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ePaper created 2014-08-04, 15:09:49 | version 1.32.01
T he figures seem to point to growth, although there are a number of imponderables that could have a serious impact on the Russian market this year – and in par- ticular the natural cosmetics market. Those of you who have conducted business in Russia for some time know that the biggest country in the world is also the world’s fifth biggest cosmetics market (with a 14 billion US-$* annual turnover). There have always been “ups” and “downs” in the era since the end of the Soviet Union: Russia has suffered in the last 20 years various setbacks because of drastic exchange rate movements, or general structural crises which of course have their im- pact on the whole economic growth of the country. A new facet is now the serious geopolitical crisis which has brought with it a cooling off of German- Russian relationships. It seems that the previously dynamic natural cos- metics market will also slow down to a certain extent. Difficult economic situation Unfortunately Russia has had to struggle with structural political prob- lems and has still not been able to make itself more independent from it’s export heavy raw materials and energy industries. The urgent modernisation of the economy is not happening. There have also been the extra costs of the Olympics at the beginning of this year in Sochi. And finally, thanks to all this, the Rouble has, within 12 months, lost about one quarter of its value. In the first quarter of this year the value of the currency fell at times by as much as 30%. And although this loss in value was somewhat improved in the second quarter the fact is that, for Russian com- panies, imported products are about 25 percent more expensive to buy. This also impacts on the purchase of raw materials for the cosmetics in- dustry. This considerable cost increase would be expected to have a negative effect on the previous dynamics of the Russian cosmetics market. What has happened so far? For several years the relatively small natural cosmetics market in Rus- sia has been developing nicely. Now the biggest western natural cosmetics brands have moved into the Russian market and have established them- selves more or less well. 10 COSSMA 7-8I2014 FOCUS: NATURAL COSMETICS MARKETS There are now Russian “green” brands that are also certified. For in- stance Natura Siberica and other brands from the mass market manufac- turer Pervoe Reshenie, who have con- tinued with their commitment to natu- ral cosmetics and are planning to certi- fy other products in their range. Other smaller manufacturers and brands are still having a tough time, such as Botanicalife of Moscow or Joli of St. Petersburg. But for about 12 months Russian manufacturers have been demanding more formulation know-how, and are interested in the costs of a western nat- ural certification, or in certified ingre- dients. Unlike western European mar- kets the share of natural cosmetics is very low, at less than 1 percent. The whole turnover in 2013 was around 101.2 million Euros. Hence the growth figure was one third higher than in the previous year and clearly higher than in the year before that. Whether 2014 will enjoy such dynamic growth remains to be seen, but is doubtful in view of the present situation. Natural cosmetics growing in popularity In Russia the interest in natural cos- metics continues to grow, both in the trade and amongst consumers. The number of international brands that are now being introduced into the Russian market continues to grow, and more and more specialist stores and new Internet shops are being seen. There are still very few genuine “bio” shops in Russia which means that sales via these outlets cannot be com- pared with those in the west. But something is happening here. The fact that natural cosmetics can The Russian natural cosmetics market Growth despite the economic crisis? Will the new Green Valley at Intercharm prove more of an attraction than the other loud claims for beauty products? photo:VictoriaAndreas,Shutterstock.com Is the current political and economic situation in danger of slowing down the dynamic Russian market? You can learn here more about the background to this question. COS1408_10_Huettner_GB_COS1408_10_Huettner_D 28.07.14 14:22 Seite 10