Source: The Gulf Times
With the cosmetics and personal care sector’s value amounting to almost US$ 1 billion, a recent study indicates that one in every ten consumers in the UAE spends around AED 60,000 on personal care annually. This is the same as the value of a year’s rent or a medium-range car.
The UAE market achieved 6-7 percent growth in 2014, surpassing global growth rates that reached up to 4.2 percent. This exceptional increase is partly due to high disposable income in the country, in addition to the growth of the young population – the main consumer of cosmetics and personal care products.
The sector is further supported by the variety of widely spread sale and distribution channels in the country, including standalone stores in malls, in addition to over-the-counter sales in salons, pharmacies, supermarkets and hypermarkets as well as bazaars and souks. In Dubai alone, there are almost 1,000 sales point, with the number of specialized, cosmetics-only stores amounting to 150.
Speaking on the sector’s outlook for the current year, Mr. Mohammad Madi, President of Madi International – a leading distributor of Internationally renowned professional beauty brands in the Middle East, stated: “In light of the current regional situation, it is difficult to determine exact growth outlooks for 2015, considering the increase in real estate prices and school fees, which all affect consumer spending and reshapes priorities. Despite all the challenges, we are confident that sector growth will not go below 4.5% in 2015.”
“The beauty and cosmetics sector in Dubai registered significant growth due to the strong purchasing power of the residents, and the availability of varied products that suit all budgets and tastes. Spending per capita is almost US$ 165 – the highest in Arab countries,” he added.
While Italy, Germany, France and the US lead the cosmetics industry in terms of production volume and standards, the strategic location of the UAE as a trade hub enabled many to invest in cosmetic manufacturing. Madi International is a leader in this arena, as it implements the most stringent international standards to maintain the safety of the product, staff and environment, while complying with the leading industry guidelines.
Clearly, the sector was not isolated from the impacts of fluctuating currency prices, mainly Euro, which led to higher competitiveness of European products against those imported from East Asia. On the other hand, those trends created a heavy burden on companies that stocked up on products during the high Euro rates, causing them to incur heavy financial losses.
However, this has not impacted growth forecasts, as individual consumption would maintain UAE’s leadership of the sector, while the market is expected to touch US$ 1.3 billion in 2017. UAE, KSA and Iran together represent a total value of US$ 9.5 billion – almost 37% of the total Middle East and Africa market.
“Although the market in Dubai is saturated in terms of new stores, competition has become remarkably stronger with new products being imported from East Asia at very competitive prices, while products of European origin gained better edge with the lower value of the Euro. This resulted in fiercer competition among products of Asia, European and local origin, ultimately benefitting customers who seek the best quality at affordable prices,” concluded Mr. Madi.’