The sales value of Russia's cosmetic market in 2015 reached nearly 14 billion dollars, giving it the 4^th place in Europe's common chart right after UK, Germany and France, which means a 3% stake in common world cosmetic sales. According to latest statistics, about 70% of Russia's cosmetic market is filled by exported products.

Even despite the crisis of 2014, annual sales keep performing a stable growth rate which by now has mounted to 10 percent making Russia one of the most attractive markets to foreign investors. In addition, nearly 45% of the population is represented by females aged between 20-60 years who are known to be the most active consumer group.

The crisis is not so black as it's painted

According to BusinessStat, within the period between 2009 and 2013, Russia's beauty market grew by 46%. Although the recent crisis inclined the population to restrain their expenses, this impact barely altered the consumers behavior at cosmetic and perfumery markets. Even despite the depreciation of Russian ruble, triggered by the implementation of economic sanctions, causing cosmetic brands to raise their prices by 20-30% on average, a decrease in consumers' expenditure on cosmetics is barely noticeable. Instead of buying less beauty and care products of brands they used to be loyal to, customers started to seek less prestigious goods for lower prices. So, if an average mascara purchase value used to stand around 1500-2000 rubles (22-30 EUR), now it oscillates around 600-700 rubles (10 EUR). 

Neither has the crisis frightened off foreign investors, who keep persistently launching at Russian market new brands or product series. Oriental cosmetics, especially those if Japanese, Korean, Chinese and Thai origin, have recently become an overtaking cosmetic and beauty trends. The clue to their success roots in those brands' favorable quality coupling with modest pricing. The most compelling part of those goods, as revealed, is presence of such ingredients as green tea, bamboo, coco-nut and white truffle extracts and essences. Promptly caught by Russian manufacturers, this trend immediately got adopted by domestic brands adding such products to their offer. 

On-line cosmetic selling in Russia

According to recent statistics, the stake of e-commerce transfer in the cosmetic market in Russia has by now been developing at the level of 4-5% of overall value. Google and Yandex, the growth rate of search queries concerned with cosmetics performs an average figure of 25% annually, which means over 7 million queries monthly. The most popular keywords used are: Chanel, Yves Rocher, L'Oréal, Lancôme and Clinique. On-line store bestsellers are mostly cosmetics coming from Germany, France and Poland.

There are presently two main reasons to on-line selling rapid growth in Russia. The first one is a large number of fake brands operating on Russian market tampering or imitating popular international brands, sold at lower prices. The second one is well-built logistics infrastructure which enables for people from outlying districts an easier access to well-known brands often unavailable in local stores.

According to a common experts' opinion, the Russian on-line cosmetic market is about to achieve a value similar European within the next 5-6 years.

Cosmetic market segmentation

The number of new cosmetic products appearing on the shelves of Russian stores every year is about 47 thousand. Leading positions are traditionally held by known mass-marked brands, such as Eveline, Avon, Faberlic and Ruby Rose. So called middle-market brands like Revlon, L'Oréal, Mary Kay, also tend to steadily show a good perfomance, as well as luxury brands like Chanel, Dior, Clinique or Givenchy.

As for countries, France has traditionally been an undisputable leader in cosmetic export to Russia when goes to premium class cosmetics, skin care products and perfumes. Second largest exporter is Germany, especially in hair and body care and eco industries. Poland holds the seventh position exporting mainly make-up and wash substances. Within the last few years, cosmetic goods originating from the US and Italy have also gained great popularity in Russia, mainly due to aggressive marketing and promotional campaigns.

Russia's largest epicenters of cosmetic market activity are, of course, Moscow and St. Petersburg. This is where the biggest brands set up their new stores in the first place. The most relevant market positions here belong to L'Oréal, Procter&Gamble and Unilever Group, holding together a 30% stake in common market value.

The direct sales market of cosmetics has recently faced a noticeable decrease, except for Avon, whose sales keep on performing outrageous numbers. The main cause to this situations roots in a rapid growth of newly set up chemist stores popping up here and there.

The largest chain of multi-brand cosmetic stores in Russia is L'Etoile, which counts over 900 sale points in more than 250 towns across Russia and Ukraine. It is expected that within the next year the number of L’Etoile branded stores is going to extend to 1000. Another relevant retailer on Russian market is a spin-off created by one of the largest grocery retailer Magnit, which year by year broadens its own chemist's store chain.

Cosmetics, cosmetics

Russia's most prominent segment of cosmetic market is hand&face care branch, pursued by make-up industry, which is said to be of daily use for more than 90% of women aged above 18 years old. Hair dyes and styling substances are used by 55% and 43% of female population correspondingly. Eyelid and around the eyes care product sales have recently performed a promising growth by 9%. There's also been noted a brand new trend of constant exertion in men and youngsters cosmetic industry rivalry.

Domestic Russian cosmetic brands have also performed a great deal of competition against western manufacturers, attracting more and more customers by offering original products and creative packaging design. At the same time a notable part of Russian manufacturers tend to copy or inherit western best practices in order to persuade the domestic customer to purchase their products. For now, the market's biggest players are: Faberlic, Pervoe Reshenie, Kalina (taken over by Unilever in 2011), Svoboda. According to latest market research Russian customers incline to choose home brands more and more often, even though the quality standards are still below European ones.        

Marketing and advertising

Within the last three years, there were only the biggest players, such as L'Oréal, P&G or Unilever, who could afford relevant marketing budgets to constantly enlarge their market stake. Those three brands combined generate approximately 50% of common advertising expanses in Russian cosmetic industry.

As for promotion channels, television still remains the most popular advertising medium, which generates about 11% of common advertising income across the country.

Recently, the more and more cosmetic brands tend to increase energize their promotional push, noticeably increasing their marketing budgets. The most prominent growth has been performed by GlaxoSmithKline (+93%), Biersdorf (+68%) and Avon (+38%). Other brands are also looking for new ways to enhance their impact on the market. For instance, in 2012 L'Oréal set up a Research & Development center, where it not only tests its new products, but also provides regular market and competition surveys in search for new possibilities for marketing and promotion.

To sum up

Fyodor Dostoyevsky once said: Beauty will save the world. And it seems that the female part of Russian population has taken those words to heart, what can be said after observing the amount of money they spend on cosmetics, especially when compared to European consumers.

The crisis of 2014 barely brought any impact on the cosmetic industry. Moving into 2017 and beyond, and observing the latest trends appearing within the Russian market of the beauty industry, we can say for sure that there still is plenty of space for new European brands to present their products, which are always welcome by the Russian population due to the assumption of western products' high quality and prestige.