Currently, the UK has the largest market share for natural cosmetic skincare products in Europe. The market for natural skin care products has been recording growth for the last decade until 2008 when the financial crisis hit Europe (Oh & Rugman 2012). However, the market is accommodative to new comers because the demand for the natural products continues to rise. Furthermore, the market for chemical-free skin care products faces the challenge of a weak retail environment. Nevertheless, the current chemical-free skincare product market is favorable for a product launch.
Prior to 2009, the market for natural skin care products was growing at a double-digit rate. The players in the chemical-free cosmetics industry were also realizing an annual sales increase of more than 10% (Geiser, Thorpe & Larson 2013). The high-end market of natural products was also affected by the recession. Currently, the UK economy is bouncing back from the financial crisis and the natural cosmetic industry has assumed a similar trend. A recent research study projects that the chemical-free cosmetics industry will be able to achieve a 5% market share of the UK cosmetic industry by the end of 2014 (Kumar 2011).
Some contributors of the increased market share for chemical-free products include their penetration into retail outlets and an increase in online outlets. The trends in the UK market are quite similar to the trends in the European market. Currently, the European natural skin-care product market accounts for a third of the world’s market (Oh & Rugman 2012). Among the potential luxury markets in Europe, the products with the largest market share are perfumes and cosmetics with a market value of sixty-seven billion Euros (Seitz & Johar 2013). Nevertheless, only a little portion of this market is taken up by natural products. Research indicates that the sales of natural skin-care products will increase by a rate of 20% annually for the next three years (Kumar 2011).
Competitor Analysis
The European cosmetic industry accommodates more than 4,000 companies. However, two thirds of these companies are small and medium enterprises. In the UK, there are approximately two hundred cosmetic manufacturers. Out of the two hundred, only about 50 actively target the luxury market (Kumar 2011). Like in many other industries around the world, the UK cosmetic industry is dominated by multinational companies that have firmly established their presence across Europe. Moreover, the UK faces stiff competition from Italy when it comes to manufacture of luxury cosmetics. Italy has also established itself as a major upcoming force in the manufacture of chemical-free skincare products. There is fierce competition for the market share of natural skincare products.
Some of the major players in the European cosmetics industry in terms of market size include L’Oreal Group, Unilever Group, Johnson & Johnson, Proctor and Gamble, Estee Lauder Cosmetics, and Beiersdorf AG (Kumar 2011). Out of all these market leaders, none has established itself in the natural skincare products’ market. The major players in the UK chemical-free cosmetics industry are cottage-like industries such as Alteya organics, Juice beauty, Mercola healthy skin, and Miessence. Most of these brands have established their niche in the natural cosmetics’ market and it would difficult to take away their market share.
Therefore, it would be advisable to create a market from the consumers who are switching from chemical to natural cosmetics. Furthermore, only about 5% of the possible total market share of natural products’ market has been acquired, the rest is still unattained (Kim & Seock 2013). The business’ competition is mostly with other start-ups and not with the existing players. Depending on how the startup companies market themselves, they have the chance of acquiring a huge untapped market share. Italian-made products dominate the current luxury cosmetics market. Therefore, there is need to conduct an analysis of the Italian market dynamics.
References
Geiser, K., Thorpe, B., & Larson, A 2013, ‘Future directions for the cosmetic industry’, The Chemical Industry, vol. 23. no.1, pp. 329-360. Web.
Kim, S., & Seock, Y 2013, ‘Impacts of health and environmental consciousness on young female consumers’ attitude towards and purchase of natural beauty products’, International Journal of Consumer Studies, vol. 33. no. 6, pp. 627-638. Web.
Kumar, S 2011, ‘Exploratory analysis of global cosmetic industry: major players, technology and market trends’, Technovation, vol. 25. no.11, pp. 1263-1272. Web.
Oh, C. H., & Rugman, A. M 2012, ‘Regional sales of multinationals in the world cosmetics industry’, European Management Journal, vol. 24. no. 2, pp.163-173. Web.
Seitz, V. A., & Johar, J. S 2013, ‘Advertising practices for self-image projective products in the new Europe: a print advertising content analysis’, Journal of Consumer Marketing, vol.10. no. 4, pp. 15-26. Web.