The cosmetics industry remains a major pillar of French foreign trade. In 2016, the trade surplus in the cosmetics sector reached 9.2 billion euros, ranking cosmetics as the second most performant sector after the aeronautics. “The French cosmetics industry continues to grow its international reputation by combining its strong assets, including innovation a reputation of high-quality,” says Patrick O’Quin, President of the French Federation of Beauty Enterprises (FEBEA).
North America and Asia drive growth
However, French exports score very differently from one geographical area to the other. Dynamism in North America and Asia has offset the slowdown in other areas.
While Germany, the United Kingdom, Spain and Italy remain among the top 5 countries where France exports the most, the total amount of exports in these four countries tends to slow down.
French exports to European countries outside the European Union (-3.5%) continue to decline, mostly because of the drop of exports to Russia (-13%), which is linked to the rubble weakness that had a positive impact on local brands but not on foreign imports.
However, sustained growth in North America offset the slowdown in Europe. Exports rose in all the three North American countries: United States (+8.5%), Canada (+4.5%) and Mexico (+4%).
Exports to Asia grew by almost 10% in 2016, including China (+15%), Singapore (+13%), South Korea (+18%) and Japan (+4%). While Asia passed through some difficulties in 2015, last year marked a real recovery throughout the zone. “The growth remains strong in China despite, regulations that are not adapted to the constant innovations in this product categories,” explains the FEBEA. Asia now accounts for 17% of French cosmetics exports.
Weakness of other areas
Exports to Latin America (-7.2%) and the Middle East (-5.9%) were down significantly.
According to the FEBEA, declines in the Middle East (including Saudi Arabia, -18% and United Arab Emirates, -5.8%) are linked to the evolution and increasingly complexification of local regulations, but also the economic transition linked to lower oil prices.
Exports to North Africa were also down (-3.6%), mainly due to a -27% drop of exports to Egypt, linked to the very bad economic situation in the country.
Growing international competition
Skin care and fragrances account for 3/4 of French exports in the beauty category (43.4% for skin care and 31.3% for perfumes). “High-end prestige brands remain popular around the world, and pharmacy brands are accelerating their penetration,” said Virginie d’Enfert, FEBEA’s Director of Economic, Environmental and International Affairs.
However, figures published by the FEBEA do not tell anything about the evolution of France’s share of the global market. While French brands remain in high demand worldwide, they are facing increased competition, particularly in Asia with the rise of Korean brands, and in the makeup category, the world’s most dynamic beauty market, where new players are sky-rocketing based on innovative distribution and marketing methods.
As far as competitiveness is concerned, the latest annual survey by Coe-Rexecode (September 2016), conducted among major European, American, Japanese and Chinese buyers about their perception of the characteristics of foreign products, found that the image of French hygiene and beauty products was declining in particular because of a very strong increase of perceived prices. A problem that does not affect luxury brands but can impact the sales of the most common products.