Euromonitor: cosmetics and personal care market in Azerbaijan expects wanton growth in the next 5 years
Euromonitor International has presented results of Beauty and Personal Care in Azerbaijan research.
The beauty and personal care market in Azerbaijan continued to show healthy value growth in 2011. Although current value growth rates in 2011 were slightly higher than in 2010, it was difficult for the market to match the compound annual growth rate of the review period or the double-digit growth prior to 2009. Towards the end of the review period, the process of niche fulfillment was already completed and category niches had stopped expanding significantly. Although demand for premium products increased towards the end of the review period, rising inflation and unit price growth, together with a slower increase in average disposable incomes, meant that Azerbaijanis continued to trade down, with consumers mainly focusing on price and basic products and reducing impulsive purchases. As a result, demand for premium brands remained fairly low during 2011. In 2011, the leading players were multinationals, such as Colgate-Palmolive, Procter & Gamble, Oriflame and Beiersdorf, with their strong positions stemming from their ability to invest heavily in advertising and promotional activities. They benefit from consumer loyalty and a longstanding presence in the country. Russian and Turkish companies, such as Kalina Concern, Pervoe Reshenie, Evyap Sabun Yag Gliserin Sanayii ve Ticaret and Kosan Kozmetik Sanayi endeavour to compete with the multinationals on the basis of lower prices.
Distribution of beauty and personal care goods in Azerbaijan in 2011, as in previous years, continued shifting towards more modern retail outlets. The further development and increasing popularity of large modern retailing formats, such as supermarkets and beauty specialist stores, offering convenient locations, competitive price policies and discounting, led to a greater emphasis on value for money. This made beauty specialist stores a very important distribution channel, with a double-digit percentage value share at the end of the review period. Despite losing value share, independent small grocers and outdoor markets remained the largest distribution channels for beauty and personal care. Direct selling remained a popular distribution channel, especially for colour cosmetics, fragrances and skin care products.
Over the next five years, beauty and personal care is expected to demonstrate almost the same constant value growth compared to the review period. The main factors that will drive growth will be the diminishing effects of the economic crisis, and more company investments in new product launches, advertising and promotions. The market has good potential for growth as is quite small compared to the rest of Western Europe. As such, there is still considerable room for growth, especially outside urban areas where penetration of beauty and personal care products remains low. This factor will also be enhanced by the young population of Azerbaijan together with rising urbanisation.
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