot care, hair removal, anti-cellulite and dental care lines. Juerg Burkhalter is head of marketing and sales at Mibelle. He says: “The general market forecast for the C&T market in Switzerland is stable. As a company we are expecting growth of 5-10% this year, mainly due to our new clients in North America. The entering into the Swiss market of the German discounters Lidl and Aldi means that a real price war in consumer goods has developed which has made everyone sit up and take notice.”
However, not everyone is as optimistic about the country’s economic prosperity. The Swiss government warned recently that the economy would contract by 0.8% overall by the end of 2009. Also the rise of countries such as Singapore and the United Arab Emirates as centres of competing global innovation could threaten to reduce Switzerland’s economic output. A report in The Economist recently stated: “The economy is expected to be in a deep recession by the end of 2009, and there is a risk of a more severe downturn than currently forecast. Switzerland’s outsized financial sector, in relation to the size of its economy, exposes the country to greater risk in the event of a systemic banking crisis.” But Switzerland has a strong banking culture and would certainly mobilise its resources to defend its position. This explains the positive outlook that dominates the C&T industry, justified by the particular strengths that Switzerland has.
Market focus
Burkhalter adds: “Switzerland is quite unique in Europe for its leading private label brands. For instance, our parent company, the supermarket chain Migros, has been developing its own private label brands since it was founded. It represents a healthy share of business for them.”
There are many Swiss companies in the country that are worth taking notice of. Among them Gaba and Spirig are strong in the oral care and sun care sectors competing on Swiss soil with many multinational brands. Spirig was founded in 1948 and the company currently owns establishments in Germany and Austria and exports products to the US and Canada among others. Its skin care range, which includes sun care products, is sold exclusively in pharmacies throughout the country.
Several manufacturers in Switzerland often have their roots in pharmaceutical beginnings. Doetsch Grether was founded as a pharmacy in 1899 in Basel, expanding into cosmetic products shortly afterwards. Its Classic Swiss Bodycare Range, still sold today, launched its first product, Fenjal Cream Bath, in 1962. Today the Fenjal range offers a wide selection of plant-based body care and bath products to the European consumer.
Meanwhile, Louis Widmer is a family-owned company that manufactures dermatological treatments and hypoallergenic cosmetic products. The company understands that consumers sometimes need a bit more direction with their purchasing choices so all of its products are available in pharmacies and selected shops where trained staff can advise on the right product for any skin condition and give advice on long-term use.
Art & Fragrance is a successful player in the perfume and cosmetics sector and specialises in the development and distribution of toiletry and cosmetics products. The company distributes Lalique, Cabochard and Jaguar For Men.
Other international players on the Swiss market are the likes of Beiersdorf, L’Oréal, Procter & Gamble, Johnson & Johnson and Unilever. Nivea (Beiersdorf) is the dominating brand in the body and sun care sectors of the Swiss C&T market. L’Oréal ranks second, leading the hair care sector, Procter & Gamble is the leader in the men’s grooming arena while Unilever rules the deodorants category in Switzerland just as it does in several other European countries.
Multiple choice
In Switzerland there’s a strong demand for specific cosmetics in niche markets with many innovative products being launched. Says Lack: “Besides natural products, consumers ask for products with specific benefits and they expect these to be provided for them.” Among these are products aimed at the over 50s and those targeted specifically at men. Male grooming products saw a value increase of 6.2% in 2007, according to official body SKW. Naturals is also a key trend, with the indigenous plant Edeilwess figuring heavily among the local ingredients used by several companies including Weleda. And many other companies are following suit.
The devil is in the detail
Switzerland is among the world’s leading producers of chemicals and pharmaceuticals, besides being a leader in the banking and insurance sector. The latest scientific knowledge is also readily applied to cosmetics production. The C&T industry also benefits from the country’s highly qualified workforce performing highly skilled work in the fields of micro technology, biotechnology and pharmaceuticals.
Suffice to say, nanotechnology has quickly become a very important part of the C&T industry in Switzerland with its influence evident in several areas. Nanotechnology takes place on the nanometer scale, a feat which has recently cast a shadow of controversy over the C&T industry. The use of nanoparticles has opened up possibilities for practical applications in a range of industries including cosmetics, and Switzerland, with its state of the art technology, has embraced it. For instance, sunscreen manufacturers have started using nanoparticles in place of bulk forms of zinc oxide and titanium dioxide because the smaller particle size reduces the visibility of the product. This could potentially mean solving one problem by creating another because the nanoparticles, while getting rid of the white streaks that creams sometimes leave behind, are believed to emit photoelectrons when exposed to UV light. These electrons in turn are said to induce the formation of free radicals that can cause damage that may lead to a host of future skin-related problems.
Despite the debate, many Swiss companies are making good use of nanoparticles. Leuenberger comments: “We use nanoparticles in our sunscreens because we view them as natural mineral filters. The debate over the use of nanoparticles rages on but as I see it there certainly is a need to invest more in this area. But consumers should be aware that nanotechnology doesn’t necessarily represent a danger by any means and opinion is divided on this. It also opens the door to several windows of opportunity in terms of innovation and development.”
La Prairie and Juvena, both owned by Beiersdorf, are the main Swiss companies to carry significant weight in this high tech sector with both experiencing loyal custom from the Swiss population.
Professor Gohla, vice president of research and development at La Prairie, comments on this matter: “At this time, micronized titanium dioxide pigments used as sunscreens are the only solid particles with a size that comes near to the nano range. Most of them are still bigger than 100 nanometers and their safety has been well established and they remain on the skin’s surface where they are removed by normal cleansing.” He also confirmed where La Prairie stands in terms of safety: “All ingredients used in our products are carefully selected and their safety is thoroughly assessed. We do additional assessments to test the finished products for compatibility on the skin of voluntary test patients. Only when they have been proven to be tolerant and utterly safe will they be launched onto the market.”
So whether courting controversy over its use of nanoparticles or making waves in the field of scientific development, Switzerland has become a country to take notice of in recent years. If its economic stability can be assured then there should be no reason for this flow of activity to be stemmed.
