Beauty Knows No Boundarie$

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The cosmetic industry is an important player in the economic world it has continued to deliver strong sales despite a global economic recession. Cosmetics include products that are meant for personal care such as make up, lotions for the skin, sunscreen, mineral powders, nail polish and the like. According to Hoovers, the U.S. consumer spending on non durable goods rose to 6.5% in October 2011 compared to October 2010. Spending on non durable goods is an indicator of beauty supply, cosmetic and perfume sales. 

The popularity of cosmetics and beauty products has attracted designers from the world of music to enter the market to make their own line of perfumes such as Justin Bieber, Gwen Stefani and several others.  In a world concerned with the environment and the rising trend of going green the organic beauty products market has grown.  It is estimated that global sales of natural and organic beauty products will increase from $9 billion to $14 billion by 2015.

In a tough economic environment there are certain things people will not part with, I believe for women beauty products is one of them.  Avon Products, Inc. (AVP) is one of the leading direct selling companies in the world and 5th biggest in personal care and beauty it is even listed on the NYSE.  It also bottomed out with the rest of the market in March 2009 and went on to recover quite nicely for most of 2010.  Although Avon flaunts a nice dividend and its sales have been growing it has recently faced some ethical dilemmas and operational difficulties as well as problems in its biggest markets.  This explains the huge drop in its share prices and for the moment it remains a fickle stock to best be watched from the sideline.

Although the recession was a blow to all from late 2007 to early 2009, in 2010 American women began to return to buy cosmetics in department stores.  According to research from Euromonitor International sales of premium color cosmetics declined by 4% in 2009 yet sales of mass drug store products grew by 1%.  In 2010 when things began to improve economically sales for both cosmetics rose by 4%.  No matter what the economy does women will not give up their beauty products they just cut down costs, they resorted to buy make up from drug stores instead of fancier high end products sold in department stores. 

Maybe she's born with it ... or maybe she just knows how to go for the natural look while saving money. Maybelline products was the second leading brand for cosmetics in 2010.  Not surprisingly L'Oréal USA Inc and its three brands, one being Maybelline, ate up 23% of the market share for cosmetics making it the leader in 2010.  As the U.S. economy has shown signs of growth sales of cosmetic products are also expected to grow.

In Germany the beauty and personal care products are expected to see slow steady growth due to competitive pricing and maturing products.  In 2010 private labels have been hot, drug store brand DM and Aldi have become popular for the females. The economic uncertainty and aging population has also affected sales.  Anti age creams will be better positioned for growth yet a healthier economy will boost sales for all products.  

In China, L'Oreal devoured the cosmetics market share with 37% in 2010. It offers a low to mid income product line to the population from L'Oreal Paris to Maybelline New York. The younger women are expected to be the leading consumers in the coming years as they like to inform themselves via internet on what is hot in the U.S. and in Japan.  In Japan the leading color cosmetic company is Shiseido generating 129 billion Yen in 2010.  In Italy, L'Oreal Italian SpA was the leader in sales with 32% of the market share.  In the U.K. with 10% of the market share Boots No 7 brand was the sales leader in 2010.  As the recession hit women preferred to go with the less expensive look. 

It is amazing to see that during a bad economy women will not compromise their physical appearance for money.  The cosmetic industry has proved to be recession proof.


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