Until the current global economic crisis, Russia had a nine-year run of continuous rapid economic expansion (approximately 7% annually). With over 140 million consumers, a growing middle class and almost unlimited infrastructure needs, Russia is one of the most promising U.S. exports markets.
Russia is the U.S.’s 28th largest export market, and 2008 U.S. exports to Russia were $9.3 billion, a 27% increase over 2007. According to Russian statistics, leading exporter countries to Russia include, in descending order: China, Germany, Japan, Ukraine, U.S., Italy, South Korea and France. The U.S. has an approximate 5% share of Russian imports.
The Russian cosmetics market was valued at $7.8 billion in 2008 and offers many market opportunities for U.S. manufacturers despite the economic downturn and rather cumbersome regulatory approval process. The leading exporter of toiletries and cosmetics is France.
Market Data & Demand
The Russian beauty products market has been experiencing steady growth and has been one of the fastest growing industry sectors in Russia during the last decade. According to industry research firm Staraya Krepost, the total current value of the Russian beauty products market is approximately $7.8 billion with recent growth of 14%; 53% of the market consists of imported products. Due to the global economic crisis, however, industry specialists believe the market may have fallen 10-20% in 2009.
Key market segments are: hair care; make-up, bath, anti-aging and anti-blemishing skin care products; and cosmetics for men and children. Spa, pedicure, and manicure products are also fast growing subsectors in the cosmetics industry.
The last several years have been characterized by a rapidly growing demand for high quality and individualized cosmetic products. Both foreign and local manufacturers created awareness of different skin and hair types, as well as the advantages of using a full range of skin and hair products. Cosmetics started to be viewed as a means not only to achieve beauty and a general improvement in health. Beauty and spa salons are becoming more and more popular.
Due to the economic downturn, however, while women will continue to spend money to make their skin look better, visits to spas and beauty salons are becoming less regular; thus there is a growing demand for professional products for home use. When the ruble was depreciating, prices on imported cosmetics and toiletries increased 30-40%, thereby intensifying demand for mass market products with a combination of price and quality.