German cosmetics market continues to struggle

Although an ageing population and renewed attitudes to men's personal care products have led to a growth in the number of launches on the market, it appears that sales remain steady as consumers batten down the hatches and plump for discount products in the face of continued economic challenges.

Recently published market reports from Research and Markets indicates that rising unemployment, which is currently hovering around 10 per cent and is centred on the East of the country, has resulted in lower consumer confidence hampering growth in all sections of the cosmetics and toiletries market.

In particular, a report on the Fragrance and Cosmetics market in Germany, highlights the fact that men's fragrances have seen one of the biggest fall in sales, with expensive fragrance retailers being hardest hit.

Although Germany has one of the highest penetration rates for male fragrances in Europe, at 82 per cent, it often appears that one of the first categories to start shrinking during financial hardships is the male cosmetic and toiletries sector, and particularly the top end of the market.

The other report from Research and Markets, Skincare - Germany, reveals that as the country's populations rapidly ages, there has been a huge increase in the number of increasingly sophisticated anti-ageing products to hit the market.

The demand comes on the back of the fact that seven out of ten women in the 55 to 65 age category now use anti-ageing products.

However, as with the men's fragrance category, actual sales have been held back by the challenging economic conditions. Likewise the report highlights low consumer confidence as being the main reason for the slowing sales.

The report also highlights a move towards natural products in this segment, as well as a significant rise in the number of private label purchases, particularly for body care.

But the shift towards private label generally means that consumers are paying less for their anti-ageing products, which in turn means that volume growth is currently outpacing value growth by approximately 3 per cent.

A recent market report conducted by Datamonitor points to the fact that the current economic conditions in Germany have led to a big rise in the penetration levels for private labels.

Currently it is estimated that the penetration levels of private labels for food, drink and personal care currently run at 25 per cent.

However, it might not all be doom and gloom for the German market, a recent market report suggested that it could soon be turning the corner, as sales have rebounded slightly over 2004 levels.

The German Cosmetic, Toiletry, Perfumery and Detergent Association (IKW) says total sales of cosmetic products increased by 0.2 per cent to reach €11.1 billion, a turnaround compared to 2004 when spending levels for the sector actually fell by 1.4 per cent. This gives a per capita spend on cosmetics products of €134.60.