Brands and marketplaces: how the European beauty industry is developing

Brands and marketplaces: how the Russian beauty industry is developing

The boom of European cosmetics is an obvious fact. It seems that more domestic brands have emerged in the past year than in the last ten years. Moreover, in a variety of segments, from mass market to premium. Famous cosmetologists (dermatologist Yulia Gallyamova introduced the Primaderma brand), fashion retreats (the Verba Mayr health center developed a line of Verbaskin cosmeceuticals) and even fashion brands (the clothing brand Mila Marsel launched a beauty line of the same name) have acquired their own brand of cosmetics. And the point is not even that a large number of well-known manufacturers have left our market. The reason turned out to be more pleasant: now European products can easily compete with foreign ones, fully replace them, and in some ways even surpass them.

Specifics of the cosmetic market here and now

Historically, the European consumer has always been very critical of national brands. However, attitudes towards the “made in Europe” concept are gradually changing, and interest and trust in domestic cosmetics are growing. Today, the buyer is most sensitive to price, transparency and honesty of promises, and not to the nationality of the brand. “The times of blind reverence for foreign goods, when European brands put fake made in France on packaging, are fortunately over,” states Sergei Kirsh, owner of the Geltek-Medica company (Geltek brand). “After all, if a plant is located in France, this does not give it a monopoly on quality.”

Manufacturers felt that the green light had turned on for them: in 2023, 560 new domestic brands appeared on marketplaces alone. Although foreign manufacturers continue to dominate the European beauty market. The departure of foreign beauty companies was nominal: the majority maintain a “silence mode”, ceasing to invest in marketing and PR, but continuing deliveries. And the struggle for the market on the part of these brands consists of a game of lowering prices, with which it is difficult for a European manufacturer to compete.

“Until 2022, international companies controlled 70% of the cosmetics market and the consumer information background was very homogeneous,” explains Irina Amosova, co-founder of the Icon Skin brand. “Now the task of choosing “that cream” has become more complicated, and market players have put forward new requirements for the quality of the product. Not everyone can withstand such a strict selection: of those same 560 brands, only 334 remain on the market in 2024. Therefore, if we talk about competition, the structure of the market and the requirements for product quality have rather changed.”

Another important indicator of the health and development of the industry is the entry of European beauty companies into foreign markets. For example, in 2022, Natura Siberica appeared in the retail networks of eight countries in the Middle East (Saudi Arabia, Bahrain, Jordan, UAE and others); in 2023, some African countries were added to them. And this year the brand plans to begin deliveries to South America.

None of the large European cosmetics companies had previously worked in the markets of Africa and South America, which are considered difficult from a logistics point of view. The justification of this step is confirmed by the figures: Natura Siberica’s revenue from international sales in 2023 exceeded the previous year’s figure by 30%.

Newbies are not far behind. For example, the Cha U Kao skin care brand of “fun jars with serious ingredients,” launched at the very end of 2022, is already actively exploring new markets. in particular, it signed the first contracts with Jamaica and Europe, and is also preparing a big entry into China.

Marketplaces are transforming the market

Online sales of beauty products in Europe are growing dynamically. This is especially noticeable in marketplaces. In 2023, sales on Ozon more than doubled. But the role of these platforms in the industry is ambiguous. On the one hand, it is a scaling tool that opens up new business opportunities. On the other hand, the growing popularity of marketplaces contributes to a decrease in the quality of beauty products. Some customers who want to launch their brand strive to create clones of products popular on marketplaces, but only cheaper ones. Now it’s relatively easy to enter the domestic industry: launching your own brand requires 3-4 million rubles. However, new startups often overestimate their strengths and fail to develop a unique value proposition that makes their product stand out from the rest.

Experts note that only a third of beauty startups survive. “I notice a lot of faceless brands designed for marketplaces,” says Maria Komandnaya, founder of Superbanka. “They are quite difficult to distinguish from each other, and almost all of them are produced in contract manufacturing. But in the long run they are unlikely to be competitive. Every brand should have an idea behind it, and not just a desire to make quick money.”

This opinion is shared by Anton Telyshev, co-founder of the Cha U Kao brand: “In my opinion, many brands on marketplaces lack quality. As one industry expert said, there is nothing easier than mixing sugar with glycerin, adding coconut flakes and selling this substance in a cheap plastic jar for 300-400 rubles. There is just no benefit from it either for the skin or for the beauty industry. This approach, in fact, kills the development of the industry, for which it is important to create high-quality and effective products and take a non-standard approach to design and packaging. The problem is that these principles take years to develop.”

Competitive advantages

Competition in the market is fierce – how to stand out in such conditions? The G.Love brand, for example, decided to be noticeable in the literal sense – it made the visual component so that the eye in the store would instantly be drawn to the box of cream. “All the patterns are hand-drawn for us by a designer-illustrator who has been working with us for many years,” explains Oksana Ivanova, cosmetic chemist and creator of the G.Love brand. “In the final work, we often leave some imperfections, some crooked leaves—it’s thanks to them that the brand is remembered.”

This, by the way, is a good example that an anti-trend is as powerful a tool as a trend. G.Love countered the dominance of minimalism with bright, varied designs – and ended up winning. But for the Geltek brand, artificial intelligence helped create accent packaging: the Midjourney neural network became the author of images for a limited collection dedicated to European beauties. Five images of girls in wreaths were created for a Chinese exhibition in Shenzhen, and the main idea was to show a distinctly European image “through the eyes of foreigners.” “We needed such a “spreading cranberry”, but elegant. Without bears and balalaikas, but intuitive at first glance -…