Overview of the Russian Beauty Industry

According to a study presented at the Think with Google Beauty conference, the Russian beauty market saw a 4% decrease, from 2016-2017 to May 2017-June 2018, with a total value of 363 billion rubles. Additionally, analysts reported a nearly 5% drop in average spending in this category. The market is currently saturated, and consumers are increasingly seeking personalized cosmetic and skincare offers, which are not yet widely available from industry players.

GfK Russia reports that the sales volume of beauty products remained steady, with a growth rate of only 0.1% from May 2017 to June 2018.

Hair care and perfumery continue to be the largest categories in the beauty and personal care industry, accounting for 23% and 22% of the Russian beauty market, respectively. However, the most rapidly growing segments are skin care and perfumery.

Primary Sales Channels for Cosmetics

The primary sales channel for cosmetics is chain stores or drogerie, which accounts for 34% of sales. Hypermarkets, discounters, and supermarkets make up 26% of other purchases, and sales in supermarkets have increased by 8% over the past year.

Online sales exhibited the most significant growth in both monetary and nominal terms in 2018, with a 10% increase in rubles and a 30% increase in quantity. While purchases are less frequent in online shops compared to chain stores and drugstores, the amount spent per purchase is 1.5 times higher.

The advent of digitalization has altered the way customers choose personal care products. As per a study by Google, 76% of users make online beauty-related queries at least once a month. When selecting a product, 28% of users follow recommendations on Instagram, and 56% on YouTube, indicating the significant role played by beauty bloggers.

Moreover, online shoppers are more inclined to purchase products that are actively promoted. GfK reports that online sales have increased by a quarter due to promotional activities. Therefore, companies must focus on building customer loyalty by engaging with beauty enthusiasts who can help drive the channel.

Furthermore, another factor contributing to growth is the migration of buyers from offline chain stores to online channels, as well as the use of multiple channels.

According to Aleksandra Kryuchko from GfK, “People are easily switching to online channels if they have already tried a product offline, because chain perfumery stores and drugstores give them the opportunity to test and sample products.”

From May 2017 to June 2018, there was a significant increase in online sales (by value) for beauty categories such as hair care, perfumery, and color cosmetics, compared to the same period in previous years.

Trends in Consumer Demand and Development

Similar to the global market, millennials are shaping consumer behavior in Russia. The 18-34 age group in Russia shares similar consumption patterns with other age groups, according to the 2018 study by Mediascope TGI/Marketing Index. The male audience in the beauty industry is also growing, as 97% of men aged 16 and above have used a cosmetic product or perfume in the last 6 months. Among men, the categories with the most dynamic growth in cosmetic usage are facial care (+4 points), body care (+3 points), hair care (+3 points), hair styling aids (+2 points), and hair dye (+2 points). For women, the categories with growth are hair dye (+3 points), hair styling aids (+1.5 points), and facial care (+1 point).

When choosing color cosmetics, younger consumers value familiar brands and are influenced by advertisements and friends’ reviews. In contrast, women aged 45 and above tend to focus on product ingredients and the country of manufacture, according to Ipsos Comcon and RosIndex’s 2018 research.

The cosmetic market analysis in Russia for 2018 reveals several notable customer behavior trends:

• Pragmatism over emotions. Despite the seemingly impulsive nature of cosmetic purchases, Russian women remain rational and value-conscious. The classic approach of seeking the best value for money prevails.
• Preference for practicality. The ongoing economic crisis since 2009 has led to a growing preference for local products that offer better quality and affordability.
• Growing demand for multipurpose products. The professional cosmetic market analysis indicates that products with multiple benefits are becoming increasingly popular.
• Significant rise in demand for facial care. The consumption of facial care products has been growing exponentially since 2010.

The top sellers in the Russian market are still dominated by Western brands such as L’Oreal, LVMH, and Procter & Gamble. Other well-known companies such as Estee Lauder Companies, COTY, Puig Beauty & Fashion Group, Shiseido, and Chanel also hold significant market share. However, Avon, Oriflame, and Mary Kay have seen a decline in their positions, which may be due in part to the decrease in direct sales as a distribution channel. Among local producers, Nouvelle Etoile and Faberlic are the leaders, but they still fall behind the Western brands.

Are you a cosmetics manufacturer looking to enter the rapidly growing Russian market? Our team of experts can assist you with market research, brand positioning, and strategy development to help you win over Russian consumers.