There is no doubt that the Beauty and Personal Care industry and associated packaging materials used therein have been hit hard by the global financial downturn. In developed world economies, consumers have widely opted to trade down and rein in their spending on discretionary personal care products including fragrances and premium cosmetics, impacting demand for glass.
Beauty and personal care applications may only represent 1% of global retail glass sales in 2009 at 3.8 billion units but container specification tends to be of a much more added-value and customised nature (through shape/design, embossing, engraving, screen printing etc.) if compared to some of the high volume, often lower unit price of glass specified across a number of the food and beverage industries.
Contraction in global glass sales in fragrances…
Fragrances, as lead beauty application for glass, are being particularly hit as global growth in 2009 shrunk to 1.5% compared to the more robust growth of 4.8% CAGR made over 2004-2009.
Leading premium fragrance and beauty markets of the US and Japan suffered notable declines in premium sales in 2009, impacting the global picture. Similarly for glass packaging, a 6% fall in unit volume consumption was recorded in 2009 as consumer economic worries and rising unemployment set in to create a reduced, more cautious level of spending on discretionary beauty products.
In Japan, heightened price sensitivity, indeed evident across world regions, and consumers rationing their purchase of “non-essential” premium beauty and personal care products is impacting most heavily skin care and colour cosmetic purchases in glass.
To 2013, a shift to mass fragrances in Western Europe is not forecast as consumers will likely continue to make their premium scent last longer whilst Eastern Europeans show a greater evidence of trading down to mass fragrances. However, it is the fast developing regions that are considered key to unlocking buoyant forecast growth for glass in fragrances.
…but Latin America is performing especially well
As most regions reduce spending on “non-essential” fragrances, Latin America provided the best regional performance in the midst of economic downturn with 2009 value spend up 3% on 2008 and strong growth forecast as recovery in the region strengthens. Those Latin American countries with low levels of consumer debt are forecast to present best performance with Venezuela and Brazil particular growth highlights. The expansion of the premium product offering from established direct sellers such as Avon and Natura will contribute to a 5% CAGR regional growth expected over 2009-2013.
In North America and Western Europe, opportunities will remain weak for glass in fragrances as other world regions offer greater promise. In Eastern Europe, the expansion of specialist retail chains like Sephora as seen in Russia will additionally promote premium fragrance and glass packaging sales.
Nail polish provides glimmers of hope
Nail polish, second only to fragrances in glass container demand in Beauty and Personal Care, is proving resilient in the downturn with global glass packaging consumption up 2% in 2009, importantly an improvement on 2008 sales.
Why? Nail polish is enjoying the recession-induced “lipstick” effect of the 1990s recession as growth in sales of nail polish outperforms other colour cosmetics products. Consumers opting to do their own nails rather than go to a salon have certainly been an additional contributory factor to retail packaging growth.
A steady rise of 2% CAGR in retail glass packaging sales for nail polish is forecast to continue through to 2013, driven by increasing consumer wealth and a consequent rising interest in masstige and premium beauty product lines across fast-developing nations in Asia Pacific and Latin America.
Europe to lead glass prospects in nourishers/anti-agers
Sales of added-value nourishers/anti-agers widely packaged in glass slowed in 2009 yet proved to be somewhat resilient in the poor economic climate as global glass packaging sales rose 9%, making nourishers/anti-agers one of the most dynamic beauty care categories for packaging in 2009 with especially positive growth recorded for glass in developed and developing markets alike.
This strong performance shows no signs of abating with global glass packaging sales in the category forecast to rise by a healthy 4% CAGR over 2009-2013, indicative of consumers’ need for and importance placed on retaining a youthful appearance.
Looking forward, the trend to “natural” in terms of the use of natural ingredients and being kind to the environment is considered to constitute a further niche growth generator in mature beauty markets of the US and Western Europe and provide glass manufacturers with growth opportunities amongst ethical, discerning consumers.